Cebu City’s approved 2025 budget reduced to P14.6B

JULY 16, 2023: A glimpse at the facade of the Cebu City Hall. CDN Digital photo | Brian J. Ochoa

CEBU CITY, Philippines — The Cebu City Council has approved a reduced P14.6 billion annual budget for 2025, cutting P3.3 billion from the executive department’s original proposal of P17.9 billion.

During a recent special hybrid session, council members debated the city’s fiscal priorities, citing revenue shortfalls and concerns about aligning expenditures with actual income.

The decision came after a narrow 8-7 vote, with objections raised over the budget’s implications for pro-poor programs and transparency in committee deliberations.

Councilor Noel Wenceslao, chairman of the Committee on Budget and Finance, defended the adjustments, stating they were necessary to reflect the city’s revenue performance. As of October 31, the City Treasurer’s Office reported collections of just over P8 billion, falling short of the ambitious P98 billion income target for 2024.

“It must be taken into consideration the effects when the proposed budget goes over the actual income of the city, which would indicate lower control and negatively impact the Cebu City Government,” he said.

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This financial caution comes in the wake of former mayor Michael Rama’s proposal of a P51.4 billion annual budget for 2023. This budget aimed to fund a range of developmental projects and infrastructure improvements to elevate Cebu City’s status.

However, a recent audit report by the Commission on Audit (COA) sounded alarms about the feasibility of such an “ambitious” budget.

The 2023 annual audit report flagged the city’s income projections as “overestimated” and highlighted “insufficient” cash reserves to support the proposed spending. Over the past five years, the city’s income forecasts have consistently been described as “unrealistic,” with 2023 standing out as the most overly optimistic.

The report noted that the Local Finance Committee (LFC) relied heavily on Real Property Tax (RPT) collections as the primary revenue source for the proposed P50 billion budget, an approach COA deemed excessively optimistic and not grounded in actual revenue trends.

“It will affect profit margins due to additional expenses, productivity due to opportunity cost, and financial stability due to decreased liquidity,” Wenceslao added.

Significant budget reductions include slashing the Economic Recovery Program from P100 million to just P1 million while funding for Free Education Expenses was reduced from P556 million to P500,000.

The Graduation Subsidy saw an even steeper cut, dropping from P13.5 million to P1 million. The entire P250-million allocation for the Digital Traffic Lights System (Phase 3) was eliminated, and the PAAS 911 Emergency Call Handling System budget was reduced from P25 million to P13 million.

Additionally, various other programs, such as those supporting livelihood initiatives, climate change adaptation efforts, and senior citizen benefits, experienced considerable funding reductions.

Meanwhile, the budget approval process sparked debate among council members. Councilor James Cuenco criticized the exclusion of himself and Councilor Jerry Guardo from discussions leading to the committee’s final report, which only bore the signatures of Councilors Wenceslao, Jocelyn Pesquera, and Phillip Zafra.

Cuenco also criticized the slashed funding for programs targeting low-income residents, including an economic initiative initially designed to assist 25,000 individuals.

In defense, Pesquera explained the city’s current financial strain, pointing out that social programs already consume 60 percent of the budget. She stressed the need to redirect resources toward investments and infrastructure to foster long-term development.

Despite objections from seven councilors, the council approved the amended budget. This approval also marked the second reading of the budget ordinance, finalizing the P14.6 billion allocation for 2025. /clorenciana