I wish to congratulate the officials and members of the Philippine Association of Local Treasurers and Assessors on the occasion of your 82nd National Convention and Seminar Workshop.
In last year’s Phaltra conference in Davao City, I have clearly expressed my directives to continuously push for the needed reforms to improve fiscal and financial management in the local governments in the spirit of good governance and nation building. I have set the LGU reform agenda to the BLGF and the pipeline of activities requires immediate implementation. Our goal is to make local public finance more transparent, credible, responsive to the local constituency, compliant with the rules and regulations, and devoid of irregularities. This is being pursued through various tracks of reforms of the DOF – (i) professional development of treasurers and assessors, (ii) policy development and operational effectiveness, and (iii) organizational reforms in the BLGF.
In 2013, we started with the LGU Fiscal Sustainability Scorecard where we assessed the fiscal indicators of all 80 provinces, 144 cities and 1,454 municipalities across the country based on the reports submitted by local treasurers and assessors. This initiative engaged public discourse and awareness among the local constituencies on how well local governments are faring in various areas of revenue generation and expenditure management. In addition to the Memorandum I sent to every local treasurer, we have made public the results through the Iskor ng ‘yong Bayan website and through various publications under the LGU Tax Watch Campaign of the BLGF. For some, the campaign did not bode well as it did not suit well their brand of politics and governance. But for many, the campaign served as a challenge and engendered renewed commitment to perform better, having seen the benchmarks and performance of other local governments. For the ordinary citizen, it meant greater transparency of information and openness at work – what used to be too technical and exclusive, often unknown, are now being communicated to them in digestible bits to make them informed participants in local governance. It is pleasing to know that many of you and your local elective officials have risen to the challenge and immediately started updating of the Schedules of Market Values and Revenue Codes. I congratulate you for setting the right example.
Last January 20, I signed Department Order No. 06-2015 directing a full performance appraisal of provincial, city and municipal treasurers and assistant treasurers across the country beginning this year, and setting the personnel performance standards, metrics, and appraisal system in support of our mandate to supervise local government treasury operations to be conducted on an annual basis. There is a long-felt need to instill a results-oriented performance culture among local treasurers and assistant treasurers. Our goal is to elevate local treasury profession and help local chief executives get the best possible treasurers using merit and performance as main decision points. It is unfair and a disservice to the local governments for the Secretary of Finance to appoint or even designate local treasurer or assistant treasurer who will not be effective in their posts as local fiscal managers, or put into position those who would compromise the interest of the people for the lure of money, power or luxury.
It is upsetting to receive and implement at least three to four dismissal orders from the Ombudsman every month against local treasurers or assistant treasurers. But the DOF remains steadfast in our commitment to fight corrupt at all levels, as we have done in the BIR and the BOC. Last year, we implemented at least 45 dismissal orders against treasurers. There are dozens of cases still pending for resolution and various complaints are now under investigation.
The results of the personnel performance appraisal will be used by the DOF as basis for appointment and other personnel actions, such as promotion, renewal of designation and extension of service, capacity building, and awards and recognitions. Beginning June this year, the BLGF will undertake the evaluation and I expect by October to see the results. Treasurers who fail to meet the benchmarks will be given assistance to improve performance, but if the results continue to be unacceptable, the DOF will institute the appropriate administrative action. Failure to pass two consecutive appraisals could lead to removal from the service. Therefore, the results of every evaluation should sharpen the focus of capacity building programs of the BLGF, instead of the generic trainings, and eventually lead to weeding out the misfits and the incompetent in local treasury service who are underserving of public trust.
It must also be emphasized that under the new Department Order, we are instituting an improved system for setting the revenue collection targets for treasurers. Effective this year, the incremental factors that will be used in determining targets for business tax, fees and charges, and income from economic enterprise will be regionalized – we will be using the prior year’s actual Gross Regional Domestic Product and the applicable inflation rate. For real property tax, 80 percent of the current year collectibles and 35 percent of the aggregate five-year delinquencies will be used as basis. As these will serve as performance commitments, treasurers must concur with the set targets.
