Understanding the Cebu City budget - Last of 2 Parts

CEBU, Philippines - Because of the poor performance of the city’s tax collectors, there are already some members of the Cebu City Council who are thinking of not approving the entire P10.5 billion annual budget of the city for next year.

The city councilors, who are mostly allies of the Bando Osmeña Pundok Kauswagan (BOPK), described Mayor Michael Rama’s proposed annual budget as unattainable because the P6 billion projected sales of lots at the South Road Properties (SRP) is highly “speculative.”

During the budget hearings at the City Council, the members of the Local Finance Committee, headed by Councilor Margarita “Margot” Osmeña, compared the city’s tax and revenue collection performance in 2010, 2011 and 2012.

The city collected taxes and other revenues amounting to P3.960 billion in 2010. Taxes and revenue collected went down to P3.863 billion in 2011 and further decreased to P3.479 billion in 2012. From January until October 12 this year, the total collection was still P3.967 billion.

For the past four years, the city’s tax collectors have failed to reach the amount needed to support the annual budgets, which is why several projects were not implemented by the Rama administration.

Sources of funds

Councilor Osmeña, however, assured that if in case the City Council will not approve the entire proposed budget, the council will approve all supplemental budget requests, if the source of funding is available.

She explained that her committee recommended the approval of only  P124 million of the P256 million Supplemental Budget No. 2 proposed by Mayor Rama because the city did not have enough funds to support the additional budget.

Osmeña said that although Acting City Treasurer Diwa Cuevas certified that the city has P120 million surplus or excess collections from business taxes, the city still failed to reach the P5.2 billion annual budget.

“We can only spend what we actually have,” Osmeña said when she delivered a privilege speech before the City Council. The mayor quickly reacted “Kon dili nila aprobahan ang akong budget, dili man ako ang maigo ana, ang mga tawo man.”

Based on the daily cash flow as of last November 5, the city still has P1.145 billion in banks, but only P467.8 million is under the General Fund, which can be used for any expense. The P434.6 million is placed in trust fund, P215.9 million is allocated for the Special Education Fund (SEF), while the P27.2 million is allocated for barangay funds.

Osmeña said that when she reviewed the city’s daily cash flow, she learned that of the P467.8 million under the General Fund, P165 million cannot be used by the city anytime because it is placed under a five-year time deposit that will mature in 2016.

She said that until now, the city treasurer’s office still failed to comply with the instruction of the Commission on Audit (COA) that the unused P85.3 million Calamity Budget in 2012 be transferred to the Local Disaster-Risk Reduction Management Fund to ensure that it will be used only for calamity-related expenses.

The city treasurer’s office also has yet to transfer to the account of the Special Education Fund (SEF) the P58 million, which is still in the general fund.

City Treasurer Cuevas said the P85.3 million that is transferrable to the LDRRMF and the P58 million for the SEF are part of the P147.1 million payables still pending for check issuance.

Despite the present state of the city’s finances, Mayor Rama said the city is not bankrupt because it is receiving taxes and other revenues every day.

For his part, City Administrator Jose Marie Poblete told The Freeman that the city has so many properties worth billions of pesos and it can never be bankrupt, although he admitted that there are some pending payables.

 â€œMaayo man og dunganon nato na og bayad ang tanan. Ang pagdumala sa city government pareho ra gud na atong balay nga kon duna ta’y mga bayranan dili man nato dunganon og bayad, duna g’yuy i-prioritized,” Poblete said.

For the 2014 budget, Mayor Rama proposed to increase the financial assistance for senior citizens from P600 million to P780 million to give way to his earlier promise that effective 2014 each senior citizen in the city will already receive P12,000 assistance for the entire year.

The mayor also proposed to increase the budget for the city scholars to P360 million next year from the present P300 million. City scholars get P10,000 scholarship grant every semester, and P1,000 for school supply allowance every semester.

Tax collection

Mayor Rama said he wants to enhance tax collection by intensifying tax information campaign and to intensify tax-mapping efforts to collect the correct taxes from those who converted their residential properties to commercial establishments.

Based on the records obtained by The Freeman from the Bureau of Local Government-Finance (BLGF), Cebu City only ranked 11th in 2010, 13th in 2011 and 11th in 2012 in the collection performance of real property taxes among the 16 cities in Central Visayas.

Although Cebu City has the highest collection of real property taxes amounting to P672 million in 2012, it did not meet its estimated target collection.

Owners of properties that are being used for commercial purposes are required to pay more compared to owners of residential properties.

 â€œKini g’yud maoy among paspasan. Makig-coordinate g’yud ko ni Assessor Eustaquio Cesa aron mosaka ang ilang collection sa real property tax,” said City Treasurer Cuevas.

Engr. Hilario Alicante, head of the Land and Building Division of the City Assessor’s Office, explained why their real property tax collection is low despite the many buildings in the city.

Alicante said while there are 234,827 Real Property Units (RPUs) in the city. These are buildings, land and machineries.

However, 50,682 buildings are exempted from the payment of taxes. These are buildings that are being used for religious and charitable purposes, owned by cooperatives and government-owned schools.

All landowners are required to pay real property taxes. Those who own houses that cost below P175,000 are exempted from the payment of real property taxes, but they are required to pay a garbage fee at P365 per year.

Records from the City Hall’s Management Information Computer Service (MICS) show that the taxable RPUs in the city are 44,505 buildings, 112,608 parcels of lands and 1,588 different kinds of machineries or a total of 158,701 RPUs.

City Treasurer Cuevas admitted that there are several delinquent RPU owners in the city. The Local Government Code empowers the city and municipalities to conduct public auction of all delinquent properties as one way to compel its owners to pay their taxes.

According to City Assessor Eustaquio Cesa, he already created 12 teams composed of 24 personnel to conduct initial tax-mapping of real properties in selected barangays.

“Sa pila ka buwan nila nga pag-operate nakadiskobre ang teams og daghang mga bag-ong Real Property Units nga wala pa gayud ma-declare mao nga naka-assess sila og dugang P100 million nga real property tax,” Cesa said. -/QSB (FREEMAN)