Budget Authorization
What is Budget Authorization?
Budget Authorization is a process of adoption and
enactment of a Barangay Budget into a General
Appropriations Ordinance (GAO).
This is provided in Section 29 (a) (3) of the LGC:
“the Sangguniang Barangay shall enact annual and
supplemental budget in accordance with the
provisions of this Code.”
Budget Authorization
What is a General Appropriations Ordinance?
A legislative instrument that authorizes the
Punong Barangay (PB) and other Barangay
Officials to carry out delivery of basic services and
to implement priority development projects.
Provides funds to support the barangay
operations/projects.
When is the Start of the Budget
Authorization?
Under Section 318 of the LGC
“The local chief executive shall submit
the said executive budget to the
sangguniang concerned not later than
the sixteenth (16th) of October of the
current fiscal year.”
Is there a penalty for a PB who fails to
submit the Annual Barangay Budget on
time?
Pursuant to Section 318 of the LGC
“Failure to submit such budget on the
date prescribed herein shall subject the
local chief executive to such criminal
and administrative penalties as
provided for under this Code and other
applicable laws.”
Is there a penalty for a PB who fails to
submit the Annual Barangay Budget on
time?
A PB who fails to submit the budget on
or before October 16 of the current year
shall be subject to such criminal and
administrative penalties as maybe
provided by the Local Government Code
and other applicable laws
How the Barangay Budget is
Authorized
STEP 1: Present the Executive Barangay Budget to
the Sangguniang Barangay
STEP 2: Deliberate on the Executive Budget
STEP 3: Enact the General Appropriations
Ordinance
STEP 4: Approval of the GAO by the Punong
Barangay
Step 1: Present the Executive
Barangay Budget to the SB
State of the Barangay Address (SOBA)
The PB shall address the members of the SB
and the General Public
Budget Message
To present the highlights, thrusts, programs
and priorities of the barangay budget
Certifiy as urgent the proposed executive budget
Step 2: Deliberate on the Executive
Budget
Who will deliberate the Executive Budget?
Committee on Appropriations
Shall be responsible for conducting
a preliminary review and
evaluation of the executive budget
Step 2: Deliberate on the Executive
Budget
Role of the Local Finance Committee?
Under Section 316 (g) of the LGC
“Assist the Sanggunian in the
analysis and review of the budget to
determine compliance with statutory
and administrative requirements”
Step 2: Deliberate on the Executive
Budget
Period of budget deliberation
Regular Period
From submission of Executive Budget
up to enactment of Appropriation
Ordinance but not to go beyond
December 31st. (Sec. 319 of the LGC)
Step 2: Deliberate on the Executive
Budget
Period of budget deliberation
Extension Period
January 1st up to the passage of the
Appropriation Ordinance but not to
go beyond March 31st (Sec. 323 of the
LGC)
Step 2: Deliberate on the Executive
Budget
Principles in Budget Authorization
Priority of Basic Services
Shares from National Wealth
Changes in the Executive Budget
Appropriation for entertainment or reception
Step 2: Deliberate on the Executive
Budget
Principles in Budget Authorization
Priority of Basic Services
Any available funds shall first be allocated for
the provision of basic services and facilities,
before applying the same for other purposes,
unless otherwise provided in the Code. (Sec.
17 (g) of the LGC)
Step 2: Deliberate on the Executive
Budget
Principles in Budget Authorization
Shares from National Wealth
The proceeds from the shares of local
government units from the utilization and
development of national wealth shall be
appropriated to finance local development and
livelihood projects. (Sec. 294 of the LGC)
Step 2: Deliberate on the Executive
Budget
Principles in Budget Authorization
Changes in the Executive Budget
Can the Sanguniang Barangay increase the
appropriations in the budget during
authorization?
No. The Sanggunian may not increase the
proposed amount in the Executive Budget nor
include new items except to provide for
statutory and contractual obligations.
Step 2: Deliberate on the Executive
Budget
Principles in Budget Authorization
Changes in the Executive Budget
Can the Sanguniang Barangay reduce the
appropriations in the budget during
authorization?
