City's major projects threatened by IRA cut
Two of the city government's major projects are threatened by the possible cut on the city's Internal Revenue Allotment (IRA) should the creation of new cities in the Philippines including the municipality of Pototan pushes through. This includes the proposed construction of the multi-million new city hall building.
Mayor Jerry Treñas said the city hall building project could be affected by the IRA cut even if the Land Bank of the Philippines already approved the city's application for loan.
Treñas met with Department of Budget and Management (DBM) Secretary Rolando Andaya yesterday in this regard. The result of their meeting would be known today.
The creation of new cities in the Philippines will automatically reduce the IRA of each city. The projected IRA share of the city government was used as one of the basis for the approval of the city's loan to Land Bank of the Philippines which amounted to P350 million.
The bank approved the city's loan based on the IRA share of the city and its capacity to pay. Once there is a cut on IRA, the paying capacity of the city government is also slim.
On the sanitary landfill, the city is working hard for the implementation of such project. In fact, several groups have already offered a design and services in constructing a sanitary landfill. The project cost millions of pesos.
The sanitary landfill is a must for the city as mandated by law. The sanitary landfill is also supposed to address the worsening garbage problem in the city's dump site. Tons of garbage are dumped everyday at the Calajunan dump site in Mandurriao.
Treñas said the approval of the new cities would cut down the city's IRA's share by P32 million. The government should take a look on the effects of the creation of new cities. The League of the Cities in the Philippines (LCP), in which Treñas is the president, is long been opposing for the creation of new cities.
The LCP also suggested that the new cities will receive the same IRA they get while they are still considered as municipalities. The proposed new cities are towns which deemed they have the capacity and revenues qualified to become a city.
At the same time, the league likewise proposed a scheme on how to release the IRA of new cities. The IRA shares of new cities should be released on staggered basis within five years. They will receive 50 percent of their IRA share on the first year, 62.5 percent for the 2nd year, 75 percent on the 3rd year, 87 percent for the 4th year and 100 percent on the 5th year.