B U D G E T      M E S S A G E

October 15, 2010

The Honorable Members

Sangguniang Pambayan

Gentlemen:

May I submit the proposed Annual Budget for FY 2011 of the Municipal Government of Laoac for the General Fund pursuant to Section 318 of RA 7160.

A. Introduction

This proposed Executive Budget was prepared after a thorough deliberation with all concerned offices/departments and interested citizens, to make it an effective tool for allocating equitably the limited resources of government to the different sectors, thus making the Budget an instrument for the economic and social upliftment of our people. We have substantially committed funds for the programs, projects and activities needed for the efficient and effective delivery of the basic services enumerated in the Code.

The preparation of this Budget has been open to the public through private sector representation so as to make decisions more participative and democratic. This is also in keeping with government’s thrust for transparency and accountability in the budget-making processes. We take full cognizance of the significant roles demonstrated by non-government organizations, other associations from the private sector and the general public in the planning and pre-budget preparation stage, by way of their membership in the Local Department Council Executive Committee.

In particular, they took active part in the review of the visions and goals in the Municipal Development Plan and the prioritized projects in the Medium-Term Municipal Development Investment Program to address current needs and provide inputs to the formulation of the Annual Investment Program. These programs have been duly formulated by the honorable members of the Sanggunian under MDC Resolution No. 10-04.

This Budget integrates the Municipal Development Plan into the expenditures program by proposing only those projects which have been ranked as top priority in the AIP.

Top budget priorities include investing on Social Services, Agricultural Development and Sustainable Livelihood Programs.  As a Fourth Class Municipality, still highly dependent on our Internal revenue Allocation (IRA), it is imperative to ensure that residents in depressed communities have access to basic government services, especially financial assistance for calamity relief, medical emergencies, burial services and other similar expenditures for our less fortunate townmates or the less privileged sector of our municipality.

The focus on Agricultural Development and Sustainable Livelihood Programs, primarily is to generate much needed economic activity to help spur the town into progress, albeit not as aggressively as we would like to,  given  a very scarce budget.

With over 90% of Laoac residents dependent on farming and livestock production, focusing expenditure on providing financial, technical and marketing assistance to our farmers can help enhance the overall productivity of the greater majority of our constituents.

For our Livelihood Programs to be sustainable and effective, there are numerous requisite components that must first be funded, including but not limited to the conduct of capacity building activities, product development, marketing research and advertising.

All these priority programs are in consonance with our vision to make Laoac a major source of quality goods, services and human resource, that can be competitive and at par with the best, not only nationally, but even internationally.

The balanced General Fund Budget for FY 2011 is composed of the Expenditure Program and Sources of Financing, amounting to a total of P 45,006,638.00. The Expenditures Program and Sources of Financing are illustrated in Exhibits 1 and 2.

B. GOALS AND OBJECTIVES

The municipality expects to attain the following objectives during the plan period:

• Increased per capita income by a stated percentage;
• Focused the provision of basic needs and services to selected depressed areas;
• Realistic percentage of citizens/constituents participation;
• Provided expanding employment opportunities among the under privileged sector thru conduct of vocational course (practical skills training) with TESDA;
• Increased agricultural productivity and enhance delivery of social services, health care and other basic services.
• Planted 30% of the targeted 100,000 trees a milestone for a greener future project.

C. FISCAL POLICIES

Revenue-generating measures include enhanced tax collection via a vigorous tax information campaign and intensified tax collection effort.

Exhibit 4 shows the trend of expenditures for 2009 to FY 2011. Expenditure for the Economic Sector has had a pronounced increase in 2010 owing to receipt by the Municipality of its Php60M share from the Tobacco Excise Tax.  This amount represents the Municipality’s share, received in lump, for the years 1997 to 2007 (10 years).

Conversely, there is a pronounced decrease in Expenditure for the Economic Sector from the year 2010 to the coming year, 2011 because there is no expected receipt of share from the Tobacco Excise Tax, or any such like amount in 2011.

In the same vein, the marked increase in Expenditure for the Social Services Sector from 2009 to 2010 is due to the Php11M Soft Loan from Landbank, which was used for various infrastructure projects by the immediate past administration. This is also the reason for the distinct decrease in Expenditure for the Social Services Sector from this year 2010 to the coming year 2011.  The Health, Nutrition and Population Control Sector also shows a steady increase for the three year period, from 2009 to 2011, owing to the absorption of devolved health services.

In furtherance of the goals of transparency, accountability and fiscal responsibility, it is the strict policy of our LGU to institutionalize full disclosure of all the municipality’s budget and all transactions through regular posting of financial reports showing budgetary allocations and disbursements in strategic places within the vicinity of our Municipal Hall and in Barangay Halls.  This is not only to keep the public appraised as to how their money is being spent but, more so to encourage a more active participation  of non-government agencies, civil society organizations, the public sector and the community in general to all our development efforts.

In health services, programs are reoriented to allow us to monitor and measure our outputs based on specific target patients/beneficiaries.  This will facilitate reporting of expenditures in health care service, as our outputs will be in measured in terms that will be easily understood by the public.

DISTRIBUTION BY FUNCTIONAL ACTIVITY

It has been long recognized that, in order to be efficient and effective in its operation, a local government unit should aim for the improvement of the ratio of its overhead cost, to cost of production and services delivery. Thus, it is important to present in this Message, through the chart below, the direct cost of public goods and services produced and delivered vis-a-vis its associated cost. This presentation slices the budget pie on the basis of functional activity.

The distribution of LGU budget (Exhibit 5), P13,900,432.19 or 31% is allocated for the operation of frontline services; P 8,243,328.00 or 18% will be spent for development projects; P 19,800,072.36 or 44% is provided for General Policy, Administration and Finance Services; P 3,062,805.45 representing 7% of the total budget will be for Other Purposes.

E. DISTRIBUTION BY MAJOR EXPENSE CLASS

PERSONAL SERVICES

The total expenditures for Personal Services for the budget year is P 23,861,868.44 inclusive of the provision for Salary Standardization. Total Personal Services accounts for 53% of the total LGU budget.

MAINTENANCE AND OTHER OPERATING EXPENSES

The amount of P 18,844,769.56 has been set aside for MOOE, representing 42% of the budget.

CAPITAL OUTLAYS

Expenditures for Capital Outlays will amount to P 2,300,000.00 or 5% of the total expenditures. It includes provisions for development projects and Equipment Outlays in the amount of P 1,672,500.00 and P 627,500.00, respectively.

OTHER PURPOSES

The amount of P 2,250,332.00 which is equivalent to 5% were set aside as reserve for calamity and P 22,000.00 as Aid to Barangays.

CONCLUSION

Submitted together with this Message are the Local Budget Preparation Forms No. 1-8.

Gentlemen of the Sanggunian, this budget proposal manifests our determination to lay a strong foundation for a greater and progressive municipality. May we always join our hands together as we go about our mission of providing a brighter future for our constituents.

Very truly yours,

SILVERIO  D. ALARCIO, JR., CEO VI

Municipal Mayor