1.0         Public Finance

1.1         Revenue Potential

The income projections for 2000-2010 range from Php 174.4 million to Php 2.2 billion with revenues from business taxes as the biggest source of income.

Projected income from business taxes was based on 30% annual increases for the planning period except for year 2006, where revenues from business taxes are expected to increase by 50% when tax holidays granted to companies under the Philippine Economic Zone Authority (PEZA) will be withdrawn.  On the other hand, projected income from real property taxes was based on a 30% increase every three years upon revision of their Revenue Code, with 5% increase every two years after each revision.  Non-tax revenue projection used an annual 2% average increase.  The Internal Revenue Allotment (IRA) was projected to increase by 10% during the ten-year period.

Table 5.1.   Projected Income, Cabuyao, 2000-2010 (In Millions of Pesos)

 

Year	Business Tax	Real Property Taxes	Non-Tax Revenues	IRA	Total
2000	90.000	28.000	16.284	40.194	174.478
2001	117.000	29.400	16.609	44.312	207.222
2002	152.100	30.870	17.274	48.232	248.476
2003	197.730	40.131	18.310	53.055	309.226
2004	257.049	42.137	19.775	58.360	377.321
2005	385.574	44.244	21.752	64.196	515.766
2006	501.245	57.517	24.363	70.616	653.741
2007	651.619	60.393	27.774	77.678	817.464
2008	847.104	63.413	32.217	85.445	1,028.179
2009	1,101.236	82.437	37.372	93.990	1,315.035
2010	1,431.607	86.559	44.847	103.389	1,666.402

 

 

Figure 5.1.  Projected Income, Cabuyao, 2000-2010

 

1.2       Projected Current Expenditures

 

Current expenditure projections were based on a 15% annual increase with expenditure levels reaching Php 149.2 million to Php 370.4 million.  Personal Services was projected to increase by 10% annually and MOOE by 15% yearly.

Capital outlay was projected to reach its highest level at Php 35 million in year 2000 when funds will be used for the completion of the municipal hall construction, purchase of office furniture, and installation of computer network system.  Vehicles for each department will be purchased from year 2000 to 2003.  It is assumed that beyond year 2003, all departments would have been provided with the equipment and facilities required; thus, capital expenditures will be constant at Php 15 million.

Table 5.2 Projected Expenditures, Cabuyao, 2000-2010 (In Millions of Pesos)

Year	Personal Services (PS)	Maintenance & Other Operating Expenses (MOOE)	Capital Outlay (CO)	Total
2000	73.553	40.706	35.00	149.259
2001	80.908	46.812	20.00	147.720
2002	88.999	53.843	20.00	162.842
2003	97.899	61.909	15.00	174.808
2004	107.688	72.196	15.00	193.884
2005	118.457	81.875	15.00	215.332
2006	130.303	94.157	15.00	239.460
2007	143.334	108.280	15.00	266.614
2008	157.667	124.523	15.00	297.190
2009	173.434	143.201	15.00	331.635
2010	190.777	164.681	15.00	370.458

 

 

 

Fig. 5.2.   Projected Expenditures, Cabuyao, 2000-2010

 

 

1.3       New Capital Financing Potential

The new capital financing potential of the municipality is computed as total municipal revenues less the current expenditures ( NCFP = MR - [PS + MOOE + CO ] ). The projected results indicate a new capital financing potential over the 10-year period ranging from Php 25.2 million to Php 1.3 billion.

Table 5.3.  New Capital Financing Potential, Cabuyao, 2000-2010

(In Millions of Pesos)

 

Year	Income	Current Expenditures	New Capital Financing Potential
2000	174.478	149.259	25.219
2001	207.222	147.720	59.502
2002	248.476	162.842	85.634
2003	309.226	174.808	134.418
2004	377.321	193.884	183.437
2005	515.766	215.332	300.434
2006	653.741	239.460	414.281
2007	817.464	266.614	550.850
2008	1,028.179	297.190	730.989
2009	1,315.035	331.635	1,013.400
2010	1,666.402	370.458	1,295.944

 

Fig. 5.3.   New Capital Financing Potential, Cabuyao, 2000 - 2010

 

1.4         Public Finance Recommendations

 

Although the New Capital Financial Potential is projected to be more than the estimated sectoral capital cost over a period of 10 years, there is also a need to maintain the stability of the New Capital Financial Potential.  The recommended measures are as follows:

1.4.1     Adoption of Measures to Minimize Revenue Losses

·         Improvement on systems and procedures including computerization to improve the tracking of payments and local revenue base.

·         Conduct of technical training for staff of the Offices of the Assessor and Treasurer.

1.4.2     Real Property Assessment and Collection Enhancement

·         Intensified Information, Education, and Communication (IEC) Campaign for residents.

·         Billing through the barangay officials to enhance collections since they are familiar with their constituents.  It may be noted that the 25% RPT collection is a major source of the barangay fund.

·         Updating/cleaning up of tax declaration.

·         Revision of property tax assessments every three (3) years.

·         Tracking of the actual addresses of Real Property Taxpayers.

1.4.3. Business and Community Tax Assessment and Collection Enhancement

·         Conduct of survey of professionals for Community Tax Mapping.

·         Conduct of business mapping to identify number and location of business establishments.

1.4.4     Improvement of Tax Collection Efficiency

·         Strict enforcement of a comprehensive, clear and specific tax ordinance including the conduct of auctions for delinquent properties.

·         Value formation and training of collectors towards making motivated and committed.

