Midterm PUAD 313 Local and Regional Governance Lecture Notes PDF

LOCAL AND REGIONAL GOVERNANCE (PUAD 313) Christopher C. Mantillas, Ph.D 1 COURSE OUTLINE A. Constitutional Provisions on Local Government B. Overview of Local Governance in the Philippines C. Local Government Terminologies D. Decentralization, devolutio...

LOCAL AND REGIONAL GOVERNANCE (PUAD 313) Christopher C. Mantillas, Ph.D 1 COURSE OUTLINE A. Constitutional Provisions on Local Government B. Overview of Local Governance in the Philippines C. Local Government Terminologies D. Decentralization, devolution and deconcentration principles E. Local Government Unit’s Revenue Sources (Taxation and Fiscal Administration) 2 CONSTITUTIONAL PROVISIONS RELATED TO LOCAL GOVERNMENT ARTICLE I NATIONAL TERRITORY The national territory comprises the Philippine archipelago, with all the islands and waters embraced therein, and all other territories over which the Philippines has sovereignty or jurisdiction, consisting of its terrestrial, fluvial and aerial domains, including its territorial sea, the seabed, the subsoil, the insular shelves, and other submarine areas. The waters around, between, and connecting the islands of the archipelago, regardless of their breadth and dimensions, form part of the internal waters of the Philippines. ARTICLE II DECLARATION OF PRINCIPLES AND STATE POLICIES STATE POLICIES Section 21. The State shall promote comprehensive rural development and agrarian reform. Section 23. The State shall encourage non-governmental, community-based, or sectoral organizations that promote the welfare of the nation. 8 Section 25. The State shall ensure the autonomy of local governments. 9 Section 26. The State shall guarantee equal access to opportunities for public service and prohibit political dynasties as may be defined by law. 10 Article X Local Government General Provisions Section 1. The territorial and political subdivisions of the Republic of the Philippines are the provinces, cities, municipalities, and barangays. There shall be autonomous regions in Muslim Mindanao and the Cordilleras as hereinafter provided. Section 2. The territorial and political subdivisions shall enjoy local autonomy. 12 Section 3. The Congress shall enact a local government code which shall provide for a more responsive and accountable local government structure instituted through a system of decentralization with effective mechanisms of recall, initiative, and referendum, allocate among the different local government units their powers, responsibilities, and resources, and provide for the qualifications, election, appointment and removal, term, salaries, powers and functions and duties of local officials, and all other matters relating to the organization and operation of the local units. 13 Section 4. The President of the Philippines shall exercise general supervision over local governments. Provinces with respect to component cities and municipalities, and cities and municipalities with respect to component barangays, shall ensure that the acts of their component units are within the scope of their prescribed powers and functions. 14 Section 5. Each local government unit shall have the power to create its own sources of revenues and to levy taxes, fees and charges subject to such guidelines and limitations as the Congress may provide, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local governments. 15 Section 6. Local government units shall have a just share, as determined by law, in the national taxes which shall be automatically released to them. Section 7. Local governments shall be entitled to an equitable share in the proceeds of the utilization and development of the national wealth within their respective areas, in the manner provided by law, including sharing the same with the inhabitants by way of direct benefits. 17 Section 8. The term of office of elective local officials, except barangay officials, which shall be determined by law, shall be three years and no such official shall serve for more than three consecutive terms. Voluntary renunciation of the office for any length of time shall not be considered as an interruption in the continuity of his service for the full term for which he was elected. 18 Section 9. Legislative bodies of local governments shall have sectoral representation as may be prescribed by law. 19 Section 10. No province, city, municipality, or barangay may be created, divided, merged, abolished, or its boundary substantially altered, except in accordance with the criteria established in the local government code and subject to approval by a majority of the votes cast in a plebiscite in the political units directly affected. 