* Cebu City Mayor Nestor Archival announced during his July 7, 2026 State of the City Address that cost-cutting measures reduced the City's budget deficit from P3.43 billion to P1.12 billion.
* The P2.31 billion deficit reduction resulted from total available funds rising to P10.28 billion, total obligations dropping to P11.40 billion, and capital outlay obligations plummeting from P2.86 billion to P101.78 million.
* Despite projected revenue increasing to P9.1 billion without new taxes, Archival emphasized the local government still faces a P1.12-billion funding gap and must sustain spending controls to achieve stability.
ONE year after declaring Cebu City was in a fiscal crisis, Mayor Nestor Archival said his administration narrowed the City’s budget deficit by more than P2.3 billion through a year of cost-cutting measures and tighter spending controls, although the local government continues to face a P1.12-billion funding gap.
During his first State of the City Address (Soca) on Monday, July 7, 2026, Archival presented financial figures showing that the City’s deficit dropped from P3.43 billion as of June 30, 2025, to P1.12 billion as of June 30, 2026, a reduction of approximately P2.31 billion.
The improvement came as the City’s total available funds increased from P9.36 billion in June 2025 to P10.28 billion this year, while total obligations declined from P12.79 billion to P11.40 billion, according to the financial report.
Budget breakdown
The report showed that the City’s General Fund, the main source used to finance day-to-day operations, slightly decreased from P1.64 billion in 2025 to P1.60 billion this year.
However, funds set aside for legally restricted purposes increased over the same period. The Local Development Fund rose from P3.59 billion to P4.06 billion, Trust Funds increased from P1.84 billion to P2.13 billion and the Special Education Fund grew from P2.29 billion to P2.50 billion. Combined, these restricted funds now amount to P8.69 billion, which means they cannot be used to cover the City’s regular operating expenses.
Cost-cutting measures
Archival attributed the improved financial position to measures introduced shortly after he assumed office on June 30, 2025, including the implementation of the “No Appointment, No Work” policy, which limited hiring except for essential frontline positions and stricter controls on expenditures.
The City also implemented energy-saving initiatives, including installing solar power systems in government buildings, reducing electricity consumption, implementing fuel-saving measures and adopting a compressed four-day workweek in selected offices.
The financial report likewise showed that manpower requests for the first six months of the year dropped from P497.61 million in January to June 2025 to P365.10 million during the same period in 2026. The unobligated balance also went down from P182.81 million to P155.31 million.
One of the biggest reductions was recorded in capital outlay obligations. Projects covered by Certificates of Availability of Funds and Purchase Requests declined from P2.86 billion in June 2025 to just P101.78 million a year later, reflecting the administration’s decision to slow major spending while focusing on fiscal recovery. Meanwhile, accounts payable increased from P2.03 billion as of March 2025 to P2.46 billion as of February 2026.
Revenue and obligations
Despite the remaining deficit, Archival said the City will continue settling its financial obligations as long as they are supported by the necessary documents while working to improve revenue collections.
“What needs to be paid, we will pay. As long as the necessary documents are there, we will settle those obligations. Then, as our revenues continue to increase, we will make sure those obligations are covered,” he said.
The mayor also said the City’s projected revenue has increased from P8.8 billion under last year’s budget to P9.1 billion this year despite not imposing new taxes.
“Another thing is that based on last year’s budget, our projected revenue was P8.8 billion. Now, it has increased to P9.1 billion,” Archival said.
He said the administration will continue strengthening revenue generation while maintaining prudent spending to further reduce the City’s remaining deficit. Despite the gains, Archival acknowledged that the City has yet to achieve a balanced financial position, with obligations still exceeding available resources by P1.12 billion.
The mayor emphasized that the administration remains committed to restoring the City’s long-term fiscal stability through sustained spending controls, improved revenue collection and expanded efficiency measures. / CAV