1.4.5     Elimination of Spillage and Leakage in the Collection of Fees and Charges

·         Bonding of collectors.

·         Close monitoring of tax collection remittances of collectors.

1.4.6     Revision of Revenue Code Every Five (5) Years

·         Annual preparation of Municipal Revenue Plan as guide in tax collection.

2.0       Capital Investment Program

2.1         Project Selection and Prioritization Process

With the goal of maximizing available resources, the identification and prioritization of projects was made through a systematic process.  In a Planning Workshop held on 16-17 September 1999 at the Light Industry and Science Park at Diezmo, Cabuyao, Laguna, the participants were grouped into Physical, Economic and Social Sectors.  They then identified and prioritized projects through a rating system using three (3) criteria with corresponding weights as shown in Table 5.4. 

 

Table 5.4.  Criteria in Project Selection and Prioritization

 

Criteria	Weight (%)
Economic Impact Environmental Impact Social Impact       Total	35.0 35.0 30.0 100.00

The sectoral groups identified projects and their corresponding location, costing and funding sources following the project rating system to come up with the Social Desirability Index (rating x weight).

 

Table 5.5 Sample Scoring Table

 

Project	Rating (0-2)			Social Desirability Index (rating x weight)
	Economic Impact (weight = 35%)	Environmental Impact (weight = 35%)	Social Impact (weight = 30 %)

 

2.2       Proposed Capital Investment Program

The Capital Investment Program (CIP) is the funding requirement for the identified programs and projects.  Cabuyao has 67 identified programs and projects within a 10 year period with an estimated capital investment of Php 1.9 billion with Php 1.2 billion as counterpart of the municipal government (Table 5.6).

Table 5.6.  Proposed Capital Investment Program, Cabuyao, 2000-2010

 

Sector	No. of Projs.	Total Cost (In Million of Pesos)			Total	LGU Counterpart)			Total
		ST	MT	LT		ST	MT	LT
Physical Economic Social   Total	34 15 18 67	227.2 410.4   93.6 731.2	469.6 13.1 243.0 725.7	224.6 90.0 192.0 506.6	921.4 513.5 528.6 1,963.5	61.7 293.2 38.6 393.5	290.6 12.6 142.0 445.2	189.6 80.0 127.0 396.6	541.9 335.8 307.6 1,235.3

 

3.0         Matching Process

 

3.1         Capital Financing Potential versus Capital Investment Requirements

 

It is only in the short term when the financing potential are just sufficient to cover the investment requirements of the municipality.  In the medium and long term, the investment requirements of the municipality can easily be financed by the capital financing potential of Cabuyao (Table 5.7)

 

This indicates that Cabuyao faces the challenge of proper funds programming rather than the lack of investment funds.

 

Table 5.7.  Capital Financing Potential vs. Investment Requirement, Cabuyao,

                     2000-2010 (in Millions of Pesos)

 

Year	Financing Potential	Investment Requirement (LGU Counterpart)	Difference
ST (2000-2003) MT (2004-2007) LT (2008-2010)	304.8 1,449.0 3,040.3	393.5 445.2 346.6	-88.7 1,003.8 2,693.7
Total	4,794.1	1,185.3	3,608.8

 

4.0         Institutional Aspect

 

Institutionalization of the planning process and active private sector participation are imperative in order to come up with viable programs and projects.  The development of a community is usually hastened through proper management and effective resource sharing mechanisms and technology transfer.

 

4.1         Institutionalizing the Local Planning Process

 

The Comprehensive Land Use Plan will help guide the municipality’s physical, economic and social development.  The programs and projects as planned by the different sectoral groups and local government officials will serve as bases for the preparation of the annual budget and annual investment plan.  The effectiveness of the plan can be evaluated regularly and revisions can be done as the need arises.

The Municipal Development Council (MDC) and the Local Finance Committee (LFC) should work hand in hand and complement each other so as to institutionalize the planning and investment programming system.  The Comprehensive Land Use Plan should be the basis of all the investment programming to be updated every year.  The barangays should be encouraged to prepare Barangay Development Plans as inputs in the updating of the Municipal Development Plan. 

The Local Finance Committee should actively take part in the prioritization of the projects taking into consideration the felt needs.  The Project Monitoring Committee (PMC) should be serious enough in the monitoring and evaluation of projects to be conducted at least every quarter.  MDC members should institutionalize the bottom-up and top-to-bottom planning process.  Moreover, there should be close coordination among the MDC, LFC and PMC.

4.2       Preparation of an Investment Promotion Plan

A coherent Investment Promotion Plan should be prepared to increase business/industrial activities in the municipality.  It should be concerned with the establishment of commercial and industrial enterprises, attraction of foreign investors, and development of local entrepreneurship.

4.3       Creation of Local Economic Promotion Office

The rapid industrialization of Cabuyao demands the creation of a Local Investment Promotion Office which will be responsible for the investment promotion efforts of the municipality.  The office will be responsible for the following:

·         Dissemination of general information on the municipality including preparation of brochures and investment kits and how to’s of doing business in the municipality;

·         Act as Assistance Center for potential investors in the municipality;

·         Orchestrate public relation efforts of the municipality; and

·         Preparation of a Business Mapping System.

4.4       Creation of a Cooperative and Livelihood Development Officer Position

Under the supervision of the Office of the Mayor, the Cooperative Livelihood Development Officer will orchestrate the provision of livelihood assistance to viable cooperatives and local entrepreneurs including the provision of skills training on livelihood projects.