20 Section 11. The Congress may, by law, create special metropolitan political subdivisions, subject to a plebiscite as set forth in Section 10 hereof. The component cities and municipalities shall retain their basic autonomy and shall be entitled to their own local executive and legislative assemblies. The jurisdiction of the metropolitan authority that will thereby be created shall be limited to basic services requiring coordination. Section 12. Cities that are highly urbanized, as determined by law, and component cities whose charters prohibit their voters from voting for provincial elective officials, shall be independent of the province. The voters of component cities within a province, whose charters contain no such prohibition, shall not be deprived of their right to vote for elective provincial officials. 22 Section 13. Local government units may group themselves, consolidate or coordinate their efforts, services, and resources for purposes commonly beneficial to them in accordance with law. 23 Section 14. The President shall provide for regional development councils or other similar bodies composed of local government officials, regional heads of departments and other government offices, and representatives from non-governmental organizations within the regions for purposes of administrative decentralization to strengthen the autonomy of the units therein and to accelerate the economic and social growth and development of the units in the region. 24 AUTONOMOUS REGIONS Section 15. There shall be created autonomous regions in Muslim Mindanao and in the Cordilleras consisting of provinces, cities, municipalities, and geographical areas sharing common and distinctive historical and cultural heritage, economic and social structures, and other relevant characteristics within the framework of this Constitution and the national sovereignty as well as territorial integrity of the Republic of the Philippines. Section 16. The President shall exercise general supervision over autonomous regions to ensure that laws are faithfully executed. 26 Section 17. All powers, functions, and responsibilities not granted by this Constitution or by law to the autonomous regions shall be vested in the National Government. 27 Section 18. The Congress shall enact an organic act for each autonomous region with the assistance and participation of the regional consultative commission composed of representatives appointed by the President from a list of nominees from multi-sectoral bodies. The organic act shall define the basic structure of government for the region consisting of the executive department and legislative assembly, both of which shall be elective and representative of the constituent political units. The organic acts shall likewise provide for special courts with personal, family, and property law jurisdiction consistent with the provisions of this Constitution and national laws. The creation of the autonomous region shall be effective when approved by majority of the votes cast by the constituent units in a plebiscite called for the purpose, provided that only provinces, cities, and geographic areas voting favorably in such plebiscite shall be included in the autonomous region. Section 19. The first Congress elected under this Constitution shall, within eighteen months from the time of organization of both Houses, pass the organic acts for the autonomous regions in Muslim Mindanao and the Cordilleras. 29 Section 20. Within its territorial jurisdiction and subject to the provisions of this Constitution and national laws, the organic act of autonomous regions shall provide for legislative powers over: (1) Administrative organization; (2) Creation of sources of revenues; (3) Ancestral domain and natural resources; (4) Personal, family, and property relations; (5) Regional urban and rural planning development; (6) Economic, social, and tourism development; (7) Educational policies; (8) Preservation and development of the cultural heritage; and (9) Such other matters as may be authorized by law for the promotion of the general welfare of the people of the region. Section 21. The preservation of peace and order within the regions shall be the responsibility of the local police agencies which shall be organized, maintained, supervised, and utilized in accordance with applicable laws. The defense and security of the regions shall be the responsibility of the National Government. OVERVIEW OF LOCAL GOVERNANCE IN THE PHILIPPINES 32 33 34 35 36 37 38 39 40 41 42 43 44 45 LOCAL GOVERNMENT TERMINOLOGIES 46 CONTROL The power of an officer to alter, modify or set aside what a subordinate officer had done in the performance of his duty and to substitute the judgement of the former for that of the latter. 47 DEBUREAUCRATIZATION The transfer of government assets through sale from the national government to the private sector. This is otherwise known as privatization of government. 48 DECENTRALIZATION Power proceeds from the national government units. To grant LGU more powers, authority, responsibilities, and resources, decentralization proceeds from the national government to the LGU’s devolution (Political decentralization). 