Chapter 3 Budgeting PDF

Chapter 3 Budgeting  Article One. - Local Government Budgets SECTION 314. Form and Content. - (a) Local government budgets shall primarily consist of two (2) parts: 1) The estimates of income; and (2) The total appropriations covering the current operating expenditu...

Chapter 3 Budgeting  Article One. - Local Government Budgets SECTION 314. Form and Content. - (a) Local government budgets shall primarily consist of two (2) parts: 1) The estimates of income; and (2) The total appropriations covering the current operating expenditures and capital outlays.  (b) The budget document shall contain: (1) A budget message of the local chief executive setting forth in brief the significance of the executive budget, particularly in relation to the approved local development plan; (2) A brief summary of the functions, projects, and activities to be accomplished in of the goals and objectives of the local government unit for the ensuing fiscal year, specifically the delivery of basic services or facilities enumerated under Section 17 of this Code; (3) Summary of financial statements setting forth: (i) The actual income and expenditures during the immediately preceding year; (ii) The actual income and expenditures of the first two (2) quarters and the estimates of income and expenditures for the last two (2) quarters of the current fiscal year; (iii) The estimates of income for the ensuing fiscal year from ordinances and laws existing at the time the proposed budget is transmitted, together with other revenue-raising proposals; (iv) The estimated expenditures necessary to carry out the functions, projects, and activities of the local government unit for the ensuing fiscal year; (v) All essential facts regarding the bonded and other long-term obligations and indebtedness of the local government unit, if any; (vi) Summary statement of all statutory and contractual obligations due; and (vii) Such other financial statements and data as are deemed necessary or desirable in order to disclose in all practicable detail the financial condition of the local government unit. SECTION 315. Submission of Detailed Statements of Income and Expenditures (a) On or before the fifteenth (15th) day of July of each year, local treasurers shall submit to their respective local chief executives a certified statement covering the income and expenditures of the preceding fiscal year, the actual income and expenditures of the first two (2) quarters of the current year, and the estimated income and expenditures for the last two (2) quarters of the current year.  SECTION 316. Local Finance Committee. - There is hereby created in every province, city, or municipality a local finance committee to be composed of the local planning and development officer, the local budget officer, and the local treasurer. It shall exercise the following functions: (a) Determine the income reasonably projected as collectible for the ensuing fiscal year; (b) Recommend the appropriate tax and other revenue measures or borrowings, which may be appropriate to support the budget;  (g) Assist the Sanggunian concerned in the analysis and review of annual regular and budgets of the respective local government unit to determine compliance with statutory and administrative requirements; and (h) Conduct semi-annual review and general examination of cost and accomplishments against performance standards applied in undertaking development projects. A copy of this report shall be furnished the local chief executive and the Sanggunian concerned, and shall be posted in conspicuous and publicly accessible places in the provinces, cities, municipalities and Barangays.  SECTION 317. Submission of Budget Proposals by Heads of Departments or Offices - (a) Each head of department or office shall submit a budget proposal for his department or office to the local chief executive on or before the fifteenth (15th) of July of each year: Provided, That the budget proposal of each department or office shall be categorized under either economic, social or general services: Provided, further, That each service shall be covered by the budget of at least one (1) department or office of the local government unit concerned. The said budget proposal shall be prepared in accordance with such policy and program as the local chief executive concerned may issue in conformity with the local development plan, the budgetary ceilings prescribed by the local finance committee, and the general requirements prescribed in this Title.  SECTION 317. Submission of Budget Proposals by Heads of Departments or Offices (b) Budget proposals of departments or offices shall be divided into two (2) primary categories, namely: the current operating expenditures and the capital outlays. Such budget proposals shall contain the following information:  (1) Objectives, functions, and projects showing the general character and relative importance of the work to be accomplished or the services to be rendered, and the cost thereof; (2) Organizational charts and staffing patterns indicating the list of plantilla positions with their corresponding salaries, and proposals for reclassification of positions and salary changes, as well as the creation of new positions with their proposed salary grade, duly supported by proper justification; (3) Brief description of the functions, projects and activities for the ensuing fiscal year, expected results for each function, project and activity, and the nature of work to be performed, including the objects of expenditure for each function, project and activity; (4) Relation of the work and financial proposals to approved local development plans; (5) Estimated current operating expenditures and capital outlays with comparative data for the last two (2) preceding, current, and ensuing fiscal years; and (6) Accomplishment reports for the last two (2) proceeding and current fiscal years.  