City Faces Financial Woes

Financial woes are knocking on the door of Cebu City Hall.

As of Tuesday, the Cebu City government failed to settle some of its financial obligations such as its P220 million second installment to the Japan Bank for International Cooperation (JBIC) this year for the loan it availed for the South Road Properties (SRP).

“Unahon ra g’yud nato kon unsay urgent nga expenses,” said Tessie Camarillo, who is designated as Officer-in-Charge (OIC) of the City Treasurer’s Office by the Bureau of Local Government Finance (BLGF).

Cebu City’s daily average collection is only P2 million. It has P1.096 billion in the bank, however, only P223.2 million of the amount, classified under the General Fund, can be used for urgent needs of the city because the huge chunk of the money are either in trust funds, time deposits, or “tagged” by the bank because of a pending case in court.

The Daily Cash Report of all funds of the City of Cebu as of August 16, 2013 shows that the city has P1,096,673,863 deposits in banks. These are categorized as General Fund (P506.1 million); trust fund (P395.2 million); Special Education Fund (SEF) (P168.1 million) and barangay funds (P27.1 million).

Usually, the expenses of government units are charged against the General Fund, but Cebu City records show that only P223.2 million of the city’s General Fund can be used for urgent expenses.

This is because of the P506.1 million under the General Fund, the P212 million can only be used for the expenses of eight City Hall departments, which include the Cebu City Medical Center (CCMC), City Traffic Operations Management (CITOM), Markets, Abattoir and Transport.

The remaining amount, meanwhile, or the P165.3 million, still cannot be touched because it was placed under a five-year term time deposit with the Philippine Veterans Bank, which will mature in 2015 yet. The city has a P117.5 million deposit with the Philippine Postal Savings Bank but this was tagged by the bank because of a pending garnishment case in court filed by the Ralloses.

While the city has P395.2 million in trust funds, guidelines have to be followed in the disbursement of such funds. For example, Pagcor funds can only be used for the maintenance of peace and order, health and some other projects.

The city’s P168.1 million SEF, meanwhile, can only be used for school-related projects like the construction or the repair of school buildings, purchase of books and other similar expenses.

The P27.1 million barangay funds on the other hand can only be used for barangay projects aside from the amount allocated to the barangays in the Local Development Funds (LDF).

The financial problems already caused some city councilors to worry, fearing that time may come that the city will not be able to pay the monthly salaries of the 4,456 city officials and employees amounting to P60 million.

The Cebu City Council on Tuesday held an executive session to discuss the city’s financial matters, but the city treasurer, city planning and the budget officers, who were invited, failed to attend the session.

This, after Mayor Michael Rama did not allow them to attend the executive session, stating that Camarillo is not his choice for city treasurer. Rama had recommended to the Department of Finance (DOF) then city treasurer Ofelia Oliva, Mandaue City Treasurer Regal Oliva and City Accountant Diwa Cuevas for the position but the BLGF appointed Camarillo in an acting capacity.

It was the second time on Tuesday that the members of the Local Finance Committee failed to act on the invitation of the City Council, but the city legislators scheduled another executive session on August 28 and still invited the LFC members to appear.

City Councilor Margarita “Margot” Osmeña, head of the City Council’s budget and finance committee, said the council wants to know the city’s financial situation because they are bothered by the Commission on Audit (COA) report that the city incurred an overdraft of P965 million as of last December 31.

An overdraft means the city’s available funds as of year end did not meet the total amount of its payables, which is over P1.9 billion.

COA had suggested to Rama that he should implement a general revision of the assessed value of the real property taxes as one way to increase the city’s revenue collections, but the mayor is not inclined to comply with the recommendation of the state auditors.

What Rama wants is to intensify the re-validation of the real property units so that the city can collect more taxes from real property owners whose properties are registered as residential when in reality these are being used for commercial purposes.

The city’s revenue collections from the real property taxes in 2012 was only P340.1 million even if there are over 240,000 real property units registered in the 80 barangays of the city.

Another possible solution to the money problems of the city is for Filinvest Land Incorporated (FLI) to remit about P600 million, representing its 10 percent share out of the Joint Venture Agreement (JVA) for the 40-hectare lot at the SRP where the FLI had constructed condominium projects for sale.

Rama said that the City Council should help solve the problem of lack of funds by authorizing him to sell the city-owned lots  such as those at the SRP, the 3.5 hectare land at the North Reclamation Area (NRA), and the one adjacent to the main entrance of Waterfront Cebu City Hotel and Casino in Lahug.

“Ingna sila nga pahatagi ko og authority nga makabaligya’g mga yuta sa siyudad kay sulbad dayon na’ng problemaha,” the mayor said.

Rama’s administration also needs about more than P1 billion to solve the flooding problem in the city, particularly in the downtown area and some lowland portions of the city.

The city also has over P172.3 million payables to the suppliers of various goods to the City Hall and the community tax shares to the different barangays, including reimbursements of job-related expenses of city officials and employees. The documents for these payables have already been processed and approved by the City Accounting Department and are now waiting for the issuance of checks at the City Treasurer’s Office.