Yes. The Sanggunian Barangay can reduce the
appropriations during the authorization phase of
the budget process.
Step 2: Deliberate on the Executive
Budget
Principles in Budget Authorization
Appropriation for entertainment or reception
“No money shall be appropriated, used, or paid for
entertainment or reception except to the extent of
the representation allowances authorized by law or
for the reception of visiting dignitaries of foreign
governments or foreign mission, or when expressly
authorized by the President in specific cases.” (Sec.
343 of the LGC)
Step 2: Deliberate on the Executive
Budget
Budget Deliberations
Discuss the allocation of income to the
following: (Initiated by the Committee on
Appropriations)
Budgetary Requirements
Allocation of Income to Other Priority Projects,
Activities and Purposes (PAPs)
Discuss Sources of Income
Step 2: Deliberate on the Executive
Budget
Budget Deliberations
Budgetary Requirements
20% of IRA for Development Projects
Check if the minimum requirement is
provided
20% X Total IRA for the Budget Year
5% of Regular Income for Barangay Disaster Risk
Reduction and Management Fund (BDRRMF)
Check the BDRRMF requirement
5% X Regular Income
Step 2: Deliberate on the Executive
Budget
Budget Deliberations
Budgetary Requirements
10% of General Fund of the Barangay SK
2% of Real Property Tax Collection of next
preceding year shall be for Discretionary
Expenses of the PB
55% Regular Income of next preceding year
shall be the PS cap or limitation
Step 2: Deliberate on the Executive
Budget
Budget Deliberations
Discuss the allocation of income to other Priority
PAPs
Priority Projects over and above the 20% of the
IRA
Expenditure Program (PS, MOOE, CO)
Expected Results/Output
Performance Indicators for each Major Final
Output
Step 2: Deliberate on the Executive
Budget
Budget Deliberations
Sources of Income
IRA and National Wealth Shares
Locally-Generated Income
Income from Tax Revenue
Income from Operating and Miscellaneous
Revenue
Income from Other Sources
Step 2: Deliberate on the Executive
Budget
Budget Deliberations
Sources of Income
IRA and National Wealth Shares
Review Points in IRA:
What is the basis for the budget year’s
IRA figure?
Compare the previous/current year’s IRA
What is the 20% IRA for the Budget Year
Step 2: Deliberate on the Executive
Budget
Budget Deliberations
Locally-Generated Income
Review points in estimating the Locally-
Generated Income
Is the estimated income realizable?
- Historical trend
- One time collections
Step 2: Deliberate on the Executive
Budget
Budget Deliberations
Incase of Borrowings
Review Points:
When is the start of amortization?
What is the amount of yearly
amortization?
Does the total debt service requirement
exceed the 20% cap?
What are the conditions for the grant of the
loan?
Step 3: Enact the General
Appropriations Ordinance
The Appropriations Ordinance is the
legislative instrument authorizing the
budget. It becomes effective at the
beginning of the budget year upon its
approval by majority of the SB
members and signed by the PB.
Step 3: Enact the General
Appropriations Ordinance
On or before the end of the current
fiscal year, the Sanggunian shall enact,
through an ordinance the annual
budget of the Barangay for the ensuing
fiscal year.
Step 3: Enact the General
Appropriations Ordinance
The Appropriation Ordinance shall
contain the following basic
information/provisions:
An assigned number; title or caption;
an enacting or ordaining clause; and a
provision specifying the effectivity
date;
Step 3: Enact the General
Appropriations Ordinance
Contents of Appropriation Ordinance
A provision summarizing the sources
of revenues, other receipts and
borrowings and the magnitude of
expenditures;
A provision that the budget complies
with the budgetary requirements and
general limitations under the Code;
Step 3: Enact the General
Appropriations Ordinance
Contents of Appropriation Ordinance
A provision that the execution of the
budget shall comply with the
budgetary guidelines and procedures
in the Manual;
A provision on the Barangay
expenditure program
Step 3: Enact the General
Appropriations Ordinance
Contents of Appropriation Ordinance
A provision identifying the budget
documents appended to the
appropriations ordinance;
Step 3: Enact the General
Appropriations Ordinance
Requisite of a Valid Ordinance
• Must not contravene the Constitution or any
statute (San Miguel Brewery vs Magno)
• Must not be unfair or oppressive (People vs.