SECTION 318. Preparation of the Budget by the Local Chief Executive - Upon receipt of the statements of income and expenditures from the treasurer, the budget proposals of the heads of departments and offices, and the estimates of income and budgetary ceilings from the local finance committee, the local chief executive shall prepare the executive budget for the ensuing fiscal year in accordance with the provisions of this Title. The local chief executive shall submit the said executive budget to the Sanggunian concerned not later than the sixteenth (16th) of October of the current fiscal year. Failure to submit such budget on the date prescribed herein shall subject the local chief executive to such criminal and administrative penalties as provided for under this Code and other applicable laws.  SECTION 319. Legislative Authorization of the Budget - On or before the end of the current fiscal year, the Sanggunian concerned shall enact, through an ordinance, the annual budget of the local government unit for the ensuing fiscal year on the basis of the estimates of income and expenditures submitted by the local chief executive.  SECTION 321. Changes in the Annual Budget. All budgetary proposals shall be included and in the budget preparation process. After the local chief executive concerned shall have submitted the executive budget to the Sanggunian, no ordinance providing for a supplemental budget shall be enacted, except when supported by funds actually available as certified by the local treasurer or by new revenue sources. A supplemental budget may also be enacted in times of public calamity by way of budgetary realignment to set aside appropriations for the purchase of supplies and materials or the payment of services which are exceptionally urgent or absolutely indispensable to prevent imminent danger to, or loss of, life or property, in the jurisdiction of the local government unit or in other areas declared by the President in a state of calamity. Such ordinance shall clearly indicate the sources of funds available for appropriations, as certified under oath by the local treasurer and local accountant and attested by the local chief executive, and the various items of appropriations affected and the reasons for the change.  SECTION 322. Reversion of Unexpended Balances of Appropriations, Continuing appropriations - balances of appropriations authorized in the annual appropriations ordinance shall revert to the surplus of the general fund at the end of the fiscal year and shall not thereafter be available for expenditure except by subsequent enactment. However, appropriations for capital outlays shall continue and remain valid until fully spent, reverted or the project is completed. Reversions of continuing appropriations shall not be allowed unless obligations therefor have been fully paid or otherwise settled. The balances of continuing appropriations shall be reviewed as part of the annual budget preparation and the Sanggunian concerned may approve, upon recommendation of the local chief executive, the reversion of funds no longer needed in connection with the activities funded by said continuing appropriations subject to the provisions of this Section.  SECTION 323. Failure to Enact the Annual Appropriations - In case the Sanggunian concerned fails to pass the ordinance authorizing the annual appropriations at the beginning of the ensuing fiscal year, it shall continue to hold sessions, without additional remuneration for its members, until such ordinance is approved, and no other business may be taken up during such sessions. If the Sanggunian still fails to enact such ordinance after ninety (90) days from the beginning of the fiscal year, the ordinance authorizing the appropriations of the preceding year shall be deemed reenacted and shall remain in force and effect until the ordinance authorizing the proposed appropriations is passed by the Sanggunian concerned.  SECTION 323. Failure to Enact the Annual Appropriations. However, only the annual appropriations for salaries and wages of existing positions, statutory and contractual obligations, and essential operating expenses authorized in the annual and supplemental budgets for the preceding year shall be deemed reenacted and disbursement of funds shall be in accordance therewith. In the implementation of such reenacted ordinance, the local treasurer concerned shall exclude from the estimates of income for the preceding fiscal year those realized from nonrecurring sources, like national aids, proceeds from loans, sale of assets, prior year adjustments, and other analogous sources of income.  SECTION 323. Failure to Enact the Annual Appropriations No ordinance authorizing supplemental appropriations shall be passed in place of the annual appropriations. In case the revised income estimates be less than the aggregate reenacted appropriations, the local treasurer concerned shall accordingly advise the Sanggunian concerned which shall, within ten (10) days from the receipt of such advice, make the necessary adjustments or reductions. The revised appropriations authorized by the Sanggunian concerned shall then be the basis for disbursements. SECTION 324. Budgetary Requirements. - The budgets of local government units for any fiscal year shall comply with the following requirements: (a) The aggregate amount appropriated shall not exceed the estimates of income; (b) Full provision shall be made for all statutory and contractual obligations of the local government unit concerned: Provided, however, That the amount of appropriations for debt servicing shall not exceed twenty percent (20%) of the regular income of the local government unit concerned;  SECTION 324. Budgetary Requirements. (c) In the case of provinces, cities, and municipalities, aid to component Barangays shall be in amounts of not less than One thousand pesos (P=1,000.00) per Barangay; and (d) Five percent (5%) of the estimated revenue from regular sources shall be set aside as an annual lump sum appropriation for unforeseen expenditures arising from the occurrence of calamities: Provided, however, That such appropriation shall be used only in the area, or a portion thereof, of the local government unit or other areas declared by the President in a state of calamity.  