Seares: Cebu City cannot easily go bankrupt

IT HAPPENED before. When the Jun Davide-Agnes Magpale tandem won the 2013 election and took over Capitol, there was talk of predecessors leaving them with a pile of unpaid debts and a bankrupt government.

It took the onset of the 2016 campaign, when rival camps claimed credit for the stable finances, that it was clarified: Capitol wasn’t insolvent when power changed hands.

Just the word loosely used, plain folk’s understanding that a cash-strapped LGU must be bankrupt. Cash-flow problem is equated with insolvency.

Fast forward to 2016, after elections but before June 30. Acting Mayor Margot Osmea in one newspaper report said Cebu City’s finances were “in disarray.” We’re “in deep financial trouble...” because if not for the P8.3 billion proceeds from SRP lots sale, we would “end up bankrupt.”

Not the same as saying City Hall was bankrupt. But in another newspaper report, she said: “If we have to pay back to giant developers, so?... this City is in a state of bankruptcy.”

Maybe it was just hinted or “insinuated.” But the “B” word was out there. When suspended mayor Michael Rama replied to the “slur” on his term by disputing it, he considered bankruptcy the issue.

Unlike in the 2013 Capitol furor, the City Hall claim was quickly resolved. Bureau of Local Government Finance audited the City’s money and found P8.48 billion cash.

Irregularities and violations of rules on managing and spending funds are, of course, another matter. Mismanagement might lead to bankruptcy but don’t necessarily mean outright financial ruin.

Not easy

A local government, a public official once said, would have to be run under the bus or pushed over the cliff, metaphorically, to become bankrupt.

Rich and healthy Cebu City--with its direct tax sources, internal revenue share, and equity, with all fiscal controls and watchdogs without large-scale thievery cannot be easily bankrupted.

Even with profligate and inept officials? Yes, he said.

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