LGUs not strong enough for shift to federalism — PIDS

MANILA, Philippines — Amid the Duterte administration’s push for a shift to a federal form of government, state think tank Philippine Institute for Development Studies (PIDS) said some local government units (LGUs) may not be strong enough to weather the change.

During a recently held forum on decentralization reforms, PIDS senior research fellow Rosario Manasan said that while federalism would enable LGUs to respond to local needs faster, not all units will have the financial capacity to do so and would continue to be dependent on reinforcement from the national government.

In a federal system, taxing and spending powers are devolved to federal states, giving them a free hand on the use of the budget.

Hence, they will be able to spend their funds on projects and policies faster and more efficiently as they no longer need to seek approval from the national government.

“The federal system brings government closer to the people, thereby allowing lower level governments to respond to local needs and preferences of their constituents,” said Manasan.

“Some local government units may not be ready for the shift to federalism especially in terms of development and financial stability,” she said, noting economic progress is still concentrated in Metro Manila and surrounding areas.

To address the risks of greater disparities under a more decentralized form of government, Manasan said policymakers must design a feasible intergovernmental transfer, which could be in the form of tax shares, unconditional block grants, or specific purpose conditional grants to assist poorer states or regions.

Such measures, she said, would enable poorer states to cope during the transition period.

“It is important to use the appropriate type of intergovernmental transfer depending on policy objectives,” said Manasan. “This will incentivize state governments to provide minimum level of services for merit goods like basic education and public health.”

Under a federal government, the central government will have exclusive powers over national defense, foreign affairs, immigration, international trade, interstate commerce and agrarian reform.

State governments will have exclusive powers within their jurisdictions over police, fire protection, early childhood education, water supply and sanitation, waste management, road traffic management and parks.

The federal government and the state governments, however, will share powers over the following: regional planning and land use management, law and order, basic and higher education, health, social welfare, agriculture and aquatic resources, national infrastructure and energy.