Cebu City’s 2015 budget bigger than Makati, Manila outlay

P13.4 BILLION BUDGET

Cebu City yesterday approved its biggest ever budget of P13.4 billion for 2015, more than double  this year’s annual outlay.

With 80 percent of revenue pegged on the disposal of assets, mainly prime lots in the the South Road Properties (SRP), a special condition was added that all capital outlay expenses would be made from sales proceeds  of reclaimed land.

If no SRP lots are sold, disbursements under a  P4.5 billion capital outlay can’t be made.

During the special session, Vice Mayor Edgardo Labella warned that the restriction would invite legal action because it was “violative of the Local Government Code which allows Mayor Michael Rama to execute budget allocations.”

“If the provision will be carried, I think we will be harboring serious legal ramifications,” Labella said.

All 17 councilors present voted to pass the budget anyway.

BIGGER THAN MAKATI, MANILA

The annual budget is larger than that of other highly urbanized cities of Makati and Manila, said finance committee chairperson Councilor Margot Osmeña.

Three top priorities are drainage improvement – P1.5 billion, disaster preparation  and response – P335 million and reconstruction of the Cebu City Medical Center (CCMC) – P300 million.

These three were among the mayor’s priorities in the budget proposal, said Osmeña.

However, the mayor’s request for a discretionary fund of P6.4 million was drastically cut to P500,000.

His proposal to use P25 million as intelligence funds was slashed to P200,000.

“We took away what we think is not necessary,” Osmeña said.

The mayor had submitted an P18.9 billion budget for next year.

This was trimmed to P13.4 billion in the version presented by Osmeña’s finance committee for council approval.

Several outlays were removed or deferred until  funds are available from SRP lot sales.

Osmeña said these were “not deleted items” but  “adjustments”  made mostly on  capital outlay appropriations for programs and projects to be funded by new SRP lot sales.

Among the items set aside were P40 million for assistance to solo parents, and P58 million for Job Order Workers honoraria.

Objections to the cuts were raised by Team Rama allies Gerardo Carillo, Noel Wenceslao and Richard Osmeña.

Carillo said the council was “going beyond its limit.”

Two other Team Rama allies – Mary Ann delos Santos and Philip Zafra – expressed reservation about the colatilla on limiting capital outlay disbursements based on SRP lot sales.

FUND SOURCES

Fund sources of the 2015 budget were identified as:
disposal of assets – P10.8 billion;
local revenues – P5.2 billion;
domestic borrowings – P3.1 billion;
auction sale – P50 million; and
joint venture sale – P50 million.

The City Treasurer’s Office is still P1.2 billion short of this year’s target collection of P5.9 billion.

“We considered the local revenue sources even if in the last four years, we have not reached our estimated revenues stated in the budget,” Osmeña said.

“In order to show our confidence in the City Treasurers Office, we considered all revenue sources to fund the 2015 budget.”

But councilors said they had to be practical and use conservative revenue estimates to support the annual budget.

Osmeña, addressing the council, reminded peers that when they authorized Mayor Rama in August to negotiate for new SRP lot sales, the authority only covered SRP Lots 8, 7 and 17 with a total area of 45.2 hectares.

If  these are disposed, the city would earn P9 billion from the transaction.

But even if the three lots are sold next year, City Hall can only collect half of the sales proceeds, she said.

This is because approved terms of sale provide that half  of the lot value will be paid by installment over the next three years.

DEFERRED ITEMS

Deferred budget items would have to wait until new revenue  sources are found and a supplemental budget is passed  by the City Council.

For example, a P500 million outlay for new classrooms in the mayor’s 2015 budget could be charged to the city’s Special Education Funds (SEF), coming from a percentage of real property tax collections set aside for the school board.

In yesterday’s special session, Budget officer Marieta Gumia took the floor to explain what projects and program were affected by the P5.5 billion cut from the executive budget.

Voting nine to five, BO-PK allies later prevailed in allowing Osmeña to explain the ordinance.

She broke it down to Maintenance and Other Operating Expenses –  P7.7 billion, capital outlay – P4.5 billion and personal services – P1.2 billion.

INCREASED OUTLAYS

Aid to barangays was increased to P800 million from Rama’s P640 million proposal.

A proposal to allocate P300 million for lot acquisition for socialized housing was tripled to P100 million.

The mayor’s request to set aside P100 million for site development was increased to P150 million.

A lump sum of P199 million was also set aside for school site land acquisition with another P100 million for non-socialized housing lot acquisition.

The colatilla to restrict capital outlay spending drew objections from the mayor’s allies in the council.

Carillo objected to  section 3 of the budget ordinance which says “all capital expenditures of this ordinance shall be sourced out from the sale of disposed assets – SRP lots. Implementation and purchases of any and all capital expenditure items identified in this annual budget shall be enforceable upon the sale of the SRP lot.”

Carillo pointed out that “Under the Local Government Code, it is the duty of the executive to provide the source of funds and to implement the budget.  If he cannot produce the cash, he has to answer for it.”

Carillo also objected to the “zero” budget given for  Solo Parents assistance, which stems from an ordinance he sponsored to provide the new benefit, which would cost P80 million, and the  construction of a P40 million City College building.

“We are the first violators of the Solo Parents ordinance because of the zero budget,” he said.

With this objection, BO-PK ally Sisinio Andales called for another round of voting.

Vice Mayor Labella stepped down from the podium to join the floor discussion and asked Councilor Nestor Archival to take over as presiding officer.

“We have to learn our lesson from the administrative cases already filed against us,” said Labella.

He was referring to the administrative case filed against Rama and council members for authorizing the release of P20,000 calamity assistance for each city employee and official last year after typhoon Yolanda.  The case is pending before the Office of the President.

Labella read section 320 of the LGC which says in part “The responsibility for the execution of the annual and supplemental budgets and the accountability therefor shall be vested primarily in the local chief executive concerned.”

“We will already be encroaching, violating the provisions of the Local Government Code if we put the colatilla in the budget ordinance.  I do not want any crackpot lawyers  to file cases against us.  I’m concerned if we continue to put the item in the budget ordinance,” Labella said.

TOO EARLY

Councilor Eugene Gabuya of BO-PK said it’s too early for anyone to say that Sec. 3 was illegal.

“After the approval of this budget, this will be submitted to the Department of Budget and Management.  They can always tell us  if the budget is not operative,” he said.

Another round of voting was held.  Before voting, each councilor was asked to speak their mind.

Councilor Alvin Dizon said the increased allocation for socialized housing convinced him to approve the budget ordinance.

Zafra said he was happy with the  higher outlay for barangay aid but expressed his reservation about the SRP lot sales condition.

Andales said the budget was in order: “We are not depriving the mayor the prerogative of budgeting. The City Council also has to scrutinize it.”

He said passing the mayor’s large P19.8 billion budget untouched could lead to a decision later  to increase taxes which city residents would oppose.