Budget Authorization

Budget Authorization
What is Budget Authorization?

Budget Authorization is a process of adoption and
enactment of a Barangay Budget into a General
Appropriations Ordinance (GAO).
This is provided in Section 29 (a) (3) of the LGC:

“the Sangguniang Barangay shall enact annual and
supplemental budget in accordance with the
provisions of this Code.”
Budget Authorization
What is a General Appropriations Ordinance?
 A legislative instrument that authorizes the

Punong Barangay (PB) and other Barangay
Officials to carry out delivery of basic services and
to implement priority development projects.
Provides funds to support the barangay

operations/projects.
When is the Start of the Budget
Authorization?
Under Section 318 of the LGC
“The local chief executive shall submit

the said executive budget to the
sangguniang concerned not later than
the sixteenth (16th) of October of the
current fiscal year.”
Is there a penalty for a PB who fails to
submit the Annual Barangay Budget on
time?
Pursuant to Section 318 of the LGC
“Failure to submit such budget on the

date prescribed herein shall subject the
local chief executive to such criminal
and administrative penalties as
provided for under this Code and other
applicable laws.”
Is there a penalty for a PB who fails to
submit the Annual Barangay Budget on
time?
A PB who fails to submit the budget on

or before October 16 of the current year
shall be subject to such criminal and
administrative penalties as maybe
provided by the Local Government Code
and other applicable laws
How the Barangay Budget is
Authorized
STEP 1: Present the Executive Barangay Budget to
the Sangguniang Barangay
STEP 2: Deliberate on the Executive Budget
STEP 3: Enact the General Appropriations

Ordinance
STEP 4: Approval of the GAO by the Punong

Barangay
Step 1: Present the Executive
Barangay Budget to the SB
State of the Barangay Address (SOBA)
The PB shall address the members of the SB
and the General Public
Budget Message
To present the highlights, thrusts, programs
and priorities of the barangay budget
Certifiy as urgent the proposed executive budget

Step 2: Deliberate on the Executive
Budget
Who will deliberate the Executive Budget?
Committee on Appropriations
 Shall be responsible for conducting
a preliminary review and
evaluation of the executive budget
Budget
Role of the Local Finance Committee?
Under Section 316 (g) of the LGC
“Assist the Sanggunian in the
analysis and review of the budget to
determine compliance with statutory
and administrative requirements”
Budget
Period of budget deliberation
Regular Period
From submission of Executive Budget
up to enactment of Appropriation
Ordinance but not to go beyond
December 31st. (Sec. 319 of the LGC)
Budget
Period of budget deliberation
Extension Period
January 1st up to the passage of the
Appropriation Ordinance but not to
go beyond March 31st (Sec. 323 of the
LGC)
Budget
Principles in Budget Authorization
Priority of Basic Services
Shares from National Wealth
Changes in the Executive Budget
Appropriation for entertainment or reception
Budget
Priority of Basic Services
Any available funds shall first be allocated for

the provision of basic services and facilities,
before applying the same for other purposes,
unless otherwise provided in the Code. (Sec.
17 (g) of the LGC)
Budget
Shares from National Wealth
The proceeds from the shares of local

government units from the utilization and
development of national wealth shall be
appropriated to finance local development and
livelihood projects. (Sec. 294 of the LGC)
Budget
Can the Sanguniang Barangay increase the
appropriations in the budget during
authorization?
No. The Sanggunian may not increase the
proposed amount in the Executive Budget nor
include new items except to provide for
statutory and contractual obligations.
Budget
Can the Sanguniang Barangay reduce the

appropriations in the budget during
authorization?
Yes. The Sanggunian Barangay can reduce the
appropriations during the authorization phase of
the budget process.
Budget
Appropriation for entertainment or reception
“No money shall be appropriated, used, or paid for

entertainment or reception except to the extent of
the representation allowances authorized by law or
for the reception of visiting dignitaries of foreign
governments or foreign mission, or when expressly
authorized by the President in specific cases.” (Sec.
343 of the LGC)
Budget
Budget Deliberations
Discuss the allocation of income to the
following: (Initiated by the Committee on
Appropriations)
 Budgetary Requirements
 Allocation of Income to Other Priority Projects,
Activities and Purposes (PAPs)
 Discuss Sources of Income
Budget
 20% of IRA for Development Projects
Check if the minimum requirement is
provided
20% X Total IRA for the Budget Year
 5% of Regular Income for Barangay Disaster Risk

Reduction and Management Fund (BDRRMF)
Check the BDRRMF requirement
5% X Regular Income
Budget
 10% of General Fund of the Barangay SK
 2% of Real Property Tax Collection of next
preceding year shall be for Discretionary
Expenses of the PB
 55% Regular Income of next preceding year
shall be the PS cap or limitation
Budget
 Discuss the allocation of income to other Priority
PAPs
 Priority Projects over and above the 20% of the
IRA
 Expenditure Program (PS, MOOE, CO)
 Expected Results/Output
 Performance Indicators for each Major Final
Output
Budget
 Sources of Income
 IRA and National Wealth Shares
 Locally-Generated Income
 Income from Tax Revenue
 Income from Operating and Miscellaneous
Revenue
 Income from Other Sources
Budget
 Sources of Income
 IRA and National Wealth Shares
Review Points in IRA:
 What is the basis for the budget year’s
IRA figure?
 Compare the previous/current year’s IRA
 What is the 20% IRA for the Budget Year
Budget
 Locally-Generated Income
 Review points in estimating the Locally-
Generated Income
Is the estimated income realizable?
- Historical trend
- One time collections
Budget
 Incase of Borrowings
 Review Points:
 When is the start of amortization?
 What is the amount of yearly
amortization?
 Does the total debt service requirement
exceed the 20% cap?
 What are the conditions for the grant of the
loan?
Step 3: Enact the General
Appropriations Ordinance
The Appropriations Ordinance is the

