3.1.1 Challenges

LGU’s Dependence on Internal Revenue Allotment (IRA). Over the past two years, CAR LGUs have not generated substantial internal revenues to fund their expenditures. Their total combined income even declined by 4 percent due to a drop in local tax revenues even while IRA slightly increased from 2005 to 2006 (Table 1).

IRA share to total LGU receipts is between 72-76 percent while local tax and non tax revenues share is only between 11-14 percent. Only Baguio City is the least IRA dependent.

LGUs utilized almost half (47%) of their revenues for general services while only 39 percent were spent for economic and social services. On the average, only 23 percent of their total expenditures were paid from local revenues, showing that more than 70 percent are funded from external sources notably, IRA. Also, LGU expenditures are greater than the local income generated leading to deficit. Very few LGUs resorted to borrowings.

National taxes collected are within targets but local tax collections targets are not. Among national taxes, value added, specific and percentage taxes, surpassed targets. In local tax, collection efficiency rate (CER) for business taxes is 92 percent, real property tax 88 percent and fees & charges 87 percent.

Small Budget Allocation. CAR’s budget of P12 billion in 2007 is one of the smallest in the country representing only 1.07 percent of total national budget1. It grew only by 5 percent from 2005 to 2007 lagging behind the national budget growth of 11 percent. The low budget allocation for CAR is attributed to its small population. However, owing to unique features attributed to its topography and rugged terrain, CAR requires higher budget for maintenance of infrastructures and better delivery of government services. Also, as the watershed cradle, CAR requires bigger budget for environmental protection.

Government consumption expenditures in the region grew by 4 percent in 2006 from its 2005 level, owing to better fiscal condition of the national government. Unfortunately, the share of CAR government consumption expenditures to the national has also declined from 2.1 percent in 2005 to only 2.03 percent in 2007. This share is almost at par with the regionu2019s share to GDP of 2.2 percent.

Peace and Order Problems. Accomplishments on this concern are mixed. The number of barangays cleared of drugs increased from 2 in 2005 to 12 in 2006 while average monthly crime rate declined from 11.91 (2004) to 8.06 (2005). However, crime solution efficiency rate declined by 3.18 percentage points (98.05% – 2005; 94.87 u2013 2006). Insurgency affected barangays slightly increased from 45 in 2005 to 49 in 2006.

Continuing Quest for Regional Autonomy. The establishment of an autonomous region in the Cordilleras is a constitutional provision that must be pursued. It could only be in the best interest of the Filipino citizens in the region for it to be fulfilled. RDC-CAR took upon itself adopting regional autonomy as the over arching theme to which the regionu2019s development efforts will be directed. Developing the region to prepare for autonomy poses a primordial concern.

3.1.2 Opportunities

The North Luzon Agribusiness Quadrangle (NLAQ) & Cyber Corridor. The NLAQ aims to harness the natural competitive advantages of North Luzon which includes CAR. CAR is expected to benefit through the inflow of additional funds for programs/projects funded under this program. In addition, the Philippine Cyber Corridor, with Baguio as the northern node, aims to interconnect the isolated regions of the country and encourage more investments in the ICT-related industries.

Constitutional Provision on Regional Autonomy. In line with Article X of the Constitution creating an Autonomous Cordillera Region, within the framework of national sovereignty, RDC-CAR adopted regional autonomy as the overarching theme of all its activities. In 2007 the national government released funds to RDC-CAR to jumpstart social preparation activities on regional autonomy. The realization of CAR regional autonomy can bring opportunities and benefits in governance & economic development.

3.1.3 Goal and Objective

Good governance shall be the anchor of regional development by providing the enabling environment for sustainable economic and human development. The “enabling environment” consists of the formulation and implementation of responsive policies and the efficient & effective delivery of public services.

3.1.4 Strategies

With regional autonomy as the overarching theme, the following are the major strategies of the sector.

Continued pursuit of Regional Autonomy. Regional autonomy shall be studied in the context of the proposed federal system of government, the indigenous governance system, the experiences of ARMM, and the sentiments of the people of Cordillera.

Ensure adequate financial resources for regional and local development.

Revenue collection can be improved with the adoption of technology and better work ethics among revenue generation entities. LGUs need to reduce dependency on IRA by maximizing existing sources of revenue and adopting innovative funding sources (e.g. bond flotation).

Implement Joint Memorandum Circular No. 1 Series of 2007. The link between planning-investment programming-budgeting must be revitalized through initiatives led by DILG, NEDA, DBM, and DOF.

Enhance efficiency and effectiveness of public institutions. Productivity-enhancing practices such as total quality management and corporate governance must be encouraged together with the use of ICT and knowledge management and sharing, while capability-building programs along this area must be implemented.

Empower local governments. Local governments must be empowered with sufficient resources and autonomy to meet their responsibilities. Continuing capability-building of local governments should be pursued. The inclusion and participation of all stakeholders in local governance processes should likewise be maximized.

Promote the security of individuals and their living environment. Each citizen is entitled to a stable and secure livelihood. CAR shall involve stakeholders in crime and conflict prevention and disaster preparedness. Insurgency shall be primarily addressed through the holistic improvement of the quality of life.

Work out initiatives to prepare appropriate planning standards for CAR. The CAR has harsh topographical settings and unique cultural characteristics render national standards mainly based on population as unresponsive to the actual development requirements hence the continuing efforts and advocacy on the formulation of more appropriate development planning standards.

Encourage a culture of innovation in government. In an effort to unleash the innovative spirit of Filipinos for global competitiveness, a policy environment conducive to the flourishing of innovations must be put in place. This includes providing incentives/awards to innovations, promoting competition, funding researches, among others.

3.1.5 Programs/Projects

Intensified Internal Revenue and Customs Collection Program. This entails the intensive enforcement of internal revenue and customs collection laws.

Local Government Financial Resource Enhancement and Mobilization Program. This includes updating of local revenues codes, establishment of LGU financial database, real property tax administration and valuation.

Harmonized Planning Programming and Budgeting. This is the implementation of Joint Memorandum Circular No.1, series of 2007.

Rationalization / Re-Engineering of the Bureaucracy Program. EO 366, directing a strategic review of the operations and organizations of the Executive Branch of Government for a leaner & more efficient bureaucracy, must be implemented.

Institutional Development and Capability-Building Program. This involves the conduct of specialized capacity building programs for LGUs and RLAs for the upgrading of skills and professionalization of regional and local government (including the military) personnel.

Value Reorientation and Anti-Corruption Program. This is the inculcation and reinforcement of values among civil servants, through the conduct of values reorientation programs for government personnel.

Peace, Security and Development Program. This consists of modernization of the Armed Forces, community-based crime prevention and justice system, human rights protection program, disaster risk mitigation and management program.

Information and Advocacy Program. This is a region-wide intensified information dissemination and advocacy of governmentu2019s programs/ projects.

CAR Regional Autonomy Programs. This includes the conduct of survey, researches on topics related to fiscal & political autonomy and capability building programs for LGUs and RDC staff on economic diplomacy, project development, and fiscal autonomy.

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