LOCAL FISCAL ADMINISTRATIONI.

NATURE AND SCOPE

Definition

Local fiscal Administration refers to systems, structures, processes, officialsand personnel, and the policy
environment governing intergovernmental, andinter-local fiscal relations, affecting among others:

the giving and receipt of allotments and grants from the NationalGovernment (NG) to local government
units (LGUs);

allotment sharing between LGUs;

sharing of taxing powers between the national government (NG)and LGUs, and among LGUs;

policy on tax rates and structure;

revenue and expenditure planning;

revenue utilization and expenditure allocation; monitoring andapproval budgets, tax ordinances and
other fiscal measures;

policy on borrowing and borrowing instruments; and

Appointment and supervision of local fiscal officers. (

Cuaresma and Ilago

)This broad definition comprehends five major elements as the scope of local fiscal administration.
These are:

Systems;

Structures;
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Processes;

Official/personnel; and

Policy environment governing inter-governmental and inter-localfiscal relations.The first four elements
can be interpreted as comprising the internalenvironment of local fiscal administration, while the policy
environment ispart of the larger external environment of local fiscal administration.The definition
likewise underscores inter-governmental and inter-localfiscal relations that transpire between national
and local governments andamong the latter (e.g. giving and receipt of allotments/grants, sharing of
taxing powers between central government and LGUs, among the latter,allotment sharing among LGUs)

All definitions have common areas. All of them refer to revenuegeneration and revenue
allocation/utilization as part of the scope of localfiscal administration.Local fiscal administration refers
to the rational, effective and efficientconduct of the fiscal functions and operations of local government
unitswhich embrace the systems, structures, processes and human resourcesinvolved in revenue
generation, revenue allocation and utilization. Inaddition, such conduct of fiscal affairs is governed by
laws and is affectedby the fiscal policy environment, which defines central-local and inter-LGUfiscal
relations.Local Fiscal Administration involves revenue generation, the rationalallocation, utilization and
control of resources through the concept of performance budgeting by the local government units (LGU)
to optimizethe use of public funds for the benefit of the greatest number of people. Itdraws strength
and rationality from the Constitutional provision of grantinglocal government the power to create their
own sources of revenuethrough local taxation.In public administration, local fiscal administration is
commonly referred toas the formulation, implementation, and evaluation of local fiscal policiesby local
governments.Among others, these fiscal policies set the framework and procedures onlocal revenue
generation that includes property tax administration, revenueordinance codification as well as the
operations of local economicenterprises.It also deals on the national government allotments, shares and
subsidiestogether with the availment of credit financing through domestic andforeign institutions.

Local Government Finances

Fiscal relations between national and local government centre on thefollowing major areas of fiscal
administration:

Allotment of internal revenue shares;

Shares of local governments in national wealth exploitation;

Shares of earnings of government agencies or government-owned or controlled corporations engaged in

the utilization anddevelopment of national wealth;
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Local government borrowing; and

Review of local government budgets