Local government units earned a combined P184.23 billion in the third quarter, up three percent from a year ago, as higher foreign financing mitigated the drop in domestic revenues.
Based on data from the Bureau of Local Government Finance (BLGF), local sources of funding dipped 15 percent to P39.65 billion due to the reduction in both tax and non-tax collections.
In August, Metro Manila and other areas were placed under lockdown to minimize the spread of the Delta variant. As quarantine restrictions were tightened, business establishments were forced to either reduce their capacity or shut operations altogether.
Thus, taxes collected by the LGUs slipped 17 percent to P27.79 billion in the third quarter. Business taxes, in particular, went down to P17.18 billion, declining by about 24 percent.
Further, real property taxes collected slid 10 percent to P8.33 billion as tenants cleared out of commercial spaces with foot traffic down during the lockdown.
Likewise, non-tax revenues generated through regulatory fees, service charges, among others, fell eight percent to P11.85 billion.
On the other hand, external financing for LGUs jumped nine percent to P144.58 billion mainly due to the increase in internal revenue allotment (IRA).
Bulk of the amount came from the IRA at P144.58 billion, improving from P133.08 billion, with the government preparing to expand the share of localities in its revenue collections. The remainder was made up of dividends in other measures like tobacco taxes, as well as aids and grants from multilateral institutions.
For the nine-month period this year, the operating income of LGUs increased two percent to P648.7 billion. Local financing dropped 22 percent to P163.09 billion, but external funding rose two percent to P439.71 billion.
Next year, LGUs will receive an internal revenue share of P959.04 billion thanks to the enforcement of the Mandanas ruling issued by the Supreme Court.
Under the order, the national government must raise its allocation for localities, which, in turn, will take up most of the responsibilities in managing public services like agriculture, connectivity and health.