Fajardo)
• Must not be partial or discriminatory
(Sarmiento vs. Belderol)
Step 3: Enact the General
Appropriations Ordinance
Requisite of a Valid Ordinance
• Must not prohibit but may regulate trade
(Kwong Sing vs. City of Manila)
• Must not be unreasonable (Marconi vs. City of
Manila)
• Must be general and consistent with public
policy (Ongsiako vs. Gamboa)
Step 3: Enact the General
Appropriations Ordinance
Effect of Failure to Enact the Budget
In case the SB fails to enact the
ordinance on time, the SB shall
continue to hold sessions without
additional remuneration until the
ordinance is approved and no other
business may be taken up during
such sessions. (Sec. 323 of the LGC)
Step 3: Enact the General
Appropriations Ordinance
Effect of Failure to Enact the Budget
If the Sanggunian still fails to pass
the ordinance after ninety (90) days
from the beginning of the fiscal
year, the appropriation ordinance
of the preceding year shall be
deemed reenacted.
Step 3: Enact the General
Appropriations Ordinance
Effect of Failure to Enact the Budget
No ordinance authorizing
supplemental appropriations shall be
passed in place of annual
appropriations.
Step 3: Enact the General
Appropriations Ordinance
What are the items that are deemed
reenacted?
Salaries and wages of existing positions;
Statutory and contractual obligations;
and
Essential operating expenses.
Step 3: Enact the General
Appropriations Ordinance
Implementation of Reenacted Budget
Local Treasurer
Excludes from the estimates of income for
the preceding fiscal year those realized
from nonrecurring sources.
Compare the revised income estimates
with aggregate reenacted appropriations.
If income is less than appropriations,
advise the Sanggunian concerned
Step 3: Enact the General
Appropriations Ordinance
Implementation of Reenacted Budget
Local Treasurer
Sanggunian, within 10 days from receipt of
advice, make necessary adjustments.
The revised appropriations authorized by
the Sanggunian shall then be the basis for
disbursements.
Step 4: Approval of the GAO
The ordinance enacted by the SB, upon
approval by the majority of its
members, need to be approved and
signed by the PB.
Step 4: Approval of the GAO
Recording/Approval of Appropriation
Ordinance
Records the ordinance in the official book
of enacted ordinance;
Stamps the ordinance with the official
seal of the Sanggunian;
Gets signature of all members and
officers in every page;
Step 4: Approval of the GAO
Recording/Approval of Appropriation
Ordinance
Forwards enacted ordinance to the
Punong Barangay for approval;
Gets signature of all members and
officers in every page, thereof.
What is a Supplemental Budget?
A supplemental budget is a financial plan
authorized by a legislative body through
the enactment of an ordinance or law
that authorizes the changes in the annual
appropriation ordinance or law
When is the SB prepared?
The SB is prepared under the following
circumstances:
When funds are actually available as
certified by the Barangay Treasurer;
When new revenue sources (other than
those identified in the annual budget) can
support the additional budgetary
requirements; and
In times of public calamity.
When is the SB prepared?
When is funds actually available?
Funds are actually available when:
Realized income exceeds actual income; and
If there is savings.
What is savings?
Savings refer to portions or balances
as of any given point in the fiscal
year of any programmed or allotted
appropriation.
When is savings realized?
If any programmed or allotted appropriation
remain free of any obligation or
encumbrances;
Still available after the satisfactory
completion or the unavoidable
discontinuance or abandonment of the work,
activity or purpose for which the
appropriations was originally authorized;
When is savings realized?
Unobligated compensation and
related cost pertaining to vacant
positions and leaves of absence
without pay of local personnel
receiving salaries.
Effectivity of the Supplemental
Budget
An ordinance enacting a supplemental
budget, shall take effect upon its
approval or on the date fixed therein.
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