House body OKs bill on LGU’s automatic income classification

Gatchalian said after 14 years since the last income reclassification in 2008, the income classifications of LGUs “extremely deviate” from the prevailing economic conditions and the overall financial status of LGUs. (File Photo: REX Gatchalian/Facebook)

MANILA – The House Committee on Local Government Thursday approved a measure that would institutionalize the automatic income classification of provinces, cities, and municipalities to boost the operation of local government units (LGUs) and bring much-needed socio-economic benefits to their personnel.

The proposed measure is a consolidated proposal of Committee chairman and Valenzuela 1st District Rep. Rex Gatchalian’s House bill No. 5290; HB 1817 of Siquijor Rep. Zaldy Villa; and HB 6121 of Sorsogon 2nd District Rep. Wowo Fortes.

It was in 2008 when the last income reclassification of LGUs was made, which according to the proponents, has affected LGUs’ operations.

Gatchalian said after 14 years since the last income reclassification in 2008, the income classifications of LGUs “extremely deviate” from the prevailing economic conditions and the overall financial status of LGUs.

“The income classification of LGUS serves, among other purposes, as the basis for fixing the maximum tax ceilings imposable by the local governments; for determining administrative and statutory aids, financial grants and other forms of assistance to local governments; the determination of the financial capability of local government units to undertake developmental programs and priority projects; and for the implementation of salary laws and administrative issuances on allowances and emoluments that local government officials and personnel may be entitled to,” Gatchalian said.

Executive Order No. 249, series of 1987, authorizes the Secretary of Finance to review LGUs income at least once every four years and to recommend such appropriate revisions.

But in 2012, the Department of Justice said the Secretary of Finance merely has a recommending authority in making changes or revisions in the income classifications of LGUs. This has resulted in the suspension of income reclassifications.

“Dahil luma ang ginagamit na income classification, malaki ang repercussions nito in the operation of LGUs. The moratorium not only impaired the capability of LGUs to undertake developmental programs and priority projects for their constituents but also adversely impacted their ability to institute compensation adjustments for LGU personnel as provided under the Salary Standardization Law (SSL) of 2015,” Gatchalian added.

He said the approval of the proposed measure is needed to fix the deficiencies to ensure that the LGUs remain dynamic and consistent.

He added that income reclassification should be made every two years.

“By instituting the Automatic Income Classification Act, we are now paving the way for local government personnel to receive the increase in their pay scale or salary grades that they rightfully deserve, and empower them economically amid these trying times. This also paves the way for LGUs to hire additional personnel in boosting its services to their constituents,” he said.

“With better salary grades, the local government can attract more talents to work in the LGU that will cater to the growing needs of the community,” he added.

Villa agreed with Gatchalian, citing his experience as former governor of Siquijor.

“During my term as governor, Siquijor was ready to be reclassified from a third-class province to a second-class province. But this could not be done because of the moratorium,” he said.

“We need to pass this measure as a means of empowering the LGU in terms of governance and improving its services to its constituents,” Villa said.

Fortes, meanwhile, said the downgrading of LGUs classification must not be allowed once the initial review has been made so that “all LGUs may reap the full benefits” of the measure.