THE BUDGET CYCLE

WHEN IS THE START OF BUDGET AUTHORIZATION

PHASE
• Under Section 318 of the
Code, “the local chief
executive shall submit the
executive budget to the
sanggunian concerned not
later than the 16th of October
of the current fiscal year.  
 LIABILITY FOR FAILURE TO
SUBMIT AN EXECUTIVE BUDGET
• 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 the
Code and other applicable laws.”
(Sec. 318, RA 7160)
 BUDGET AUTHORIZATION
(October 17 – October 31)
What does the Local Code say?

Section 391 (a)(3)of the Code provides: “the

Sangguniang Barangay shall enact annual and
supplemental budgets in accordance with the
provisions of this Code”.

This stage of the budget process is the adoption and

enactment of a Barangay Budget into a General
Appropriations Ordinance (GAO).
 STEPS IN BARANGAY BUDGET
AUTHORIZATION
• 1. Presentation/ Submission of the
Executive Barangay Budget to
the Sangguniang Barangay
• 2. Deliberation on the Budget.
• 3. Enact the General Appropriation
Ordinance.
• 4. Approval by the Punong Barangay.
Step 1: Present the Executive
Barangay Budget to the
Sangguniang Barangay

* Deliver the State of the Barangay Address (SOBA)

* Follow Contents of Budget Message
* Calendar and Certify as urgent the proposed Executive
budget
 Contents of Budget Message

• Policy thrusts for the Budget Year

• Estimated Income for the Budget Year

•
• Expenditure Program

• Expected Results to be Accomplished

Effect of a Bill Certified as Urgent
• Whether or not included in calendar
of business, the bill may be
presented and considered by the
body at the same meeting without
suspending the rules (Art. 107 (e))
• It may be submitted for final voting
immediately after debate or
amendments during 2nd reading
(Art. 107 (f), IRR)
STEP 2. Deliberate on the
Executive Budget

This is initiated by the Committee on

Appropriations
(Discuss the allocation of income.)
 BUDGETARY
REQUIREMENTS
20% of IRA for 2% of Real Property
Development Projects Tax collection of the
next preceding year
5% of Regular Income for Discretionary
derived from Expenses of the
regular/recurring Punong Barangay
sources for Calamity
Fund 55% of Regular
Income of next
10% of the General preceding year shall
Fund shall be set aside be the PS limitation
for the Sangguniang
Kabataan.
 Discuss the allocation of income to other
Priority Projects, Activities and Purposes
Other Priority Projects/Services
• Priority Projects over and above the
20% of the IRA
• Basic Services Delivery
• Expected Results/Output
• Performance Indicators for each Major
Final Output
Discuss 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
PERIOD OF BUDGET DELIBERATIONS
–Regular Period
• From submission of Executive Budget
up to enactment of General
Appropriation Ordinance but not to go
beyond December 31st. (Sec. 319)

–Extension Period
• From January 1st up to the passage of
the Appropriation Ordinance but not to
go beyond March 31st (Sec. 323)
GUIDELINES IN BUDGET AUTHORIZATION

–Priority of Basic services

–Appropriation of Shares from
national wealth
–Appropriations for administrative
expenses
–Inclusion of new items in the
Executive Budget
–Transfer of Appropriation
–Augmentation of items of
appropriation
–Appropriation for entertainment or
reception
 PRIORITY IN THE USE OF FUNDS

• “Any fund or resource available

for the use of local government
units shall be first allocated for
the provision of basic services
and facilities enumerated in
subsection (b) hereof, before
applying the same for other
purposes, unless otherwise
provided in the Code” (Sec. 17
(g), RA 7160).
 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.
When the proceeds is derived from the
development and utilization of
hydrothermal, geothermal, and other
sources of energy, 80% of it shall be
applied solely to lower the cost of
electricity in the LGU where such a
source of energy is located. (Sec. 294)
 Changes in the Executive Budget

• “The Local Sanggunian may

not increase the executive
budget nor include new
items except to provide for
statutory and contractual
obligations…” (Art 145,
IRR)
 Prohibition against religious or
private purposes
• No public money or
property shall be
appropriated or applied for
religious or private
purposes. (Sec. 335)
 Transfer of Funds
• Funds shall be available
exclusively for the specific
purpose for which they have
been appropriated.
• No ordinance shall be passed
authorizing any transfer of
appropriations from one item to
another. (Sec. 336)
 Augmentation of items of
appropriation
• The Local Chief Executive or the
presiding officer of the sanggunian
concerned may, by ordinance, be
authorized to augment any item in
the approved annual budget for their
respective offices from savings in
other items within the same
expenses class of their respective
appropriations.
 Prohibition Against Expenses for
Reception and Entertainment
• “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)
Step 3. Enactment of the General
Appropriations Ordinance (GAO)

On or before the end of the

current fiscal year, the
Sanggunian concerned shall
enact, through an ordinance the
annual budget of the LGU for the
ensuing fiscal year on the basis
of the estimates of income and
expenditures submitted by the
LCE (Sec. 319).
 Step 4. Approval of the General
Appropriation Ordinance
by the Punong Barangay
• “Ordinance enacted by the
sanggunian barangay shall,
upon approval by the majority
of all its members, be signed by
the Punong Barangay” (Sec. 54
(c)).
 Effectivity of the Budget

