FROM HIS own city's experience with decentralization, Naga City Mayor Robredo also believes the Code provisions promoting participation and partnerships stand out as its best features. "It is where Naga City carved its niche — participative governance, which has become part and parcel of our 2015 vision," he says.

	LOCAL GOVERNANCE IDOL. A congratulatory message to Naga City Mayor Jesse Robredo for yet another award. [photo courtesy of naga.gov.ph]

The same provisions, in fact, served as legal basis for the city's internationally recognized Empowerment Ordinance of 1997, which led to the establishment of the Naga City People's Council, the local federation of NGOs and POs that Robredo says are "effectively co-governing with us in the city."

Co-governance seems to be the strategy as well of Negros Oriental Governor Arnaiz, who emphasizes people empowerment and effective partnerships between local governments and civil society. Working closely with the province's 25 mayors and three congressmen, he has implemented and supported programs like the Barangay Agricultural Development Center, which tries to address the needs of his constituents in the remotest parts of Negros Oriental, minimize the insurgency problem, and provide agriculture-led government service.

Under Arnaiz's leadership, more than a third of Negros Oriental's development budget is now allocated to healthcare delivery, resulting in modernized health facilities and a scholarship program for medical and nursing students so that provincial hospitals will have enough doctors and nurses. A gardening and fishpond project in schools and communities called Gulayan at Palaisdaan Alay sa Kabataan (GPAK) meanwhile provides children and their families their daily vitamin and protein requirements.

The 51-year-old governor is also credited for making possible the construction of the Oriental Negros Drug Treatment and Rehabilitation Center, and the three-story Provincial Hospital Administration Building, among others.

Thousands of kilometers up north, Sabangan Mayor Dominguez also places much importance on participatory democracy, encouraging the people to help their public officials in drafting policies and implementing programs toward local development. In addition, he has shown strict adherence to the rule of law and practices leadership by example. And while Sabangan is still a fifth-class agricultural municipality, it is now aiming to generate income from local sources instead of solely relying on its IRA.

Sabangan may want to take notes from Surigao City Mayor Casurra, in that case. A prudent fiscal manager, Casurra was able to set aside funds for the city's development programs. Top on his list of priorities is quality education, for which the former three-term councilor and vice mayor has sought — and realized — the establishment of an agri-fishery extension college. Then to enhance the city's agricultural productivity, he provided funds for the building of farm-to-market roads and an irrigation system to service more than 400 hectares of rice lands.

Mayor Casurra is known for his hands-on and performance-oriented management style. This has translated into a customer-friendly organization out of city hall, the rationalization of the local government bureaucracy, and simplified processes. As a result, Surigao City has earned the distinction as the country's Most Competitive City under the Small Cities Category in terms of cost of doing business. But it is just as proud (if not prouder) of its having maintained its status as one of Rotary International's 50 Peace Cities in the world since 2003, for the peaceful co-existence among Muslims, indigenous peoples, and Christians.

IF ONLY for what local governments are now able to achieve because of a law he "fathered," Sen. Pimentel should be a contented man. To a certain extent, he is, although his perennially glum countenance may lead one to think otherwise. According to Pimentel, the level of success attained so far by local governments can be attributed not only to devolution of powers, but also to the fact that they now share 40 percent of the taxes of the nation.

Before the Code's adoption, provinces, cities, municipalities, and barangays did not have a specific share in the country's revenues. "Their share depended on, you might say, the closeness of the political leaders of the provinces, cities, municipalities and barangays to the powers that be," says Pimentel, who was Cagayan de Oro mayor in the 1980s, when the country was still under authoritarian rule. He recalls, "For example, the salary increases of our employees were dependent on the release of Malacañang of the funds. But (President Ferdinand) Marcos didn't like me because I was in the opposition. And so for a time, the people thought that I was the cause of the problem of the employees at city hall. I had to work with some of my friends in the KBL (Kilusang Bagong Lipunan, the ruling party) at that time to be able to solve that problem."

