Tax collection is biggest priority for 2024 – Cebu City councilors

CEBU CITY, Philippines – Cebu City has its hands full trying to raise tax collections after the city council reached a consensus to slash the budget for fiscal year 2024. 

City councilors recently cut Cebu City Mayor Mike Rama’s proposed P100-billion budget by 78% – down to only P22.093 billion for 2024. 

The budget cuts were essential to bring Cebu City Hall’s 2023 actual revenue in line with the projected revenue for 2024, Cebu City Councilor Jocelyn Pesquera said in an interview with SunStar Cebu on Friday, December 22. 

In December 2022, the council approved Rama’s proposed P50-billion annual budget for 2023. However, most projects and programs were left unfunded and postponed after the city managed to collect only a gross amount of about P7.5 billion as of October 2023. 

Cebu City had an annual budget of about P10 billion in 2022. 

Pesquera, the majority floor leader and vice chair of the budget and finance committee, emphasized that if the funding source for the proposed P100-billion 2024 annual budget relies on projections, it would be prudent for the city to prioritize boosting revenue collection first before considering a budget increase. 

Tax revenue 

According to the local finance committee (LFC), the bulk of the source of funding will be taken from an estimated tax revenue of about P77.5 billion, as the LFC already factored in the possible approval of the ordinance updating the city’s real property tax (RPT) code. 

As of the last regular session on Wednesday, December 20, however, the council has yet to finalize its deliberations on the matter. 

City treasurer Mare Vae Reyes acknowledged in an earlier interview that Rama’s veto of the initially-approved ordinance for updating the tax code indicated acceptance that tax revenue collection targets will not be achieved. 

On the updated RPT code deliberation, Pesquera said the council is taking into consideration the property owners’ ability to pay and what’s best for the city government. The situation indicates that the executive department will be unable to support the proposed P100-billion budget with expected revenues.

Pesquera added that if the suggested increase in the fair market value of properties is implemented, it could discourage investors from doing business in the city. 

For instance, the proposed RPT adjustment in the north district is expected to increase by 3,200%. This is where the IT Park and Cebu Business Park are located.

‘A peso for this’ 

In the approved amendments, at least 32 city departments and offices were given only one peso for proposed expenses in 2024. 

Majority of the proposed procurements were for heavy utility equipment, IT and communication equipment, and insurance. Among the most sought after procurements were motor vehicles. 

The city’s non-office peace and order program alone proposed a budget of P20.6 million for motor vehicles, while three sub-offices under the Department of Public Services asked for a total of P15.32 million for the same items. 

“For us, it’s no longer a priority. However, if we have realized additional income and savings, they can propose a supplemental budget,” Cebu City Councilor Noel Wenceslao told Rappler on Saturday, December 23. The city managed to save P128.5 million from possible expenses on motor vehicles. 

On Friday, Cebu City Councilor Joel Garganera said that there was an initial proposal to procure electric vehicles but this was turned down as it was not in line with the Local Climate Change Action Plan (LCCAP). Garganera added that the city will be exerting more effort to include tree-planting activities and other long-term environmental sustainability programs for the LCCAP. 

Rappler tried to reach Cebu City Mayor Mike Rama and Cebu City Budget Officer lawyer Jerone Castillo to comment on the 2024 annual budget proposal. 

According to Wenceslao, the mayor has the power to veto the proposal. Rama has yet to issue a statement. – Rappler.com

Wenilyn Sabalo is an Aries Rufo Journalism fellow for 2023-2024.