LGU budget rises to P1.2 trillion in 2026

MANILA, Philippines — Budget allocation for local government units (LGUs) will rise by 15 percent to P1.2 trillion in 2026 as government revenues continue to recover from the pandemic.

In its latest local budget memorandum, the Department of Budget and Management (DBM) released the indicative national tax allotment (NTA) shares of LGUs for 2026.

The higher allocation came as state agencies and LGUs prepare their budget proposals for the record P6.793 trillion proposed National Expenditure Program (NEP) for 2026.

According to the  DBM, NTA for LGUs for 2026 will increase by 15 percent to P1.19 trillion from this year’s level of P1.03 trillion.

LGUs will get a higher share as the NTA is based on the 2023 revenue collection, which improved as the economy sustained its recovery from the pandemic.

In computing the NTA, the DBM uses as base period the third year prior to the distribution. In this case, the 2026 budget of LGUs is measured against the revenues raised in 2023.

During that year, government revenues improved by eight percent to P3.82 trillion.

Of the P1.2 trillion NTA next year, 73 percent or P868.65 billion will come from the Bureau of Internal Revenue (BIR), P321.79 billion from the Bureau of Customs (BOC) and the remaining P66.21 million from other agencies.

By level, municipalities will take the largest share in the NTA at P404.49 billion, followed by cities at P274.1 billion. Provinces will receive P273.82 billion, while barangays will secure the smallest share of P238.1 billion.

There are 83 provinces, 149 cities, 1,491 municipalities and 41,911 barangays in the country.

Next year, Calabarzon will receive the largest budget among regions at P141.15 billion, Central Luzon with P115.9 billion, Metro Manila with P71.57 billion, and Bicol Region with P71.53 billion.

The lowest allocations will go to the Cordilleras at P35.64 billion, Caraga at P46.15 billion and Soccksargen at P50.16 billion.

Based on the law, the NTA will first cover the cost of providing the basic services and facilities of LGUs.

Each LGU should appropriate at least 20 percent of its NTA share for development projects, 10 percent for Sangguniang Kabataan and a minimum of five percent for its local disaster risk reduction and management fund.

The annual budgets of LGUs should also include programs and projects that are attributed to the benefits of gender and development, senior citizens and persons with disabilities, community-based human immunodeficiency virus prevention and care services, and the protection of children.

The NTA is still part of the Supreme Court ruling that increased LGU share in national tax collections.

Following the Mandanas implementation, LGUs are now getting a bigger share in the collections of national taxes, with their NTA coming from 40 percent of all national taxes collected by the BIR and BOC.

Previously, the share of LGUs came only from the taxes collected by the BIR.