DBM declares Iloilo City’s 2025 budget inoperative due to tax allocation entry error

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The issue stems from an incorrect amount indicated by the City Budget Office in the city's National Tax Allocation

ILOILO CITY, Philippines – A miscommunication in the preparation of Iloilo City’s 2025 annual budget led to the Department of Budget and Management (DBM) declaring the approved local government budget “inoperative in its entirety.”

The issue stemmed from an incorrect amount indicated by the City Budget Office in the National Tax Allocation (NTA), the share of national taxes allocated to local governments.

In the 2025 budget approved by the City Council in November 2024, the NTA share amounted to P1,714,764,252, which is P9,175,216 lower than the correct amount stated by the DBM.

A letter from the DBM, dated June 27, 2024, showed that the correct figure should be P1,723,939,468.

Viminale Capulso, head of the City Budget Office, said there was an internal miscommunication, as the office received the DBM letter but it was not forwarded to the budget officer handling the preparation of the city’s 2025 budget.

As a result of the discrepancy, allocations for key funds, such as the 20% Development Fund, the 5% Local Disaster Risk Reduction and Management Fund (LDRRMF), and the 1% Local Council for the Protection of Children, were insufficient.

Since these funds require fixed percentage allocations under the Local Government Code, the DBM ordered the allocations to be adjusted.

During its regular session on Wednesday, February 5, the City Council rectified the discrepancies. It will be resubmitted to the DBM for review, and, if approved, it will be retroactively implemented from January 1.

With the adjustments made based on DBM’s figures, the total annual budget is now P4.143 billion, up from P4.134 billion.

Iloilo City’s Development Fund increased from P342 million to P344 million; LDRRMF increased from P206.7 million to P207.158 million; and the Local Council for the Protection of Children saw an increase from P17.147 million to P17.239 million.

Capulso assured that the mistake did not cause any damage to the city’s financial operations, as the adjustments even led to funding for previously unfunded projects.

“There is no damage. We consider it actually a happy problem because the amount increased, so we have additional funds to support our projects […] With these adjustments, we now have the resources,” she emphasized.

Additional funds allocated for previously unfunded projects include P6.59 million for drainage construction, rehabilitation, and repair of LaPaz Plaza, and P200,000 for the Philippine Councilors’ League.

To prevent similar issues in the future, a separate logbook has been created specifically for tracking communications with the DBM.

“I have designated another records officer, so we assigned a new one. We have a separate logbook for communications coming from the DBM or exclusively from the DBM,” she said.

Since there was no proof of acknowledgement in the previous operations, Capulso said staff members are now required to affix their initials when relaying information to ensure accountability and confirm receipt of documents. – Rappler.com