Public Services as Socio- Economic Enterprises (Part I)

Courtesy of philter.com

Background

One of the fundamental state policies enshrined in the Philippine Constitution is the autonomy of local government units. (Const., Art. II, Sec. 25). Pursuant to the mandate given by the Constitution, the Philippine Congress enacted Republic Act No. 7160, otherwise known as the Local Government Code of 1991 which replaced Batas Pambansa Blg. 337, which is the old local government code.

Under the Local Government Code of 1991 (LGC), more public services and responsibilities were devolved to the Local Government Units some of which are complex and costly to undertake, such as primary health care (hospitals and clinics), public education, peace and order and environmental management, among others.

In the Philippines, pure public services are either provided by the LGUs free or partly operated with minimal user charges, which means fully or partly subsidized by budgetary appropriation. This free public service has been traditionally practiced by the LGUs, ever since up to the present.

Republic Act 2425 on the other hand, directs the LGUs to see to it that the minimum basic needs (MBN) of the citizens are provided for. The Social Reform Agenda (SRA) defines MBN as “the needs of Filipino family pertaining to survival (food and nutrition, health, water and sanitation, clothing), security (shelter, peace and order, public safety, income and livelihood) and its enabling needs (basic education).

Courtesy of www.paranaque.gov.ph

It will be noted that the implementation of the MBN, especially the highlighted ones, can be effectively carried out effectively through socio- economic enterprises. This is of course easier said than done because of one major constraint,  limited and/or lack of financial resources, the proverbial and traditional scapegoat of LGUs for failing to adequately, if not effectively, carry out the delivery of local public utilities as mandated by the LGC and the MBN/SRA.

Lately, R.A. Act 9003 ordered the mandatory requirement for LGU’s to establish solid waste sanitary landfill as an additional public service. Aside from being complex and budget dependent, these capital intensive functions have no direct sources of revenues to finance their administrative and technical operations. The LGU’s can collect fees and charges to a certain extent though, but barely enough even to pay the salaries of personnel and related administrative costs, let alone procurement of supplies and materials, capital improvements, etc.

Historical records show that 70-80 percent of annual expenditures of the LGUs are for administrative and recurrent maintenance activities. The remaining 20% is competitively shared by capital expenditure, economic investments, human resource development, and the surplus, if any, to pay for additional personnel benefits at the end of the year. In most LGU’s in the country, research and development is a far thing from their plans.

It is sad to note that the inter-local government cooperation and effort sharing as authorized in the LGC have not been exercised nor even initiated yet by the LGUs. There is no effort on the part of the LGUs, it appears, to draft memorandum of agreements or operating procedures and mechanics to activate “dormant potential” tool for economic development and delivery of services, especially the local socio-economic enterprises.

Many LGU chief executives and elected officials have still the wrong hypothesis that effective governance is equal to have year-end surplus or savings  in the local treasury, that is, the bigger the savings, the higher their performances are. On the contrary, many basic public services have been neglected. To me, that is a myopic view of good governance. Some local chief executives are afraid to invest public funds for public services, to which the people’s money is intended to, in the first place. 

More to come in part 2)