legislative instrument authorizing the
budget. It becomes effective at the
beginning of the budget year upon its
approval by majority of the SB
members and signed by the PB.
On or before the end of the current

fiscal year, the Sanggunian shall enact,
through an ordinance the annual
budget of the Barangay for the ensuing
fiscal year.
The Appropriation Ordinance shall
contain the following basic
information/provisions:
 An assigned number; title or caption;

an enacting or ordaining clause; and a
provision specifying the effectivity
date;
Contents of Appropriation Ordinance
A provision summarizing the sources
of revenues, other receipts and
borrowings and the magnitude of
expenditures;
A provision that the budget complies
with the budgetary requirements and
general limitations under the Code;
A provision that the execution of the
budget shall comply with the
budgetary guidelines and procedures
in the Manual;
A provision on the Barangay
expenditure program
A provision identifying the budget

documents appended to the
appropriations ordinance;
Requisite of a Valid Ordinance
• Must not contravene the Constitution or any
statute (San Miguel Brewery vs Magno)
• Must not be unfair or oppressive (People vs.
Fajardo)
• Must not be partial or discriminatory
(Sarmiento vs. Belderol)
Requisite of a Valid Ordinance
• Must not prohibit but may regulate trade
(Kwong Sing vs. City of Manila)
• Must not be unreasonable (Marconi vs. City of
Manila)
• Must be general and consistent with public
policy (Ongsiako vs. Gamboa)
Effect of Failure to Enact the Budget
 In case the SB fails to enact the

ordinance on time, the SB shall
continue to hold sessions without
additional remuneration until the
ordinance is approved and no other
business may be taken up during
such sessions. (Sec. 323 of the LGC)
 If the Sanggunian still fails to pass

the ordinance after ninety (90) days
from the beginning of the fiscal
year, the appropriation ordinance
of the preceding year shall be
deemed reenacted.
 No ordinance authorizing
supplemental appropriations shall be
passed in place of annual
appropriations.
What are the items that are deemed
reenacted?
 Salaries and wages of existing positions;
 Statutory and contractual obligations;
and
 Essential operating expenses.
Implementation of Reenacted Budget
Local Treasurer
Excludes from the estimates of income for
the preceding fiscal year those realized
from nonrecurring sources.
Compare the revised income estimates
with aggregate reenacted appropriations.
If income is less than appropriations,
advise the Sanggunian concerned
Implementation of Reenacted Budget
Local Treasurer
Sanggunian, within 10 days from receipt of
advice, make necessary adjustments.
The revised appropriations authorized by
the Sanggunian shall then be the basis for
disbursements.
Step 4: Approval of the GAO
The ordinance enacted by the SB, upon

approval by the majority of its
members, need to be approved and
signed by the PB.
Recording/Approval of Appropriation
Ordinance
Records the ordinance in the official book

of enacted ordinance;
 Stamps the ordinance with the official
seal of the Sanggunian;
Gets signature of all members and
officers in every page;
Recording/Approval of Appropriation
Ordinance
Forwards enacted ordinance to the

Punong Barangay for approval;
Gets signature of all members and
officers in every page, thereof.
What is a Supplemental Budget?
A supplemental budget is a financial plan

authorized by a legislative body through
the enactment of an ordinance or law
that authorizes the changes in the annual
appropriation ordinance or law
When is the SB prepared?
The SB is prepared under the following

circumstances:
When funds are actually available as
certified by the Barangay Treasurer;
When new revenue sources (other than
those identified in the annual budget) can
support the additional budgetary
requirements; and
In times of public calamity.
When is the SB prepared?
When is funds actually available?

Funds are actually available when:
Realized income exceeds actual income; and

If there is savings.
What is savings?
Savings refer to portions or balances

as of any given point in the fiscal
year of any programmed or allotted
appropriation.
When is savings realized?
If any programmed or allotted appropriation

remain free of any obligation or
encumbrances;
 Still available after the satisfactory
completion or the unavoidable
discontinuance or abandonment of the work,
activity or purpose for which the
appropriations was originally authorized;
When is savings realized?
Unobligated compensation and

related cost pertaining to vacant
positions and leaves of absence
without pay of local personnel
receiving salaries.
Effectivity of the Supplemental
Budget
An ordinance enacting a supplemental

budget, shall take effect upon its
approval or on the date fixed therein.
Thank you so
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What is Budget Authorization?

This is provided in Section 29 (a) (3) of the LGC:

 A legislative instrument that authorizes the

Provides funds to support the barangay

“The local chief executive shall submit

“Failure to submit such budget on the

A PB who fails to submit the budget on

STEP 2: Deliberate on the Executive Budget

STEP 3: Enact the General Appropriations

STEP 4: Approval of the GAO by the Punong

Certifiy as urgent the proposed executive budget

Any available funds shall first be allocated for

The proceeds from the shares of local

Can the Sanguniang Barangay reduce the

“No money shall be appropriated, used, or paid for

 5% of Regular Income for Barangay Disaster Risk

The Appropriations Ordinance is the

On or before the end of the current

 An assigned number; title or caption;

A provision identifying the budget

 In case the SB fails to enact the

 If the Sanggunian still fails to pass

The ordinance enacted by the SB, upon

Records the ordinance in the official book

Forwards enacted ordinance to the

A supplemental budget is a financial plan

The SB is prepared under the following

When is funds actually available?

Realized income exceeds actual income; and

Savings refer to portions or balances

If any programmed or allotted appropriation

Unobligated compensation and

An ordinance enacting a supplemental

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