The IRA Allocation of Olongapo City: A Study of Its Effects on Developmental Efforts

Abstract

With the advent of the Local Government Code (LGC) of 1991, significant changes had happened with regards to the role and significance of local government units (LGUs) in the local setting. This became possible because the LGC granted the LGUs with additional revenue sources and a larger share in the national government budget 一 the Internal Revenue Allotment (IRA). Among the devolved functions specified in the law is the responsibility to carry out the development process in the local context. This is operationalized with the statutory requirement of spending 20% of IRA on development projects. This research paper looks at one case in particular 一 Olongapo City. The research has used library and archival research coupled with interviews to determine what the impacts of IRA are with regards to the choice and implementation of development programs. It also tried to look at the perception of Olongapenos with regards to these programs. Unlike other less blessed LGUs, Olongapo City does not see budget limitation as a problem with regards to its development programs. This is because the LGU resorts to other ways to finance these through BOTs, loans, and increasing its revenues through the restructuring and updating its tax collection system. At the end, it was recommended that the city look at its expenditure priorities and give equal priority to the intangible side of development which is the improvement in the quality of lives of Olongapenos by increasing its expenditure of social services. Furthermore, the focus of the programs of the city should be geared towards empowering the people by encouraging them to go in their own businesses. In this way, Olongapenos would no longer depend upon the LGU to provide them with employment opportunity. A restructuring of IRA was also suggested towards a system that takes into consideration the net fiscal capacities of LGUs in order to encourage them to increase their tax collection.