Iloilo City can weather extended RPT discount, data shows ample reserves

By Francis Allan L. Angelo

Despite warnings from city officials that an extended 40 percent real property tax (RPT) discount may weaken Iloilo City’s service delivery, audited financial statements from the Department of Finance and Commission on Audit (COA) indicate that the city has sufficient fiscal reserves to absorb the revenue loss while continuing essential programs and debt servicing.

A proposed ordinance certified as urgent by Mayor Raisa Treñas-Chu would maintain the 40 percent RPT discount through 2028 – effectively deferring full implementation of the city’s new property tax rates until 2029.

City Budget Officer Viminale Capulso argued during an Aug. 22 council hearing that the extension could severely affect public services, particularly for low-income constituents dependent on city-funded education, health, and welfare programs.

“We can either cut the number of beneficiaries, the period, or the amount of assistance given to the people. We may also reduce operating expenses and the maintenance of city hall offices. Based on the deficit of PHP600 million, it would reduce the capacity development of our employees,” she added.

However, consolidated financial reports submitted to the Bureau of Local Government Finance (BLGF) and verified by COA show a different picture: Iloilo City has accumulated multi-year budget surpluses and cash reserves exceeding ₱4 billion, providing a substantial fiscal buffer.

From 2019 to 2023, the city posted consecutive surpluses, including ₱1.49 billion in both 2022 and 2023, per BLGF data. These surpluses increased the city’s fund balance from ₱2.8 billion in 2019 to approximately ₱4 billion in 2023.

In terms of cash on hand, COA’s audited 2022 report showed the city with a consolidated cash balance of ₱5.01 billion, slightly down from ₱4.94 billion in 2021.

Pandemic deficits, but cash remains strong

Even during the pandemic’s economic fallout, the city maintained financial solvency. COA records show budgetary deficits in both 2021 and 2023 due to increased spending and revenue disruptions:

• 2020: ₱1.1 billion surplus
• 2021: ₱662.6 million surplus
• Deficit (2021 over 2020): ₱444.4 million
• 2022: ₱849.7 million surplus
• 2023: ₱619.6 million surplus
• Deficit (2023 over 2022): ₱230.1 million

Despite these shortfalls, the city continued to meet its obligations, including loan repayments totaling over ₱121 million in 2023 – further reinforcing its fiscal resilience.

Surpluses, business tax gains

In 2023, Iloilo City collected ₱822.11 million in business taxes – up by more than ₱135 million from 2022, partially offsetting the ₱237.11 million cut in the city’s National Tax Allocation (NTA) for the same year.

The city’s consistent budgetary surpluses include:

• ₱1.23 billion in 2019
• ₱1.17 billion in 2020
• ₱854.6 million in 2021
• ₱1.53 billion in 2022
• ₱1.49 billion in 2023 (preliminary)

These positive balances raise questions about the urgency behind the RPT hike and whether a more gradual adjustment could have mitigated the public backlash.

Legal mandate

The steep RPT hike – up to 300 percent in some brackets – was the first in nearly 20 years. Officials cited Section 219 of the Local Government Code of 1991, which requires local governments to reassess property values every three years.

COA’s Audit Observation Memorandum (AOM No. 2023-009) further recommended updates to prevent potential losses estimated at ₱400 million annually.

Yet, critics argue that the law allows for staggered implementation or moderation of rates, particularly when economic conditions or social impact warrant leniency.

The proposed ordinance extending the discount is now under review by the city council. Councilors Alan Zaldivar, Frances Grace Parcon, Irene Ong, and others were present during the recent deliberations, along with representatives from the City Treasurer’s Office, City Legal, and City Assessor.

Capulso and Treasurer Jinny Hermano warned that the extended discount could constrain the city’s future budgets.

Hermano noted a mismatch between department requests and projected revenue for 2026—₱5.1 billion in proposed expenditures versus ₱4.5 billion in expected income.