SECTION 325. General Limitations The use of the provincial, city, and municipal funds shall be subject to the following limitations: (a) The total appropriations, whether annual or supplemental, for personal services of a local government unit for one (1) fiscal year shall not exceed forty-five percent (45%) in the case of first to third class provinces, cities, and municipalities, and fifty-five percent (55%) in the case of fourth class or lower, of the total annual income from regular sources realized in the next preceding fiscal year. The appropriations for salaries, wages, representation and transportation allowances of officials and employees of the public utilities and economic enterprises owned, operated, and maintained by the local government unit concerned shall not be included in the annual budget or in the computation of the maximum amount for personal services. The appropriations for the personal services of such economic enterprises shall be charged to their respective budgets;  SECTION 325. General Limitations (b) No official or employee shall be entitled to a salary rate higher than the maximum fixed for his position or other positions of equivalent rank by applicable laws or rules and regulations issued thereunder; (c) No local fund shall be appropriated to increase or adjust salaries or wages of officials and employees of the national government, except as may be expressly authorized by law; (d) In cases of abolition of positions and the creation of new ones resulting from the abolition of existing positions in the career service, such abolition or creation shall be made in accordance with pertinent provisions of this code and the civil service law, rules and regulations;  SECTION 325. General Limitations (e) Positions in the official plantilla for career positions which are occupied by incumbents holding permanent appointments shall be covered by adequate appropriations; (f) No changes in designation or nomenclature of positions resulting in a promotion or demotion in rank or increase or decrease in compensation shall be allowed, except when the position is actually vacant, and the filling of such positions shall be strictly made in accordance with the civil service law, rules and regulations; (g) The creation of new positions and salary increases or adjustments shall in no case be made retroactive; and  SECTION 325. General Limitations (h) The annual appropriations for discretionary purposes of the local chief executive shall not exceed two percent (2%) of the actual receipts derived from basic real property tax in the next preceding calendar year. Discretionary funds shall be disbursed only for public purposes to be supported by appropriate vouchers and subject to such guidelines as may be prescribed by law. No amount shall be appropriated for the same purpose except as authorized under this Section. SECTION 327. Review of Appropriation Ordinances of Component Cities and Municipalities The Sangguniang Panlalawigan shall review the ordinance authorizing annual or supplemental appropriations of component cities and municipalities in the same manner and within the same period prescribed for the review of other ordinances.  SECTION 327. Review of Appropriation Ordinances of Component Cities and Municipalities If within ninety (90) days from receipt of copies of such ordinance, the Sangguniang Panlalawigan takes no action thereon, the same shall be deemed to have been reviewed in accordance with law and shall continue to be in full force and effect. If within the same period, the Sangguniang Panlalawigan shall have ascertained that the ordinance authorizing annual or supplemental appropriations has not complied with the requirements set forth in this Title, the Sangguniang Panlalawigan shall, within the ninety-day period hereinabove prescribed, declare such ordinance inoperative in its entirety or in part. Items of appropriation contrary to limitations prescribed in this Title or in excess of the amounts prescribed herein shall be disallowed or reduced accordingly. The Sangguniang Panlalawigan shall within the same period advise the Sangguniang panlungsod or Sangguniang bayan concerned through the local chief executive of any action on the ordinance under review. Upon receipt of such advice, the city or municipal treasurer concerned shall not make further disbursements of funds from any of the items of appropriation declared inoperative, disallowed or reduced.  SECTION 328. Duration of Appropriation - Appropriations for ordinary administrative purposes not duly obligated shall terminate with the fiscal year and all unexpended balances thereof shall be automatically reverted on the thirty-first (31st) day of December of each year to the general fund of the local government unit.  Article Two. - Barangay Budgets SECTION 329. Barangay Funds. - Unless otherwise provided in this Title, all the income of the Barangay from whatever source shall accrue to its general fund and shall, at the option of the Barangay concerned, be kept as trust fund in the custody of the city or municipal treasurer or be deposited in a bank, preferably government-owned, situated in or nearest to its area of jurisdiction. Such funds shall be disbursed in accordance with the provisions of this Title. Ten percent (10%) of the general fund of the Barangay shall be set aside for the Sangguniang kabataan.  