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Fiscal Management

Naga’s sound fiscal position today, as has been the pivotal strategy of the previous administration, is not anchored alone on its IRA share but more on the collection of local taxes and revenues, thus, complementing the national windfall.

Two fundamental thrusts helped in attaining this healthy financial standing by pursuing: increased revenue generation and judicious utilization of government resources.

Increased collection. The City Treasurer’s Office, at the forefront, the city government launched an intensified revenue generation campaign anchored on the following strategies:

Intensifying collection efforts. This basically requires fielding more people and motivating them to do their work more efficiently and effectively. As a consensus, ways and means were resorted to in avoiding the possibility of incurring graft and corruption.

Updating existing tax measures and introducing new ones. The former basically involves revision of tax rates, assessment levels, and schedule of market values to reflect more accurately prevailing economic realities. The latter involves studying new revenue generating measures, proposing them to the Sangguniang Panlungsod, and working for their adoption.

Enhancing local revenue database. Built around the computerization of various aspects of revenue generation, it seeks to expand the local tax base by institutionalizing and maintaining more accurate records of local taxpayers for better monitoring and control. Thus far, business licensing and real property tax assessment had been computerized as of January and June 1994, respectively and with the help of the city EDP unit continuous upgrading of the systems and hardware components have been made.

Amnesty program for delinquent taxpayers. This basically involves the periodic granting of general tax amnesty to delinquent real property owners who are perceived to be no longer in the position to settle their back taxes and penalties, enabling them to start anew. For the City Government, it is another means of putting in place a wider tax base as a tool for future collection efforts.

These strategies paid off as attested by the following:

Total Revenue. From only PhP 45.9 M in 1990 and PhP 262.4 M in 1998, Naga’s total revenue in 2009 soared to PhP 534,755,372.37.

Real Property Taxes. From only PhP 8.8 M in 1990 and PhP 36.0 M in 1998, Naga’s real property tax collection was hiked to PhP 105,646,875.00 in 2009.

Business Taxes and Licenses. From only PhP 8.2 M in 1990 and PhP 41.5 M in 1998, Naga’s take from business taxes and license shoot up to Php 76,459,862.53 in 2009.

Judicious use of government resources. This strategy supplements efforts to increase tax collection and widen the local tax base by optimizing the use of the city government’s financial resources.

The table below shows the city’s budget for the last 5 years.

Year Budget Percentage Increase/Decrease
2005 318,980,000.00 —-
2006 358,184,461.52 12.29%
2007 408,026,959.00 13.92%
2008 416,042,253.11 1.96%
2009 460,594,894.00 10.71%

FINANCIAL MANAGEMENT

Financial Position

The present administration vigorously pursued its twin guidepost in fiscal management: a) increasing revenue collection, and b) judicious use of government resources. The unparalleled fiscal stability of the city government can be attributed to this two-pronged financial management program.

This claim can be verified from the following financial statements and comparative presentations of the financial growth of the city government in the past years.

1978 7,991,170.05 ——– 6,106,532.45 ——-
1979 11,520,818.92 44.17% 8,271,052.02 35.45%
1980 16,194,605.58 40.57% 11,631,643.97 40.63%
1981 14,907,618.97 -7.95% 12,840,188.81 10.39%
1982 18,297,550.27 22.74% 13,293,560.02 3.53%
1983 16,607,779.47 -9.23% 17,637,539.63 32.68%
1984 17,632,558.82 6.17% 18,401,224.23 4.33%
1985 18,808,361.71 6.67% 18,334,867.27 -0.36%
1986 19,293,470.38 2.58% 19,140,134.60 4.39%
1987 19,254,111.62 -0.20% 20,203,764.49 5.56%
1988 25,213,484.46 30.95% 23,601,936.07 16.82%
1989 33,335,346.26 32.21% 31,039,869.48 31.51%
1990 45,918,239.02 37.75% 43,298,224.04 39.49%
1991 60,964,191.89 32.77% 59,897,837.52 38.34%
1992 76,760,595.36 25.91% 71,398,318.67 19.20%
1993 126,344,646.26 64.60% 107,982,744.62 51.24%
1994 173,926,012.26 37.66% 174,354,258.23 61.46%
1995 163,452,577.30 -6.02% 165,435,475.67 -5.12%
1996 188,845,116.48 15.54% 177,950,634.17 7.56%
1997 241,351,820.48 27.80% 244,873,258.96 37.61%
1998 262,493,634.42 8.76% 276,223,743.68 12.80%
1999 238,719,511.36 -9.06% 246,220,904.55 -10.86%
2000 307,806,139.77 28.94% 312,209,930.48 26.80%
2001 329,135,357.19 6.93% 316,762,900.02 1.46%
2002 304,976,156.76 -7.34% 280,616,077.02 -11.41%
2003 373,814,407.66 22.57% 353,459,817.44 25.96%
2004 338,723,941.94 -9.39% 326,083,108.56 -7.75%
2005 408,594,877.48 20.63% 361,198,512.55 10.77%
2006 493,997,966.47 20.90% 416,311,310.84 15.26%
2007 463,676,856.68 -6.14% 429,761,329.55 3.23%
2008 447,389,093.01 -3.51% 435,092,752.35 1.24%
2009 534,755,372.37 19.53% 472,203,854.78 8.53%

Financial Performance, CY 2009

Revenue Generation

Indicator Naga City Average 2nd Class City National Average City Desired performance Naga’s Performance
Cost to Collect Revenues
(Cost in collecting revenues/total income) x 100
5.44% 17.51% 28.58% Should be lower than the average of LGUs with the same LGU type and income
Locally-Sourced Revenues to Total Income
(Amount of Locally-Sourced Revenues/Total LGU Income) x 100
43.99% 31.30% 33.70% Locally-sourced revenues to total income should be higher then the average of LGUs with the same type and income class
Regular Revenues to Total Income
[(Locally Sourced Revenues + IRA)/Total Income] x 100
100.00% 96.95% 86.67% Should be higher than the average of LGUs with the same LGU type and income class
Locally-Sourced Revenue Level 216,331,889.52 131,011,617.87 454,736,691.58 Should be higher than the average of LGUs with the same LGU type and income class
Locally-Sourced Revenue Per Capita
(amount of locally-sourced revenue/population)
1,286.55 999.99 999.99 Should be higher than the average of LGUs with the same LGU type and income class
Real Property Tax (RPT) Accomplishment Rate
(amount of RPT collected/amount of projected RPT collectibles) x 100
101.07% 96.13% 90.61% Should be higher than the average of LGUs with the same LGU type and income class

Resource Allocation and Utilization

Indicator Naga City Average 2nd Class City National Average City Desired performance Naga’s Performance
Personal Services Expenditure Ratio
(personnel services expenditures/total expenditures) x 100
57.73% 48.79% 37.80% Determines the biases of the LGU in terms of budget allocation. Should not exceed the ceiling as mandated by law, i.e., for 1st-3rd class LGUs – 45%
Total Expenditure per Capita
(total expenditures/population)
1,929.16 2,839.46 2,439,903.13 Should be higher than the average of LGUs with the same type and income class
Debt Service Ratio
(actual debt service cost/regular income)
2.72% No data No data Should not exceed 20% of the regular income. This is the debt servicing limitation set for under LG Code of 1991