Belt tightening measures up as city tackles budget deficit
Baguio City will adopt belt tightening and economic recovery measures to cope with the budget deficit and reduction due to huge income losses it suffered from the Covid-19 pandemic.
Mayor Benjamin Magalong told the Management Committee Aug. 25 that the city has to rationalize its spending and improve profitability for it to weather the financial crisis.
At the same time, the mayor stressed the need to prioritize funds for its continuing Covid-19 control programs.
He said one way for the city to recover is to engage in business enterprise to generate revenues and be independent from the national government assistance through the Internal Revenue Allotment.
“We can work out acquisition of more lands to entice potential investors for income-generating ventures,” the mayor said.
City Treasurer Alex Cabarrubias and City Budget Officer Leticia Clemente recommended cost-cutting measures to deal with the deficit in the 2020 budget and the impending reduction of the 2021 budget.
Cabarrubias said the city’s losses in internal and external income had so far reached P126 million in the last five months and this has significant impact on this year’s financial status.
He said there is no way that the city can collect its projected income from business, real property, and other sources this year because of the financial hardship everyone is experiencing.
Cabarrubias said the city will have to do away with non-essential projects and pursue only revenue-generating ones.
Clemente projects a P400M reduction in the 2021 annual budget from the current P2.3 billion to P1.9B.
This is based on the reduced income projections of P1.137B from external sources and the P767M from internal revenues.
She suggested three ways to save on expenditures: reclassify the more than 200 vacant positions or freeze hiring of personnel; implement an across-the-board 11 percent decrease in the proposed budget of all departments by prioritizing essential needs; and remove allocations under the capital outlay.
City Planning and Development Officer Donna Tabangin said that in view of the scaled down projections, the city will also have to revisit the programs, plans, and activities (PPAs) and barangay projects earlier listed in the proposed Annual Investment Plan (AIP) for 2021 amounting to P6.7B for the needed adjustments.
“We have overshot the allowable amount of funding and now we call for everyone to go back to their PPAs and prioritize,” she said.
The AIP lists the development projects to be implemented each year and funded under various sources in the annual budget. – Aileen P. Refuerzo