House OKs automatic income classification of LGUs

House Bill 7006 or the Automatic Income Classification Act for LGUs, amends for the purpose Section 8 (Division and Merger) of Republic Act 7160, otherwise known as the Local Government Code of 1991. (File Photo: House of Representatives of the Philippines/Facebook)

MANILA – With a unanimous 300 votes, the House of Representatives on Tuesday approved on third and final reading the measure seeking to institutionalize the automatic income classification of provinces, cities, and municipalities to boost the operation of local government units (LGUs), and bring about much-needed socio-economic benefits to local government personnel.

House Bill 7006 or the Automatic Income Classification Act for LGUs, amends for the purpose Section 8 (Division and Merger) of Republic Act 7160, otherwise known as the Local Government Code of 1991.

The measure seeks to institutionalize an income classification system for provinces, cities, and municipalities that is reflective of the present financial capability of the LGUs.

Within 30 days of the effectivity of this Act, the Secretary of Finance shall cause the publication of the first General Income Reclassification of all existing LGUs based on the income range determined by the Finance Secretary.

The first general income reclassification shall be applicable on the first day of January of the immediately succeeding year following its publication.

HB 7006 provides that every six years from the first general income reclassification, the Secretary of Finance shall update the income ranges for the income classification of all provinces, cities, and municipalities.

Every two years after the first general income reclassification, the Secretary of Finance shall “automatically update” the income classification of all LGUs within 60 days from the deadline for the submission of the year-end report.

The income classification of LGUs serves, among other purposes, as the basis for the determination of 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.

The Secretary of Finance shall issue the appropriate department orders for the automatic income classification of provinces, cities, and municipalities.

HB 7006 is a consolidation of HB 5290 of then Valenzuela City 1st District Rep. now Social Welfare Secretary Rex Gatchalian, HB 1817 of Siquijor Rep. Zaldy Villa, and HB 6121 of Sorsogon 2nd District Rep. Wowo Fortes.

In pushing for the measure, the authors have pointed out that the last income reclassification of provinces, cities, and municipalities was done in 2008 “to the detriment of the LGUs and its personnel.”

Executive Order 249, series of 1987, which provides for the income classification of LGUs, authorizes the Secretary of Finance to “review the income ranges, at least once every four years, and recommend such appropriate changes or revisions.”

However, in 2012, the Department of Justice opined and emphasized that the Secretary of Finance merely has a recommending authority in making changes or revisions in the income classifications of LGUs. This resulted in the suspension of the income reclassifications in 2012 and the succeeding cycles.

The authors said the passage of HB 7006 is needed “to fix the deficiencies in the Local Government Code to ensure that the LGUs remain dynamic and consistent.”