Today the IRA is automatically released to local governments (although have also been several instances when its release was delayed or withheld. Pimentel's office says that there are unreleased allotments amounting to roughly P7 billion dating back to 2001). From a mere P20.3 billion in 1992, the Code's first year of implementation, the local governments' IRA share reached P166 billion in 2006, for a total amount of P1.42 trillion.

Table 1: Historical IRA Share of LGUs, 1992-2006 Source: Office of Senator Aquilino Pimentel Jr.
LGUS	PERCENTAGE (%)	IRA SHARE
Provinces	23	P326.03 billion
Cities	23	P326.03 billion
Municipalities	34	P481.97 billion
Barangays	20	P283.51 billion
TOTAL		P1.42 TRILLION

The IRA booty has resulted in bigger local government budgets; some barangays now have as much as P180,000 annually compared to the previous P5,000. Municipalities get as much as P9 million each, up from P1.5 million, while cities have posted a budget increase from IRA shares of over 200 percent. But it is the provinces that have enjoyed the greatest windfall. Capiz, for instance, saw its budget rise by 1,215 percent, from just over P25 million in 1991 to P329 million in 1995.

Here's the downside, though: Studies done for the Local Development Assistance Program concluded that despite the increased shares from national taxes, the amounts transferred to local governments through the IRA have not been sufficient to cover the cost of devolution.

"The powers have been devolved to them, but at the same time the LGUs are given another impediment in unfunded mandates," explains Brillantes. These mostly correspond to the salaries of about 70,000 employees of the devolved national agencies of the Department of Health, Department of Agriculture, Department of Social Welfare and Development, and Department of Environment and Natural Resources. Programs like the Magna Carta for Health Workers have prescribed salary scales of devolved personnel that local governments could not afford. Such expenditures have largely been responsible for the local governments' inability to achieve surplus income.

The other issue is what Brillantes calls a resource-allocation imbalance. "It's almost misleading," he says. "Because when you look at the national budget, the IRA share of local governments amounts to a mere 17 percent of the national budget."

Table 2: IRA Shares of LGUs vs the National Budget (in million pesos) *Actual obligation Notes: a - allotment release; b - proposed budget Source: Department of Budget and Management (DBM)
YEAR	TOTAL BUDGET*	IRA SHARE	IRA AS % OF TOTAL BUDGET
1991	293,161	9,841	3.4
1992	286,603	20,305	7.1
1993	313,749	36,724	11.7
1994	327,768	46,815	14.3
1995	372,081	52,042	14.0
1996	416,139	56,594	13.6
1997	491,783	71,049	14.4
1998	537,433	76,941	14.3
1999	580,385	95,291	16.4
2000	682,460	114,278	16.7
2001	707,093	115,828	16.4
2002a	770,767	134,422	17.4
2002b	804,200	141,576	17.6

The imbalance is also manifested in the Priority Development Assistance Funds (PDAF), or pork barrel allocations, of congressmen and senators, as well as other budgetary insertions, whose amounts are typically greater than local-government budgets — not to mention that pork barrel somehow tends to distort local planning since the legislator would often insist on his or her own projects.

Pimentel is therefore proposing to increase the IRA share from the present 40 percent to 50 percent in keeping with Article X, Section 6 of the 1987 Constitution, which provides that local governments shall have a just share in the national taxes. He is also recommending that local governments be given slices from other taxes levied by the national government like customs duties, wharfage fees, and others.

"First of all, I am not comfortable with the term internal revenue allocation because it means that it is something that is dependent on the wishes of the central government," he says. "These are internal revenue shares, so I would rather call them that."

Pimentel adds that as far as he can recall, the intention of the Local Government Code was to make all government revenues as basis of the sharing, and not what the central government has been doing, which is to restrict access only to internal revenue taxes. Article 290 of the Code even provides that, in addition to the IRA, local governments have a 40-percent share of the national government's gross collections from mining taxes, royalties, forestry and fishery charges, and other taxes, fees and charges collected from the development and utilization of the national wealth within their territories.