2013 budget ‘unrealistic’ Local Finance Board gets flak from City Council

Posted on November 24, 2012


Cebu City councilors yesterday chided the Local Finance Committee (LFC) for coming up with unrealistic revenue estimates as the City Council started scrutinizing Mayor Michael Rama’s proposed P6.7 billion budget for 2013.

Cebu City Treasurer Emma Villarete got flak after she told the budget committee that the city is capable of funding the proposed budget by improving its real property tax (RPT) collections.

“If you haven’t done that in the last four years, what assurance can you give that you’ll be able to do it next year?” asked Councilor Sisinio Andales during the budget hearing.

Councilor Margot Osmeña, who chairs the budget committee, also questioned the LFC’s collection estimates as “dangerous”.

“There is a danger in having high estimates. We are not being realistic. Isn’t it better that if we collect more (next year) we’ll just have supplemental budget?” she said.

Villarete said the city government expects to earn over P55 billion. The amount is broken down as P1.8 billion in tax revenues; P0.9 million in non-tax revenues; P1.2 billion in external sources and P2.5 billion from other sources. She said they estimate to raise at least P1.2 billion from other local taxes and P560 million from real property taxes.

The projected real property tax earnings is 45 per cent more than this year’s projected revenue of P386 million.

As of October 31, the City Treasurers Office (CTO) has collected P280.4 million or 73 percent f its target of P386 million.

Villarete said the treasurer’s office is expected to earn another P50 million to P60 million in real property taxes until December 31.

Osmeña said that even if P60 million more is collected before the year ends, total collections will only amount to P340 million by year’s end, or P46 million short of the target. She said that it was far from possible for the city government to reach a P560 million real property collection target next year if it could not even collect its P386 million target for this year.

The CTO also failed to reach its collection and business and other service income target.

The office has so far collected P132 million of its P350 million collection target for the year.

They also fell short in their collection of other income receipts and managed to only collect P135 million of their P300 million collection target as of October 31.

Other income receipts consist of interest which the city earns from its bank deposits, tax payments from telecommunications companies and other revenues which cannot be classified under the other revenue categories.

Villarete told the City Council that they failed to reach a 100 per cent RPT collection efficiency because of lack of manpower. She said they do not have the personnel to go to the barangays and serve notice of delinquencies to property owners.

In order to remedy the problem, Villarete said they are embarking on a project next year to intensify their presence in the barangays. They will also be tapping the help of barangay officials especially in helping them locate real property owners for the delivery of notices of delinquencies.

Villarete added that the P560 million collection target is only based on their projections of how much the city will collect in basic taxes. This still does not include payments from delinquencies and penalties.

Breakdown of 2012 tax collection as of

October 31, 2012

(taken from Villarete’s presentation before the council)

Estimates Actual Percentage 2013 Estimate
Tax Revenues:

Real Property taxes

P386 M P280 M 73% P560 M
Other Local Taxes P900 M P927 M 103% P1.2 B
Non tax Revenues:

License Fees Business and Service

P100 M P140.9 M 141% P150 M
Income P350 M P132 M 38% P450 M
Other income receipts P300 M P135 M P343 M

“But we are short of P46 million in this year’s RPT collection and still you are projecting a 45% increase next year. Goodluck,” said Osmena.

Villarete admitted that the 45 per cent increase which they are targeting in the RPT collection is an uphill climb especially since the city is only averaging a 5% increase per annum in collection during the last four to five years.

Councilor Jose Daluz III, Rama’s ally in the City Council, said setting high collection standards is a means to push tax collectors to even collect more.

“The 45 per cent increase (we are aiming for) is a bit ambitious but it is just an estimate,” said Daluz who added that there is nothing wrong with “dreaming”.

Poblete assured the council that the LFC and the executive department did their “homework” before they submitted the annual budget for the legislative body’s review.

Councilor Noel Wenceslao disagreed with Daluz.

“In budgeting we should be conservative. We should not put high estimates nga dili kaya nato but based on historical data,” he said.

Osmena also told Poblete that while the council would want to move “in the same direction” with the executive department, it came as a surprise why they were not included in the series of consultations which mayor Rama called to solicit inputs from multi-sectoral groups on his “peoples budget.”

City Assessor Eustaquio Cesa told the councilors that with the construction boom, many new structures and developments are rising in the city especially at the IT Park, the Cebu Business Park and at the South Road Properties (SRP) which will contribute to its RPT collections.

Unlike the city’s RPT collection, the CTO faired in their collection of other local taxes and non tax revenues. Local tax collections amounted to P927 million as of October 31. Collection efficiency if 103% if compared to the city’s collection target of P900 million for the entire year.

License fees collection also amounted to P140.9 million or 141% its collection target of P100 million. /Doris C. Bongcac, Chief of Reporters

Posted in: Uncategorized