Scrutiny of LGU funds
As the House of Representatives begins its scrutiny of the proposed record-high P7.2-trillion budget for 2027, one of the significant line items that should merit more than a cursory glance is the substantial P1.3-trillion allocation for the National Tax Allotment (NTA) for local government units (LGUs).
Rising by about 11 percent from the P1.19 trillion this year, the NTA—previously known as Internal Revenue Allotment—is a mandatory allocation that is supposed to lead to faster development of towns, cities, and provinces given their higher share of national tax collections following the Mandanas-Garcia Supreme Court ruling of 2019.
Progress since the increase and the implementation of the Local Government Code of 1991, however, has been uneven at best.
State think tank Philippine Institute for Development Studies (PIDS) underscored in its June research paper that despite the higher resources channeled to LGUs, national government expenses, particularly in the key areas of economic services, social services, and infrastructure “have not decreased as one might expect,” raising questions over LGUs’ readiness to fully execute their devolved functions.
Limited fiscal space
PIDS noted that even with the increased allocation, LGUs “struggled to sustain high spending levels” due to issues on planning, execution, or project management. These have to be urgently resolved if the additional resources are to be translated into improved public services and accelerated local development.
Finance Secretary Frederick Go is particularly concerned about development projects, on which LGUs are supposed to allocate at least 20 percent of their NTA. “But of course, whether the LGUs are actually doing it or not is another topic,” Go said in a recent discussion with Inquirer reporters and editors. “We need the LGUs to really spend that money on infrastructure within their own localities.”
The national government itself has limited fiscal space to embark on high-impact infrastructure projects, thus it is counting on local governments with the automatic allocation to pick up the slack and spend on high-impact projects such as roads, bridges, irrigation, water distribution, and agriculture development projects.
This makes it incumbent upon Congress to raise the necessary questions to help make certain that the huge funds for LGUs will go to well thought out projects that will realize the promised “People-Centered Growth for an Inclusive and Resilient Future.”
Political patronage
A rigorous review will also help douse suspicions that the higher allocation will be wasted on unnecessary, unproductive projects or, worse, lost to corruption or used as the proverbial carrot to influence local government officials since this will be the last full-year budget of the Marcos administration before the 2028 general elections.
As former Finance Secretary and current Monetary Board member Benjamin E. Diokno said in his latest paper, “for congressmen and senators seeking office in 2028, it is the 2027 budget that matters the most,” coming as it does at an “awkward moment” when economic growth is slowing, interest rates are rising “and the next election is close enough to concentrate political minds.”
Adding fuel to these nagging doubts is the additional line item for the Local Government Support Fund, worth a record high P58.32 billion in the 2027 budget–exceeding last year’s P57.88 billion and more than double the P23 billion set aside in 2025–described as “very politically significant” for the Marcos administration that has about two years left to make a difference and cement a positive legacy.
Former Department of Finance Undersecretary Cielo Magno raised fears that the fund was being used as a political patronage tool ahead of the crucial 2028 elections.
Utmost transparency
If the funds are indeed intended to fund beneficial projects, then these should be spelled out in the development plans of the target LGUs, not merely left to the discretion of the executive branch.
In turn, these LGUs should be capable of implementing them as planned so that every hard-earned peso that went into the national budget and funneled to LGUs is spent judiciously and helps “uplift everyone and ensure that no one is left behind.”
Filipino citizens, however, who are paying the steep price of corruption will have to do their part and demand utmost transparency as Congress continues its deliberations over the 2027 budget, to ensure that there will be no pork hidden in the voluminous budget document, given the patent conflict of interest.
As Diokno said, the question now is whether legislators facing elections in May 2028 can resist the temptation to seize their potentially last opportunity to shape public spending before the campaign season and instead pass one that is free of pork and compliant with the 1987 Constitution.
Unrelenting pressure from an engaged citizenry can help make sure that Congress will do its job to serve the people and guard public funds.
