Metro Manila (CNN Philippines, October 27) — President Ferdinand Marcos Jr. has signed into law a measure which classifies local government units (LGUs) based on income to establish a basis for their respective financial grants and other forms of assistance.
Republic Act (RA) No. 11964 aims to institutionalize the automatic income classification of LGUs as a “more responsive approach” to promote local economy and “enable LGUs to realize their full economic potential.”
In line with this, the State recognizes the need to determine the financial capability and fiscal position of local government units,” the new law states.Under the law, municipalities are classified into five classes according to their income ranges and the average annual regular income for three fiscal years before reclassifying the LGU’s general income.The five classes identified and their respective annual average incomes are as follows:First Class – ₱200 millionSecond Class – ₱160 million or more but less than ₱200 millionThird Class – ₱130 million or more but less than ₱160 millionFourth Class – ₱90 million or more but less than ₱130 millionFifth Class – less than ₱90 millionThe classification will serve as a basis for identifying administrative and statutory aids, financial grants and other forms of assistance to LGUs.It would also determine “LGU capability to undertake development programs and projects” and the units’ total annual supplemental appropriation for personal services.Compensation adjustment for LGUs personnel, pursuant to the “Salary Standardization Law of 2019,” will also be based on the classification.Other inclusions under the classification include bases for creation of a new LGU, setting numbers of elective members in the Sangguniang Panlalawigan and the Sangguniang Bayan, issuance of free patent titles to residential lands, minimum wage of domestic workers, insuring LGU properties with the Government Service Insurance System, and for setting the limit on the percentage of agricultural land area that can be reclassified and its use.The first general income reclassification shall be made within six months after the effectivity of the law and every three years thereafter.The first income reclassification of provinces, cities, and municipalities will take effect on January 1 of the immediately succeeding year following the issuance of the table of income classification by the Finance Secretary.