SECTION 330. Submission of Detailed Statements of Income and Expenditures for the Barangay Budgets. - On or before the fifteenth (15th) day of September of each year, the Barangay treasurer shall submit to the punong Barangay a statement covering the estimates of income and expenditures for the ensuing fiscal year, based on a certified statement issued by the city or municipal treasurer covering the estimates of income from local sources for the Barangay concerned. SECTION 331. Preparation of the Barangay Budget. - (a) Upon receipt of the statement of income and expenditures from the Barangay treasurer, the punong Barangay shall prepare the Barangay budget for the ensuing fiscal year in the manner and within the period prescribed in this Title and submit the annual Barangay budget to the Sangguniang Barangay for legislative enactment. (b) The total annual appropriations for personal services of a Barangay for one (1) fiscal year shall not exceed fifty-five percent (55%) of the total annual income actually realized from local sources during the next preceding fiscal year. (c) The Barangay budget shall likewise be subject to the same budgetary requirements and limitations hereinabove prescribed. SECTION 332. Effectivity of Barangay Budgets The ordinance enacting the annual budget shall take effect at the beginning of the ensuing calendar year. An ordinance enacting a supplemental budget, however, shall take effect upon its approval or on the date fixed therein. The responsibility for the execution of the annual and supplemental budgets and the accountability therefor shall be vested primarily in the punong Barangay concerned.  SECTION 333. Review of the Barangay Budget. (a) Within ten (10) from its approval, copies of the Barangay ordinance authorizing the annual appropriations shall be furnished the Sangguniang panlungsod or the Sangguniang bayan, as the case may be, through the city or municipal budget officer. The Sanggunian concerned shall have the power to review such ordinance in order to ensure that the provisions of this Title are complied with. If within sixty (60) days after the receipt of the ordinance, the Sanggunian concerned takes no action thereon, the same shall continue to be in full force and effect. If within the same period, the Sanggunian concerned shall have ascertained that the ordinance contains appropriations in excess of the estimates of the income duly certified as collectible, or that the same has not complied with the budgetary requirements set forth in this Title, the said ordinance shall be declared inoperative in its entirety or in part. Items of appropriation contrary to, or in excess of, any of the general limitations or the maximum amount prescribed in this Title shall be disallowed or reduced accordingly. SECTION 333. Review of the Barangay Budget. (b) Within the period hereinabove fixed, the Sangguniang panlungsod or Sangguniang bayan concerned shall return the Barangay ordinance, through the city or municipal budget officer, to the punong Barangay with the advice of action thereon for proper adjustments, in which event, the Barangay shall operate on the ordinance authorizing annual appropriations of the preceding fiscal year until such time that the new ordinance authorizing annual appropriations shall have met the objections raised. Upon receipt of such advice, the Barangay treasurer or the city or municipal treasurer who has custody of the funds shall not make further disbursement from any item of appropriation declared inoperative, disallowed, or reduced.  SECTION 334. Barangay Financial Procedures. (a) The Barangay treasurer shall collect all taxes, fees, and other charges due and contributions accruing to the Barangay for which he shall issue official receipts, and shall deposit all collections with the city or municipal treasury or in the depository account maintained in the name of the Barangay within five (5) days after receipt thereof. He may collect real property taxes and such other taxes as may be imposed by a province, city or municipality that are due in his Barangay only after being deputized by the local treasurer concerned for the purpose.  SECTION 334. Barangay Financial Procedures. (b) The Barangay treasurer may be authorized by the Sangguniang Barangay to make direct purchases amounting to not more than One thousand pesos (Php1,000.00) at any time for the ordinary and essential needs of the Barangay. The petty cash that the Barangay treasurer may be authorized to hold for the purpose shall not exceed twenty percent (20%) of the funds available and to the credit of the Barangay treasury.  SECTION 334. Barangay Financial Procedures. (b) The Barangay treasurer may be authorized by the Sangguniang Barangay to make direct purchases amounting to not more than One thousand pesos (Php1,000.00) at any time for the ordinary and essential needs of the Barangay. The petty cash that the Barangay treasurer may be authorized to hold for the purpose shall not exceed twenty percent (20%) of the funds available and to the credit of the Barangay treasury.  SECTION 334. Barangay Financial Procedures. (c) The financial records of the Barangay shall be kept in the office of the city or municipal accountant in simplified manner as prescribed by the Commission on Audit. Representatives of the Commission on Audit shall audit such accounts annually or as often as may be necessary and make a report of the audit to the Sangguniang panlungsod or Sangguniang bayan, as the case may be. The Commission on Audit shall prescribe and put into effect simplified procedures for Barangay finances within six (6) months following the effectivity of this Code.