CEBU City Mayor Michael Rama, who is serving a six-month preventive suspension, washed his hands of the City’s P50 billion income projection for 2023, which the Commission on Audit (COA) flagged for being “unrealistic.”
Rama, in a news forum on Tuesday, July 30, 2024, said that the 2023 income projection did not come out of nowhere, adding that it was a figure that was reached with the coordination and careful consideration of the Local Finance Committee (LFC).
In COA’s 2023 Audit Report, state auditors said the income projection of Cebu City for the past five years, including its P50 billion projected income in 2023, was “unrealistic.”
In 2023, the City’s income projection was P49.7 billion, but the actual income was only P6.948 billion, according to the COA report.
“Wa man ko naghuna-huna anang P50 (billion) out of thin air (I didn’t even think that P50 billion came out of thin air),” Rama said.
For 2019, Cebu City had an income projection of P6.920 billion while the actual income was P6.788 billion; in 2020, the income projection was P8.715 billion while the actual income was P6.108 billion; in 2021, the income projection was P7.666 billion while the actual income was P5.709 billion; and in 2022, the income projection was P8.740 billion while the actual income was P6.973 billion.
The state auditors said that the income projection “shows abnormal financial projection, which can obviously affect the City’s capability to formulate a sound financial plan as required under the law.”
Audit
COA, in its 2023 Audit Report, said that since 2019, the City’s projected income has increased its deficit from the actual income.
The state auditors also flagged the 2023 real property tax (RPT) income projection with an income estimate of P42 billion.
This was despite the proposed revision of the Local RPT Code had not yet been turned into an ordinance.
On Feb. 6, 2023, Rama vetoed an ordinance approved by the City Council revising the RPT code in 2022, saying that it does not express the true values of properties and deprives the City Government of a proper source of funds.
A new revised RPT Code was proposed in the same year and awaits deliberation in the City Council as of this writing.
In an earlier SunStar Cebu report, the local business sector already expressed its concerns over the higher increase in the Fair Market Values (FMV) of properties that may affect the local economy.
The FMV is the basis for the computation of the RPT due to each property owner.
By updating Cebu City’s RPT code, the City sought to raise its revenue that would fund the 2023 approved annual budget of P50 billion, which was a 450 percent leap from the City’s P9 billion annual budget in 2022, Councilor Noel Eleuterio Wenceslao, chairman of the budget and finance committee, earlier said when he proposed the new RPT code.
The City’s RPT code has not been updated since 2004.
COA said income projections that are anchored on a non-existing revenue-raising ordinance are not in accordance with Section 314 of the Local Government Code. It urged LFC to exercise more caution in setting income estimates.
The income projections served as the basis for the City’s budget formulation, hence, estimates must not differ from the actual income so the City can develop a sound financial plan as dictated by prevailing economic conditions.
Rama, as a response, asked if there was a report that the City’s coffer and money were stolen under his administration.
“Gusto nako tugpahon kung kawat, naa bay nawala nga P18 billion? Wa pa ko matugpa ana actually (I want to know if there is theft, is there P18 billion missing? I haven’t actually thought of that yet) but I am just letting you know that I am ready but not now,” he added.
However, Rama declined to give more details, stating that he will answer all pressing concerns in his upcoming “huge” press conference, which will be announced at a later date.
Rama said that he will make a video presentation that will include all details regarding the matter and be shown in his “huge” press conference.
“I have to put this in a proper perspective. I cannot be answering for the whole Local Finance (Committee) as one body. Number two, in preparation for the budget, you know how things will ensure,” Rama said.
Rama is currently serving his six-month preventive suspension by the order of the Office of the Ombudsman following a complaint from four City Hall employees whose salaries were unpaid for about 10 months.