49 DECONCENTRATION The transfer of powers and functions from the national offices to local offices, the purpose of which is to declog the responsibilities of the national offices. 50 DEVELOPMENT ADMINISTRATION The changing administration. It is an organization which exist in a pragmatic, result-oriented environment. The ecology of public administration also changes. As its ecology changes public administration must concede what such developments shall generate changes within itself, including changes in government. An organization is required to adapt and cope with change to survive. The organization is structured to be compatible with new developments. 51 DEVOLUTION The transfer of the basic services and facilities, assets and personnel records, equipment and other assets of national agencies and offices corresponding to the developed powers, functions and responsibilities. 52 DOMICILE A place of temporary sojourn where a person has a fixed and permanent home for legal purposes. 53 INTERNAL REVENUE ALLOTMENT The share of local units from the Bureau of Internal Revenue (BIR) collections. It is now known as the National Tax Allotment (NTA). 54 LOCAL AUTONOMY The quality or state of self-governing to enable local government units to attain their fullest development as self- reliant communities and make them more effective partners in the attainment of national goals through a more responsive and accountable local government structure instituted through a system of decentralization. 55 LOCAL INITIATIVE The legal process whereby voters of a local government unit may directly propose, enact, or amend any ordinance. This right is exercised by all registered voters of the provinces, cities, municipalities, and barangays. Results of such an exercise is certified by the COMELEC on whether or not the required number of signatures has been obtained. 56 LOCAL GOVERNMENT Refers to the territorial and political subdivisions of the Republic of the Philippines which are the provinces, cities, municipalities, and barangays. 57 LOCAL TAXING AUTHORITY The power to impose a tax, fee or charge or to generate revenue under the local code which shall be exercised by the Sanggunian of the local government unit through an appropriate ordinance. 58 MANDANAS-GARCIA RULING The source of the Internal Revenue Allotment (IRA) should include other national taxes such as tariffs and customs duties. The Mandanas Ruling clarifies that the share from the Internal Revenue Allotment (IRA) of the local government units (LGUs) does not exclude other national taxes like customs duties. The exclusion of other national taxes like customs duties from the base for determining the just share of the LGUs contravened the express constitutional edict in Section 6, Article X of the 1987 Constitution. 59 NATIONAL TAX ALLOTMENT (NTA) Annual share of local governments out of proceeds from national taxes. Estimated at 40% of actual collections of National Taxes. 60 ORGANIZATION DEVELOPMENT Intended to change the beliefs, attitudes, values and structures of an organization so they can better adapt to new technologies, markets and challenges and the rapid rate of change itself. If a public official wants organizational changes, he should generate the necessary power to bring about effectiveness, efficiency and economy in the bureaucratic structure. 61 RECALL Refer to the power to ask for the repeat of an election for loss of confidence. It shall be exercised by the registered voters of a local government unit to which the local elective officials belong. 62 REFERENDUM The legal process whereby the registered voters of the local government units may approve, amend or reject an ordinance enacted by the Sanggunian. 63 RESIDENCE Refers to the place where on lives. 64 DECENTRALIZATION, DEVOLUTION AND DECONCENTRATION PRINCIPLES CHRISTOPHER C. MANTILLAS, PHD DECENTRALIZATION Stohr (1998) pointed out the occurrence of the movement in responsibility for regional development policy from being that of the central government (mainly in the 1960s and 1970s) to its being a local/regional “self-help agenda” (mainly since the 1980s). The movement from central to local government responsibility was not only driven by the lack of central government funds but by the inability of the former to solve local problems in periods of rapid change. 66  Decentralization under the principle of subsidiarity has been adopted as an important strategy particularly in regional development administration. The principle of subsidiarity posits that the decision-making powers, development responsibilities and control over resources must be relegated to the lowest possible level in order to broaden public sector legitimacy, transparency and accountability and thus contribute to effective governance and service delivery. During the past three decades, developing countries have attempted to implement various decentralization policies along this principle. 