Wednesday, August 17, 2005
SRP debt hurts public services
By Gingging A. Campaña
Sun.Star Staff Reporter
Payment for the South Reclamation Project loan, which is about P6.3 billion based on current foreign exchange rate, cornered a sizeable part of the Cebu City Government’s budget in the last three years, according to the local finance management committee (Fimac).
Fimac chairman Nigel Paul Villarete said that from 5.5 percent in 2002, the debt servicing share rose to 18 percent in 2003 and to 23 percent in 2004.
The statement of income and expenditures show that the City paid P85 million in 2002 for debt service, P350 million in 2003 and P384 million last year.
City Hall spent less on public services, education, health and social services last year than what it did in 2002.
Education got the smallest budget last year at P26.59 million compared with P149 million in 2003.
The debt service, however, also covers loans for the construction of the City Hall annex, Pardo public market and the City condominium.
Delay
“Undeniably, the fact that Cebu City Government has been unable to generate the commensurate revenues from the SRP due to the delay in titling caused by Talisay City’s objections is the main reason for this sharp increase (in debt service),” Villarete said in his report submitted to the council last week.
“It has to be remembered that the SRP is not only a self-liquidating project, but an economic enterprise designed to boost revenues of the City by tremendous figures, over time that is. Still the original design of the SRP should have been that revenues start pouring in by the time the City starts paying the debt amortization,” he said.
Villarete, also SRP manager, said had there been no hitch in the titling process of the SRP in 2002 brought about by Talisay’s objections, the City Government could have started marketing the 295-hectare project as early as 2002, and revenues could have started to come in by 2003 to offset the loan payments.
The three-year delay has affected the expenditure patterns of the City by shifting portions of what have been shared by other expenses to debt payments, he said.
Villarete said the drop in the expenses in education has to be looked into.
However, he said it is significant to note that in spite of the shift in expenses to loan payments, there was a significant increase in the share of housing and community development in 2004 and a steady figure on health, nutrition and population spending in 2003 and 2004.
Pattern
Overall, Villarete said, there is no significant change in the income pattern of the City Government.
But Cebu City remains a viable city compared to most of the local government units (LGUs), as shown in the level of dependency on the Internal Revenue Allotment (IRA).
Other LGUs depend on their share of the IRA by 50 to 85 percent, while Cebu City, only 30 percent.
This, he said, shows that the City is way far ahead in local revenue generation and efficiency.
Again, he said, the City’s “independence” would have been higher had the SRP started operating.
“Once revenues begin to flow in from SRP operations, the City’s income levels will shoot up in relation to the share in national tax collections and it may bring us to less than 20 percent IRA dependency. When that happens, we will be one of the most, if not, the most viable LGU in the country,” Villarete said.
Current bind
The Talisay City Government is claiming a 53.44-hectare portion of the SRP, saying this falls within its territory. A presidential proclamation to start the titling process was annotated, stating that special patents can be issued to the Cebu City Government without prejudice to Talisay’s claim.
He recommended that once the City “gets out of this current bind of the delay of the SRP titles,” shares for social services such as education, health, nutrition, population, housing and community development be increased to higher levels, “to cope with the rapidly urbanizing population and arrest urban difficulties inevitably brought about by development.”
Villarete submitted his report to the council following a resolution passed last month requesting him to update the body on how much the City earned and how it spent its revenues in the last three years.
(August 17, 2005 issue)
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