Senate ratifies reconciled version on income classification of LGUs
THE Senate has ratified the proposed Automatic Income Classification for Local Government Units (LGUs), which aims to institutionalize an income classification system for provinces, cities and municipalities that accurately reflects their current financial capabilities
Senator JV Ejercito sponsored the bicameral conference committee version of the bill, which reconciles Senate Bill No. 2165, also known as the Automatic Income Classification of LGUs Act, with House Bill 7006, titled the Automatic Income Classification Act for LGUs.
Income classification of LGUs is one of the priority bills of the administration of President Ferdinand “Bongbong” Marcos Jr.
In the reconciled version, Ejercito explained that LGUs will be categorized into five income classes based on income ranges and their average annual regular income over three fiscal years. This will involve a revision of the general income classification, departing from the current six-class system.
“With the proposed adjustment of income thresholds under the Senate version, only five municipalities will remain under the sixth income classification, while no city or province will fall under the said category, thus rendering the sixth income classification irrelevant,” Ejercito said during the bicameral conference committee session on Tuesday, August 29.
The reconciled version of the measure also adjusted income thresholds for provinces:
*Second Class are provinces with yearly income between P900 million and P1.5 billion
*Third Class are provinces with yearly income between P700 million and less than P900 million
*Fourth Class are provinces with yearly income between P500 million and less than P700 million
*Fifth Class are provinces with yearly income less than P500 million
Ejercito said the administrative authority of the Secretary of Finance under section 5 of the reconciled bill was further strengthened through a proposal to include the National Economic and Development Authority (Neda) as the recommending agency in upgrading LGUs to higher income classification.
“This is in line with our objective to strengthen the LGUs' administrative autonomy to streamline their departments and organizational structure so they can achieve greater efficiency and responsiveness to their service delivery requirements,” Ejercito said.
In the bid to strengthen the power and authority of the LGUs to streamline their departments and organizational structure, LGUs were allowed under the proposed measure to fully adopt the salary schedule set in the law, and only subject to the personal services or PS limitation under Republic Act No. 7160 or the Local Government Code of 1991.
Ejercito said the income classification of a municipality, city or province may still be used as a basis for the adjustment of compensation for LGU personnel.
Earlier, Finance Secretary Benjamin Diokno welcomed the approval of Senate Bill No. 2165 or the Automatic Income Classification of Local Government Units Act, noting that it will improve the LGUs’ fiscal performance and allow the frontline government units to recruit skilled professionals for quality public service delivery. (SunStar Philippines)