BAGUIO CITY — City Budget Officer Leticia Clemente has warned that the ongoing global fuel crisis could lead to a decline in tax revenues next year, potentially affecting both local and national government spending.

Clemente said the transport sector was the first to feel the impact, but the ripple effects have now reached basic commodities and the agriculture sector. She cautioned that a prolonged crisis could strain the economy further and reduce tax collections, which may force budget adjustments for many local government units.

She noted that business taxes will be significantly affected, with the impact expected to be reflected next year when firms file payments based on this year’s operations.

“The reduction in taxes paid by businesses is expected to decrease the city’s projected revenues,” Clemente said, adding that this will directly influence the preparation of the city’s 2026 annual budget.

Despite the outlook, Baguio City is currently operating on a P3.6-billion budget, higher than last year’s P3-billion allocation.

Clemente remains hopeful that the global fuel crisis will ease, allowing businesses to recover and consumer spending to stabilize.

The budget preparation process will formally begin in July with the issuance of the call for proposals. By mid-October, the proposed budget will be submitted to the local legislative body for deliberation.

Officials stressed that timely approval of the budget is crucial to avoid operating under a re-enacted budget, which could delay development projects and affect the delivery of basic services to residents.