In sum, I take pride that the LGU Fiscal Sustainability Scorecard and Performance Standards for Local Treasurers and Assistant Treasurers are now being institutionalized as regular fiscal performance assessment tools and monitoring programs of the BLGF. Gone are the days when slipshod evaluations are being undertaken in the guise of soliciting patronage, and the use of mediocre benchmarks and disparate parameters was unbridled. If in any case these performance evaluation tools are used to solicit favors on any local treasurer, assistant treasurer or officials and employees of the DOF and the BLGF, you may report it directly to my Office or to the Civil Service Commission. We have gone to this extent so we can use the power of data to drive performance, as it is very hard to supervise and manage what we cannot measure. Data may be intimidating, but it offers a process for self-check. There is value in knowing how you can overcome your weaknesses and keep focused in attaining your goals. To reiterate, I call on all local treasurers, assistant treasurers, assessors, assistant assessors, and other personnel and staff in this conference to always uphold professional competence, integrity, transparency, and accountability in your work.
The DOF continues to support the priority legislation of the Valuation Reform Bill. After its approval in the House of Representatives last December, we are now pushing for its passage in the Senate so that our vision of having a credible, transparent and depoliticized LGU valuation will be realized soon. If the mandatory updating of schedule of market values will be synchronized, the increase in local real property tax is estimated at Php5.8B to Php17.6B annually. Reforms are also needed in the quality of reporting of local assessors of the Quarterly Report on Real Property Assessments. I task upon the BLGF to improve the quality and granularity of the report on real property assessments ASAP, and start conducting audits on these reports. Almost five years since the DOF and the DILG jointly signed Memorandum Circular No. 02-2010, less than a handful are implementing idle land taxation. I ask the BLGF to immediately submit the technical guidelines to effect this important regulation. It is envisioned that with these policies, land market will be stimulated to improve the contribution of land—the nation’s foremost asset and most important resource—to national income which contribution presently is estimated to be only 6.6% of the GDP.
In addition, we are also pushing for the legislation of the LGU Income Classification Bill as an urgent measure. We want to synchronize the income classification every three years beginning 2016. If approved, the new policy will allow for greater benchmarking of revenue capacities of local governments vis-à-vis the assistance needed for LGUs on a slower development track.
In essence, we envision LGUs to be more competitive and attractive, whether urban or rural, with good governance, accountability, and transparency as main pillars. As we ready for the ASEAN integration, we must not lose sight of the fact that local governments are engines of growth and development. Cooperation is the key for local governments to take advantage of this move for integration of economies. Local governments must strategically coordinate, rather than outright compete, with one another to promote local investments – know your comparative advantage and complement other LGUs so economic benefits can be enjoyed mutually. This applies in tourism, small and medium enterprises, capital development, economic enterprises, among others. LGUs should make investments more attractive through transparent, predictable, and fair local taxation, secure land tenure, professional tax administration, efficient delivery of quality basic services in terms of public safety, health, education, etc., and consistency with the investment directions of the national government. In all these endeavors, treasurers and assessors have a role to play.
In closing, Phaltra’s theme, which is Local Treasurers and Assessors: Rising Above the Challenges of Local Governments’ Fiscal Accountability, Transparency and Sustainability should not just be for branding or publicity purposes. It should serve as a commitment that local treasurers and assessors, acting as fiscal managers, must lead local governments towards genuine reforms. That for one is the challenge you must rise to. Your attendance here is for a noble purpose – so that you may serve better your LGU. Every centavo that you are now spending from your LGU funds so you can attend this Phaltra conference must be worth the taxpayer’s money. In this way, you can proudly report back that your weeklong absence was not for an occasion of frivolity but for an opportunity to learn what needs to be done when you return to your LGUs.
Maraming salamat po!