President Arroyo may be the toast of local executives for her policy of speedily releasing the share of local government units (LGUs) in tax revenues, but her administration is guilty of making it more difficult for them—especially the cities—to make ends meet.

A record number of additional provinces, cities, municipalities, and barangays have been created since Ms. Arroyo came to power in 2001, thus reducing the percentage share of LGUs in their lifeblood—the internal revenue allotment (IRA) from the national government.

A total of 3 provinces, 22 cities, 17 municipalities, and 52 barangays have been created during President Arroyo's six years in office, or from January 2001 to December 2006, based on figures from the National Barangay Operations Office of the Department of the Interior and Local Government and from official government announcements. These are more than what have been created by her predecessors since the process of devolution and decentralization started in 1992.

Although the creation of a new LGU is an act of Congress, Malacañang is perceived to be encouraging the practice. The President has not discouraged her allies in the legislature from creating new local entities. Local government leagues have lobbied for an end to it—to no avail.

Most local governments depend on their share in the IRA to finance at least 70 percent (to as high as 98 percent) of their operations. They say that to be able to deliver services well, they should be getting more than what the Local Government Code stipulates, which is 40 percent of the national government's tax revenues.

Of this 40 percent, 23 percent goes to the provinces, 23 percent to the cities, 34 percent to the municipalities, and 20 percent to the barangays. Old LGUs therefore consider newly created ones as competitors for their already small slice in the IRA pie.

While the administration of President Fidel Ramos created an undetermined number of additional LGUs, this was done in the earlier years of decentralization, which started in 1992, his first year in office, when stakeholders were still balancing the pros and cons of the new IRA formula. (The Department of Budget and Management told us that records of new LGUs created under Ramos are not in their database, probably stored in one of their stockrooms.)

When Ramos stepped down in June 1998, the country had 78 provinces, less than 85 cities, 1,540 towns, and almost 42,000 barangays. After two-and-a-half years, or when President Joseph Estrada stepped down in 2001, there were still 78 provinces, 96 cities, 1,513 towns, and 41,943 barangays—the number of towns and barangays even decreasing from Ramos's time.

For the creation of LGUs, the Code lists down requirements (involving population, LGU income, and land area) that observers say are easy to meet (Click here for the list of requirements for LGU creation). So while some geo-political units may be qualified to be set aside as a separate LGU or converted into a higher-level unit, the easy requisites may be taken advantage of by a President, legislators, and ambitious local politicians to boost their political stock.

Under President Arroyo's watch, for instance, many of the additional LGUs were created or converted shortly before election periods. (Read the list here).

In 2001, before the campaign for senatorial and local elections started, 14 municipalities were converted into cities, and the province of Zamboanga Sibugay was carved out of Zamboanga del Sur.

In 2004, all of the new LGUs, except for one town, were created before the May presidential elections that year. These were 2 cities, 2 municipalities, and 16 barangays.

A few weeks before 2006 ended, or a barely three months before the start of the national campaign period of 2007, two new provinces were created: Shariff Kabunsuan, which was carved out of Maguindanao, and Dinagat Islands, which was carved out of Surigao del Norte. During the same year, 18 towns were converted into cities, 4 new cities were created, and 15 towns and 52 barangays were formed.

Of the new LGUs over the last six years, most are in Mindanao, and many of them are in the province of Maguindanao, where Arroyo's loyal ally and main vote-getter, Gov. Andal Ampatuan, is said to be creating new LGUs where his sons can run for elective posts. (Read: All in the Family and Dividing Like Amoebas.) Aside from one province carved out of Maguindanao, at least eight municipalities and 12 barangays were created in the said province under the Arroyo presidency.

The loudest complaints about the creation of new LGUs are coming from existing cities. They are the most affected, after all, in terms of reduced individual IRA share.

Of the types of LGU creation, the second most frequently done is the conversion of municipalities into cities. In the last six years, 19 municipalities were turned into 18 cities (in the province of Sorsogon, two towns, Sorsogon and Bacon, were merged to become a city), and four more new cities were created.

In 2000, when there were 96 cities, their average individual share in the P25.70-billion IRA was P267.78 million.

The following year, with a reenacted national budget, the same allotment was divided among cities, which by that time had increased to 114. This has reduced the cities' average individual share to P225.5 million, or a slash by P42.28 million for each city.

In 2003, a P32.43-million IRA was divided among 115 cities. The national budget was reenacted for 2004 but the number of cities had increased to 117, so average individual shares dropped from P282 million to P277.17 million.

Due to government's tax collections, it can be said that the average individual shares of LGUs have most of the time been nominally increasing despite the additional LGUs that partake of the IRA.

However, existing LGUs can't help but think of the bigger amounts that could have been released to them—and funded their operations—if the number of LGUs partaking of the increased IRA remained the same.

This article was made possible with support provided by the United Nations Democracy Fund and the United Nations Development Programme in the Philippines. The opinions expressed here are those of the author(s) and Newsbreak and do not necessarily reflect the views of the United Nations Democracy Fund and the United Nations Development Programme in the Philippines.

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