Final Local Fiscal Administration

WHAT IS LOCAL FISCAL ADMINISTRATION?
Local Fiscal Administration refers to systems, structures, processes, officials and

personnel, and the policy environment governing intergovernmental (involving two or
more government agencies such as DBM, DOF, BIR etc) and inter-local (relation
between the cities/municipalities, provinces and barangays) fiscal relations, affecting
among others: SCOPE OF LFA ( THIS IS THE RELATIONSHIP BET. LGU AND NG)
 the giving and receipt of allotments and grants from the National Government (NG) to
local government units (LGUs);
 allotment sharing between LGUs;
 sharing of taxing powers between the national government (NG) and LGUs, and
among LGUs;
 policy on tax rates and structure;
 revenue and expenditure planning;
 revenue utilization and expenditure allocation; monitoring and approval budgets, tax
ordinances and other fiscal measures;
 policy on borrowing and borrowing instruments; and
 Appointment and supervision of local fiscal officers.
These Definition equally emphasizes and highlight that transpire fiscal relationship
between National and Local Governments. All of them refer to revenue generation and
revenue allocation/utilization as part of the scope of Local Fiscal Administration
The broad definition comprehends five major elements as the scope of Local Fiscal
administration. These are:
 System The first 4 elements can be interpreted as comprising the internal

 Structure environment of local fiscal administration. Generally refers to the
 Processes process involved in the revenue generation, allocation and
 Official/personnel expenditure of the local government
 Policy environment governing inter-governmental and inter-local fiscal relation
While the policy

• In public environment
administration, is the
Local Fiscal external isenvironment
Administration of local
commonly referred to asfiscal
the
administration. By devolving and sharing of responsibilities with the National
formulation, implementation, and evaluation of local fiscal policies by local
Government Agencies of basic service delivery and regulatory power, Health,
governments.
Education, flood control, Public safety, garbage collection , enforcement of Natl Bldg
Code, Licensing Administration
• Local Fiscal of Business set the framework
Establishment, and procedures
Regulation on RealonProperty,
local revenue
Public
generation
Works, etc
1
(Because LGUs have additional local taxation power and authorized
to generate local revenue that includes property tax, income tax and
also to adjust tax rate and order revenue ordinance as well as the
operations of the LGUs)
LEGAL BASIS FOR LOCAL FISCAL ADMINISTRATION:

Local Fiscal Administration is characteristically legalistic or statutory. (It is governed by
laws). Local Government exercise the function of Fiscal Administration by virtue of the
explicit powers and authority vested in them:
 1987 PHILIPPINE CONSTITUTION
 SECTION 2 ARTICLE X:” The territorial and political subdivisions shall
enjoy local autonomy”
The principle under the 1987 Constitution THE LOCAL AUTONOMY is simply
“DECENTRALIZATION” transferring of Administrative functions and
powers from central government/National government Agencies with their
supervisory function.
And the Territorial and political is the subdivisions of the Republic of

the Philippines into the Provinces, cities, municipalities and barangays
The Local Government Code of 1991, otherwise known as Republic Act 7160
UNDER THE LGC THE LGU’S HAS A:
Power to Create their own Sources of Revenue (Sec. 129)
 Each local government unit (LGU) has the power to create its own
sources of revenue and to levy taxes, fees, and charges
 The grant of power to create sources of revenue is consistent with

the basic policy of local autonomy
 The taxes, fees and charges shall accrue exclusively to the LGU.
OTHER LAWS AND GOVERNMENT ISSUANCES:
Local fiscal administration is also governed by laws and issuances from the national agencies that
exercise supervisory power over local government units. Such agencies are the following:
1. Department of Finance (DOF)
2
The DOF, maintains the Bureau of Local Government Finance (BLGF) which is the unit
primarily involved in local financial administration.
 The Bureau provides technical assistance and training for local governments on local
finance.
 It administers credit facilities such as the Municipal Development Fund, and prepares
guidelines and standards on matters related to taxation, credit financing, and
imposition of various fees and charges.
 It also exercises technical supervision on local assessment and treasury operations,

