‘Flypaper effect’

“MONEY STICKS where it hits.” This is the “flypaper effect.” It shows up in a Commission on Audit analysis of 1,351 year-end reports by local governments that nailed 182 officials who squandered their 20 percent Local Development Fund.

“The LDF is the most abused budget item today,” Local Government Secretary Jesse Robredo asserts. Of 182 profligate LGUs, 80 splurged for junkets (lakbay aral), parties, ghost employees, honoraria—for themselves. “Wasting money is like water soaking into sand,” a Japanese proverb says.

The LDF was crafted at the 1972 Stockholm Conference as a safety net for the neediest. The Philippines and 112 countries agreed to earmark 20 percent of resources for the most deprived.

Nutrition, health care, sanitation, primary schooling, etc. can curb disease and death rates, Stockholm’s 20-20 Pact stressed. Unmet human needs usher more pre-school Filipino children into premature graves than in Egypt or Kenya, the Asian Development Bank notes.

Former Sen. Aquilino Pimentel Jr. stitched that 20 percent safety net into the Local Government Code. Internal Revenue Allotments (IRA) would underwrite LDF. Politicians promptly converted the LDF into mini-pork barrels.

Even more damning, 102 other LGUs never fully implemented LDF-funded projects, Robredo said. LDF unutilized balance surged to P650.6 million. Quick to junket or crib allowances for themselves, many local officials prove inept—or indifferent—at spending to relieve hunger, sickness or ignorance.

Indigent pregnant and nursing mothers are denied nutrition and safe delivery facilities. Kids lack vaccines and clean water.

Such lapses are paid for in blood. Maternal death rates remain stubbornly high. Here, 19 infants die out of every 1,000 live births. Compare that to 5 in Taiwan.

Ill-fed kids are deprived from “10 to 14 percent of their potential intelligence quotient (IQ),” the ADB noted. Among stunted kids, cognitive loss can top 10 percent.

That loss is irreversible. Up to their often earlier graves, these children are boxed into lives far below their God-given potentials.

This also cuts life spans. A child in Tawi-Tawi has a life expectancy of 54 years; if born in Cebu, 74 years.

“Life is the threshold at which all other hopes begin.” The LDF was designed to ensure that kids cross that threshold. What is the track record?

Lapu-Lapu City Mayor (now Rep.) Arturo Radaza bankrolled Christmas parties. In 2010, Maguindanao’s total IRA soared to P3.56 billion. Much of that went pffft, a special COA audit found. Cotabato City dissipated P44.3 million of its P55 million LDF for salaries.

IRAs are blank checks. They are unconditional grants from national government. There is no mechanism for monitoring. So why are we surprised at the resulting mayhem?

“(Local) bureaucrats tend to maximize spending with the perception that they could manage to spend substantial sums as long as they are allies of the President,” notes the Tax Research Journal.

Urdaneta in Pangasinan is the only city that consistently spent more than 20 percent of its LDF on education, health, culture, etc., according to the National Statistical Coordination Board’s Romulo Virola. Urdaneta, which gained cityhood status only in 1998, spent 24 centavos out of every IRA peso for human needs.

Cabanatuan, Valenzuela, Calamba, Las Piñas, Makati, Tagaytay, Manila, La Carlota in Western Visayas, and Pasay spent about 16 percent of their total income on health, nutrition and family planning.

IRA checks for Quezon City, Davao, Manila, Zamboanga City, Caloocan, Puerto Princesa and Cebu tower over that for Urdaneta and other cities. They could have spent more for human development. But “money sticks where it hits.” They penny-pinch on human needs.

Does the “flypaper effect” encourage laid-back panhandling? asks the Tax Research Journal. Does it squelch efforts by local governments to generate local income to become self-reliant?

Don’t judge a book by its cover. Many municipalities appear rich, but that doesn’t come from locally generated income. They are propped up by IRAs. In the Autonomous Region in Muslim Mindanao, 28 towns draw 99 centavos of every peso in their budgets from the IRA.

The 10 most “self-reliant” municipalities, in contrast, cluster in the Calabarzon: Cabuyao, Cainta, Bacoor, General Trias, Biñan, Imus, Dasmariñas, Carmona, Pantabangan and Calaca, Batangas.

The “flypaper effect” stems from “monopolistic, budget maximizing local politicians and bureaucrats.” Overdue reforms of the IRA and LDF should avoid “unconditional grants.” The Tax Research Journal also recommends padlocking the stable door before the mares bolt by having the COA pre-audit LGU budgets to curb today’s excessive or fraudulent spending.

Local sahibs can no longer make whoopee with the LDF, Robredo ruled last December. DILG memo circular 2010-138 lists seven “Thou shalt nots.”

Effective immediately, these expenses billed against the LDF will be bounced: salaries, honoraria, travel, fiestas, cash gifts, bonuses, food allowances, uniforms, supplies, meetings, water and light, gasoline etc. That’s the stick.

More significant is the carrot: A Performance Challenge Fund offers half a billion pesos, as counterpart, to 344 LGUs—if they funnel the LDF into essential projects, like water, sanitation and post-harvest facilities. That should help “unstick” the “flypaper effect.”

“Man has enough for his needs,” as Mohandas Gandhi put it. “But not enough for his greed.”

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