67 MAJOR FORMS OF DECENTRALIZATION Rondinelli (1990) has typified decentralization into two major forms: Deconcentration refers to the transfer of power to the local administrative units or offices of the central government. 68  Devolution refers to the transfer of power to subnational political entities or subnational units of government, whose activities are outside the control of the central government. 69 DIMENSIONS OF DECENTRALIZATION There are two important dimensions of decentralization that are more or less associated with such typology: Administrative Decentralization: Associated with deconcentration which exists when resources are generated centrally but a part of it is allocated to decentralized units which implements the spending activities according to the guidelines or control set at the central government. 70 Fiscal Decentralization: Related to devolution wherein the decentralized units have the power and authority to generate resources through its taxing powers and to spend the same according to established legal criteria (Ugaz, 1997). 71 MAJOR CONCERNS OF FISCAL DECENTRALIZATION Devolution and fiscal decentralization has been regarded as the more important and meaningful aspect of decentralization. Conceptually, fiscal decentralization 72 EXPENDITURE AND REVENUE ASSIGNMENT Expenditure assignment refers to the definition of functions and services that will be performed by local government and that by the center. Revenue assignment concerns the power and authority of local governments to raise and administer tax revenues. 73 DECENTRALIZATION RATIONALE The rationale for government intervention in an economy (externalities, public goods, economies of scale, absence of markets, imperfect information, etc.) provides the basis for the assignment of powers to each level of government. The spatial characteristics of public goods has been the basis for the decentralization theorem as formulated by Oates (1972) which states that “centralization is costly if it leads the government to provide a bundle of public goods that diverges from the preferences of the citizens in particular areas”. The main economic justification of the assignment bases largely on allocative and efficiency considerations. 74 DECENTRALIZATION RATIONALE Tanzi (1995) identified five considerations in this regard: Decentralization induces competition among jurisdictions. This is likely to produce the same kind of allocative benefits in the case of private sectors in a competitive market. Decentralization allows experimentation in the provision of output. Quality in the provision of services will be a likely outcome. Decentralization may generate a smaller public sector and a more efficient economy. Decentralization expands the possibilities for increased participation. Decentralization promotes accountability through clearer and closer linkages between the benefits of local public services and cost of these benefits. 75 LOCAL GOVERNMENT UNIT’S REVENUE SOURCES (TAXATION AND FISCAL ADMINISTRATION) 76 SOURCES OF REVENUES OF LOCAL GOVERNMENT UNITS: LOCALLY GENERATED: Business Tax and Other Taxes: Higher ceiling for tax rates. Graduated fixed rates: percentage tax for gross receipts exceeding specified levels. Tax on income of banks and other financial institutions. Tax on forest products concessions. Tax on mines and mineral products. Expanded coverage of situs of tax rule (plantation and project offices). Authority of LGUs to adjust tax rates once every five (5) years but not to exceed 10% of rates prescribed in the code. LGU authority to grant tax exemption privileges. Withdrawal of local tax exemption privileges of GOCCs. 77 Real Property Tax Reduction of assessment levels on land (residential) and buildings (residential, agricultural, and commercial). Higher ceilings for real property tax rates. Sanggunian to fix assessment levels Income from Economic Enterprises Fees and Changes 78 EXTERNALLY SOURCED: Share in BIR Collections (IRA) Distribution of LGUs -23% Provinces -23% Cities -34% Municipalities/Barangays -20% Such share shall be released automatically and directly to the local treasurer within five (5) days after each quarter. 79 ALLOCATION FORMULA: For Province/City/Municipality: Population 50% Land Areas 25% Equal Sharing 25% 80 REFERENCES: Civil Service Commission Memorandum Circular No. 6 s. of 2023. Cities and Municipalities Competitiveness Index (2023) Citizen’s Charter 2nd edition. Bayan ng Kasibu, Nueva Vizcaya (2022). Local Government Code of 1991. Philippine Constitution of 1987.’ Philippine Statistics Authority (2023) Sangguniang Bayan Checklist (2019). A Reference Guide to Action Task and Responsibilities Checklist. Local Government Academy 81 THANK YOU Christopher C. Mantillas, Ph.D [email protected]