Lacson files LGU-Empowering Budget Reform Bill to Achieve Inclusive Growth

A budget reform bill by Sen. Panfilo M. Lacson seeks to give local government units an active role in nation building by providing them with much-needed funding for their development projects.

Senate Bill 40, dubbed the Budget Reform for Village Empowerment Act of 2016, lets territorial and political subdivisions enjoy meaningful local autonomy to attain their fullest development as self-reliant communities.

“By giving the LGUs the necessary wherewithal to be active participants in the development of our country, we will end the culture of mendicancy and political patronage that viciously thrive in our system. Ultimately, this will help us realize the elusive inclusive growth that we all aspire for as a nation,” he said, adding the bill seeks to distribute funds equitably among national government agencies and LGUs.

Related: LGU, direktang dadaluyan ng pondo sa panukala ni Ping

[Download: Senate Bill 40, Budget Reform for Village Empowerment Act of 2016]

Under the bill, a Local Development Fund (LDF) will be divided among the different political subdivisions to be used solely for developmental projects, activities and programs (PAPs).

The LDF, to be automatically and directly released to every LGU at the start of the fiscal year or quarterly within five days at the start of each quarter, includes:

For provinces: P500 million to P1 billion each

For cities: P100 to P200 million each

For towns/municipalities: P50 to P100 million each

For barangays: P3 to P5 million each

As a safeguard, no LDF shall be released without a certification from the Local Government Academy that the LGU is capacitated to plan and implement its CDP.

The PAPs shall be based on their approved Comprehensive Development Plans (CDPs), which in turn will be reviewed annually by a committee created to review their performance and determine if their funding should be reduced or retained.

Meanwhile, P1 billion shall be appropriated to the Local Government Academy (LGA) to provide the LGUs with the necessary tools to effectively plan and properly implement their PAPs.

Local Development Fund release

The LDF shall be used solely by the LGUs to finance their respective development projects in their approved Comprehensive Local Development Plans. Use of the fund for other purposes may make those involved liable for technical malversation.

LDF funds may not be spent for items that are not related to or connected with the development PAPs. LDF funds cannot be spent for PAPs that may duplicate or overlap with PAPs implemented by the national government agencies. Neither shall they be used as a counterpart fund to support national government agencies’ identified PAPs.

Meanwhile, the national government may not impose any lien or holdback against the LDF. Any person who withholds the release of the LDF to the LGUs faces imprisonment from one to six years, and a fine of P500,000, and will be disqualified from holding any public office or employment in the government, including any government-owned and/or controlled corporations and their subsidiaries.

Performance evaluation

Before the end of the fourth quarter of the year, the Performance Evaluation Committee (PEC) chaired by the Undersecretary for Local Government of the Department of Interior and Local Government (DILG) shall conduct a performance-based review of LGUs’ implementation of their development PAPs.

LGUs whose performances are deemed unsatisfactory may see their LDFs halved, and the amount may be restored if they show improvement in the next evaluation period.

LGUs that have two consecutive unsatisfactory performances may see their LDFs terminated. They may reapply for funding after a year.

A Web-based monitoring system will be set up by the PEC to monitor and evaluate PAPs funded by the LDF. An initial P100 million will be appropriated for such a system.

Information accessible to the public may include funding/cost, location, contractor, progress status, number of beneficiaries, date of completion and responsible government official, of the PAPs shall be disclosed.

Government officials or employees who shall prevent the reporting or disclosure of any information or data pertaining to a funded development PAP shall be held administratively liable.

LGUs that fail to comply with the reportorial requirements for this system risk suspension of their funding.

On the other hand, a Performance Evaluation Committee will be created to monitor and evaluate the implementation of development PAPs under the LDF. Its members include:

* The Undersecretary for Local Government of the DILG, as Chairman

* The Assistant Director-General for Planning of the National Economic and Development Authority (NEDA)

* The Assistant Secretary for Policy and Planning of the DBM

* The Executive Director of the Bureau of Local Government Finance (BLGF) of the Department of Finance (DOF)

* A representative from each of the various leagues of the different LGUs concerned

* A representative from the National Commission on Indigenous Cultural Communities/Indigenous Peoples (NCIP), if applicable

* Four representatives from accredited civil society groups and/or non-government organizations involved in the implementation of development projects funded by the LDF

Meanwhile, a Congressional Oversight Committee will monitor and oversee the implementation of the provisions of this Act. The Committee shall be composed of five members each from the Senate and House of Representatives. It will be chaired by the Chairpersons of the Committee on Local Government from both the Senate and House of Representatives.

A sunset review of the law will also be held after five years or as the need arises, to determine remedial legislation.


The Local Government Academy (LGA), cooperating with institutions of higher learning with distinguished competencies in public governance programs, is to ensure all territorial and political subdivisions are capacitated to effectively plan and implement the development projects in their respective CDPs, one year after the budget reform measure is passed.

An initial P1 billion will be appropriated for capacity building of all LGUs.