February 3, 2023

The City Government of Baguio has decided to hold off the benefits of some city government personnel to implement the 4th tranche salary increase of all employees in 2023. 
The benefits are hazard pay, subsistence allowance, and laundry allowance of some personnel under the City Health Services Office, City Social Welfare and Development Office, and City Veterinary and Agriculture Office. 
The total amount of benefits to be removed from the city’s budget for Personal Services (PS) in 2023 is P29.7 million. This amount is more than enough to satisfy the estimated funding requirement for the 4th tranche salary adjustment, which is P28.8M.
City Budget Officer Leticia Clemente said the magna carta benefits will be granted retroactively in the future, subject to the availability of funds from the PS savings.
Earlier, it was announced that the city government had exceeded its 45 percent PS limitation for fiscal year 2023.
As a result of the PS excess, the city government was constrained to implement the 4th tranche of the salary standardization for its employees. 
Pursuant to Section 325 (a) of the Local Government Code, first to third class local government units such as Baguio City shall not allocate an amount exceeding 45 percent of its total annual income from regular sources of the previous year for PS in the next preceding year. 
In the foregoing case of the City Government of Baguio, the basis for computing its 45 percent PS limitation to be applied next year is Fiscal Year 2020.
The excess is attributed to the Covid-19 pandemic, which had greatly affected the economy, both locally and globally, especially in 2020.
Personal services refers to all budgetary items intended for the payment of salaries, wages, step increments, and other compensation of permanent, temporary, contractual, and casual employees of an LGU.
The Salary Standardization Law of 2019 also provides that the implementation of the salary adjustment is subject to the PS limitation.
The Department of Budget and Management-Cordillera earlier informed the city council there are two possible options the city government can explore to provide the fourth tranche salary increase despite the PS excess.
The first option was to collapse vacant plantilla positions in all offices or to reduce PS items that are of lesser priority.
The first option was not viable as the amount of the annual salaries of all vacant positions is only P17.04M, which is 69 percent lower than the amount needed for the 4th tranche salary adjustment. – Jordan G. Habbiling