• “The ordinance enacting

the annual budget shall
take effect at the
beginning of the ensuing
fiscal year…” (Sec. 320)
Effectivity of the Supplemental Budget

• “x x x An ordinance
enacting a supplemental
budget, however, shall
take effect upon its
approval or on the date
fixed therein” Sec. 320).
 Effect of Failure to Enact the Budget
(1)

In case the Sanggunian fails

to pass the ordinance
authorizing the annual
appropriations by January 1st,
the appropriation ordinance
of the preceding year shall be
deemed reenacted (Art. 415,
IRR).
 Effect of Failure to Enact the Budget
(2)
• If the Sanggunian fails to enact
the appropriation ordinance at
the beginning of the ensuing
fiscal year, it shall continue to
hold sessions for 90 days from
the beginning of the fiscal year,
until such ordinance is approved,
and no other business shall be
taken up. (Sec. 323)
 Effect of Failure to Enact the Budget
(3)
Items of appropriations deemed
reenacted (Sec. 323)
Honoraria of barangay officials
Salaries and wages of existing positions
Statutory and Contractual Obligations
Essential operating expenses
authorized in the annual and
supplemental budgets of the previous
year.
 Effect of Failure to Enact the Budget
(4)

• “…No ordinance authorizing

supplemental appropriations shall be
passed in place of the annual
appropriations” Sec.323).
Recording of General Appropriations
Ordinance (GAO)

• Each sanggunian shall keep a

journal and record of its
proceedings…(Sec. 53 (e))

• “The barangay secretary shall

keep custody of all records of
the Sangguniang Barangay…”
(Sec. 394 (d)(1))
 BARANGAY BUDGET AUTHORIZATION
FORM NO. 1
• Barangay ________
• City/Municipality ________
• Province of _________

• _______Regular Session

• Began and held in _____, ______ on

__th day of _____, ___.

Barangay Appropriation Bill No. ____

 Barangay Budget Authorization Form No. 01

AN ORDINANCE APPROPRIATING FUNDS FOR BARANGAY

__________.

Be it enacted by the Sangguniang Barangay of _______ in

Council assembled:

Section 1. Source of Funds. The following income as

indicated hereof are hereby declared as sources of
funds particularly the Tax Revenue and Operating and
Miscellaneous Income, which are realistic and probable
to be collected and remitted to the Local Treasury,
necessary to finance the delivery of basic services and
implementation of priority development of Barangay
_________ from January one to December thirty-one,
Two thousand and ____, except otherwise specifically
provided herein:
Estimated Income for Budget Year

Share on Internal Revenue Collections P

Share on Real Property Tax
Business Taxes (Stores and Retailers)
Share on Sand and Gravel Tax
Share on National Wealth
Share on EVAT
Miscellaneous Taxes on Goods and Services
Other Taxes
Other Specific Income
Subsidy fro Other LGUs
Total Available Resources P
Barangay Expenditure Program
Section 2. Appropriation of Funds. The
following sums or so much thereof as
maybe necessary are hereby appropriated
out of Tax Revenue and Operating and
Miscellaneous Income and any
unexpended balances thereof, in the Local
Treasury of the barangay not otherwise
appropriated for basic services delivery
and implementation of priority
development projects.
 Barangay Expenditure Program
P/P/A Description Personal Maintenance Capital Total
Services and other Outlay
Operating
Expenses

Agricultural Services

Day Care Services

Health & Nutrition Services

Peace & Order Services

Administrative & Legislative Services

Development Projects (20% of IRA)

SK Projects (10% of GF)

Calamity Projects (5% of RF)

Section 3. The appropriated amount is aimed to produce the
expected major final output (MFO) for the barangay and
are to be measured by performance or output indicators
per MFO. This serves as the rationale for the money spent
for the various services and development projects provided
by the Barangay, pursuant to section 17 of the Local
Government Code.

Budget Year

P/P/A Description Performance Estimated

MAJOR FINAL OUTPUT Indicator Output
Section 4. General Provisions. The following policies are
authorized for the fiscal year:

a. Income from operating and miscellaneous fees shall be

collected at maximum collection efficiency.
b. Priority in the use of income shall be for budgetary
requirements as mandated by the local code.
* 20% of IRA for development projects
* 5% for Unforeseen Events
* 10% for Sangguniang Kabataan (SK)
c. Strict compliance to the 55% Personal Services limitation
shall be observed.
d. Priority in the use of savings shall be for basic services,
augmentation of development projects and other
mandatory expenses provided under the Local Code.
e. All procurement shall follow strictly the provisions of R.A.
9184.
Section 5. Effectivity. This Ordinance shall take effect immediately
upon its approval.

Date Promulgated: ________

Carried Unanimously,

Name and Signature of Barangay Sanggunian Members.

__________________ __________________

I HEREBY CERIFY to the correctness of the above-quoted Local

Appropriation Ordinance.
____________________
Secretary to the Sangguniang Barangay
Attested:
Chairman, Committee on Appropriation
APPROVED
LCE, Punong Barangay
thank you