and performs monitoring and evaluation of financial performances.
2. Department of Budget and Management (DBM)
The DBM is primarily responsible for:
 Disseminating information on Internal Revenue Allotment (IRA) allocation and the local
government’s share from the utilization and development of national wealth.
 Releases the share of internal revenue allotment directly to the provinces, cities,
municipalities and barangays.
3. Commission on Audit (COA)
The COA is primarily responsible for the:
 Accountability phase of the local budget process.
 The Commission maintains the Local Government Audit Office (LGAO), through which
it implements auditing rules and regulations in local government units.
 The Commission also “settles accounts and fixes the liability of accountable officers, as
well as determines whether fiscal responsibility has been properly and effectively
discharged by the local chief executives.
4. Department of Interior and Local Government (DILG)
 Assist the President in the exercise of general supervision over local governments, at
times issues guidelines which are fiscal-related.
5. Office of the President (OP)
 The President of the Philippines has general supervisory power over the local
government units, as provided by Section 4 of the 1987 Constitution.
 As such, the OP still issues from time to time executive or administrative orders that
affect local government units.
LOCAL FISCAL ADMINISTRATION VS. PUBLIC FISCAL ADMINISTRATION
3
1. Local Fiscal Administration refer to systems, structures, processes, officials and
personnel, and the policy environment governing intergovernmental and inter-local
fiscal relations. WHILE
2. Public Fiscal Administration comprises the formulation, implementation, and evaluation

of policies and decisions on taxation and revenue administration.
Local Fiscal and Public Fiscal Administration are closely related. They are
both concern about government revenues, allocation of budget and
expenditures. With the concerned formulation, implementation and
evaluation of policies and decisions, PFA allow to transfer of POWER AND
RESPONSIBILITIES in the attainment of local development as well as in
the attainment of National goals.
Example in PFA, the DOH is the central government for Health Service
Delivery towards achieving the policy goal of Universal Health Care or
Kalusugan Pangkalahatan, The DOH support to health facilities
construction and enhancement of government hospital, Rural Health Units
(RHU), Barangay Health Stations (BHS) thru DOH Budget and Sin Taxes
collection the transfer of funds directly downloaded to LGUs for
implementation of health facilities construction with oversight function of
the DOH.
 Fiscal Environment: in terms of power and responsibilities
 Local Fiscal Administration as Micro-economic in terms of power and
responsibilities is
 generally restricted to Local Government Units (LGU’s) are the
Provinces, Cities, Municipalities and Barangays to oversees local
issues and concern in taxation and spending.
o Public Fiscal as Macro-economic
4
focuses on the large structure of inter-governments, national government
and central governments to supervise the external environment of fiscal
function and operation involved in revenue generation, revenue allocation
and utilization.
 Share in National Taxes
 In accordance with the law, the LGUs share in Local Taxes collected by Bureau of
Internal Revenue (BIR) of the total local taxes collected, The IRA (Internal Revenue
Allotment) The LGU’s will have 30% to 40% while the National government gets the
balance 60% or (70%) defend when Fiscal Deficit occurs for payment on
DEBT SERVICES due on too much Public Debt.
Fiscal Budget represents the estimate of expected income and projected

expenditure over a period (Fiscal year)
 Local Fiscal Administration the LGU’s has basic limitation to have a BALANCED
BUDGET for every fiscal year of its operation.
Balanced Budget is a budget in which revenue are equal to
expenditure requiring LGU’s cannot spend more than its income.
 Public Fiscal Administration Historically National Government have always

DEFICIENT IN total revenues resulting in BUDGET DEFICIT
(expending is greater than revenue) Because of government
expenditure for economic and social development, and too much public
debt, the government has run a budget deficit and will have to borrow
money to cover its government’s spending.

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What is the scope of Local Fiscal Administration?

What is the scope of Local Fiscal Administration?

What are the legal bases for Local Fiscal Administration?

What are the legal bases for Local Fiscal Administration?

WHAT IS LOCAL FISCAL ADMINISTRATION?

Local Fiscal Administration refers to systems, structures, processes, officials and

 System The first 4 elements can be interpreted as comprising the internal

While the policy

LEGAL BASIS FOR LOCAL FISCAL ADMINISTRATION:

And the Territorial and political is the subdivisions of the Republic of

UNDER THE LGC THE LGU’S HAS A:

Power to Create their own Sources of Revenue (Sec. 129)

 The grant of power to create sources of revenue is consistent with

OTHER LAWS AND GOVERNMENT ISSUANCES:

1. Department of Finance (DOF)

 It also exercises technical supervision on local assessment and treasury operations,

2. Department of Budget and Management (DBM)

The DBM is primarily responsible for:

3. Commission on Audit (COA)

The COA is primarily responsible for the:

 Accountability phase of the local budget process.

4. Department of Interior and Local Government (DILG)

5. Office of the President (OP)

LOCAL FISCAL ADMINISTRATION VS. PUBLIC FISCAL ADMINISTRATION

2. Public Fiscal Administration comprises the formulation, implementation, and evaluation

o Public Fiscal as Macro-economic

 Share in National Taxes

DEBT SERVICES due on too much Public Debt.

Fiscal Budget represents the estimate of expected income and projected

 Public Fiscal Administration Historically National Government have always

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