LOCAL FISCAL

ADMINISTRATION

Presented by:
OLIVER A.SANTOS
I. WHAT IS LOCAL FISCAL ADMINISTRATION ?

Local Fiscal Administration refers to systems,

structures, processes, officials and personnel,
and the policy environment governing
Intergovernmental and Inter-local fiscal
relations
 SCOPE OF LOCAL FISCAL ADMINISTRATION
• The giving and receipt of allotments and grants
• Allotment sharing between LGUs;
• Sharing of taxing powers
• Policy on tax rates and structures;
• Revenue and expenditure planning;
• Revenue utilization & expenditure allocation; monitoring &
approval budgets, tax ordinances & other fiscal measures;
• Policy on borrowing and borrowing instruments; and
• Appointment & supervision of local fiscal officers.
5 MAJOR ELEMENTS AS THE SCOPE OF LFA

INTERNAL ENVIRONMENT
1.Systems
2.Structures;
3.Processes;
4.Official/personnel
EXTERNAL ENVIRONMENT
5. Policy environment governing
inter- governmental and inter-
local fiscal relations.
 IN PUBLIC ADMINISTRATION

• Local Fiscal Administration is commonly referred to

as the formulation, implementation, and evaluation
of local fiscal policies by the local governments.

• Local Fiscal Administration set the framework and

procedures on local revenue generation
 II. LEGAL BASIS FOR LOCAL FISCAL
ADMINISTRATION
Local Fiscal Administration is characteristically legalistic and
statutory. 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”
 II. LEGAL BASIS FOR LFA
1987 Philippine Constitution; Section 2, Article X
“The territorial & political subdivisions shall enjoy local
Autonomy”
 II. LEGAL BASIS FOR LFA
The Local Government Code of 1991, otherwise known as
Republic Act 7160
•Power to Create their own Resources of Revenue (Sec.
129)
• Each LGU’s has the power to create its own sources of
revenue, and 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:

Department of Finance (DOF)

The DOF, maintains the Bureau of Local
Government Finance (BLGF) which is the unit
primarily involved in local financial
administration
 Other Laws and Government Issuances
Bureau of Local government Finance (BLGF)
• 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
Other Laws and Government Issuances

Department of Budget and Management (DBM)

The DBM is primarily responsible for:
•Disseminating information of 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.
Other Laws and Government Issuances
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 implement
auditing rules and regulations in LGU’s
•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
Other Laws and Government Issuances

Department of Interior and Local Government

(DILG)

The DILG, upon which the supervisory power of

the President is reposed, at times issues guidelines
which are fiscal-related
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 and administrative orders that affect local
government units.
LOCALFISCAL ADMINISTRATIONVS.PUBLICFISCALADMINISTRATION

• Local Fiscal Administration refer to systems, structures,

processes, officials and personnel, and the policy
environment governing intergovernmental and inter-local
fiscal relation
• Public Fiscal Administration comprises the formulation,
implementation and evaluation of policies and decisions on
taxation and revenue administration

• Example: DOH and LGU’s “Health Service Delivery”

 FISCAL ENVIRONMENT
IN TERMS OF POWER AND RESPOSIBILITIES

LOCAL FISCAL PUBLIC FISCAL

ADMINISTRATION ADMINISTRATION
VS
AS AS
MICRO-ECONOMIC MACRO-ECONOMIC
 SHARE IN NATIONAL TAXES
In accordance with the Law, The LGU’s share in Local taxes
collected by Bureau of Internal Revenue (BIR) of the total local
taxes collected, The IRA (Internal Revenue Allotment)

LOCAL FISCAL PUBLIC FISCAL

ADMINISTRATION VS ADMINISTRATION
LGU’s - 40% NG=60%

Depend when Fiscal Deficit occurs for payment of Debt Services due on too much Public Debt
 FISCAL BUDGET
Represents the estimate of expected income and projected
expenditure for every fiscal year
PUBLIC FISCAL
LOCAL FISCAL
ADMINISTRATION
ADMINISTRATION VS
NG HAVE ALWAYS
LGU’s HAS BASIC
DEFICIENT IN TOTAL
LIMITATION TO HAVE A
REVENUE RESULTING IN
BALANCED BUDGET BUDGET DEFICIT