Investment Programming and Revenue Generation Guidebook

1. AG Corpuz October 2007 Investment Programming and Revenue GenerationGuidebook

5. Familiarity and appreciation of the rudiments of investment programming are evident among LGU planners. Present LGU planning officers have been in their positions long enough to be well familiar with the planning work requirements as well as the LGU bureaucracy. The investment programming process is by and large formally initiated. Generally, the formulation of the investment program is a collaborative effort. The investment program is generally subjected to some form of public consultation.

6. There are serious procedural and analytical deficiencies in the LGU investment programming process--limit the effectiveness of the PDIP as a key LGU planning and management tool. Inter-departmental work responsibilities for the preparation of the investment program are often not formally defined. The responsibility for the solicitation of project proposals is not formally defined. The responsibility for revenue analyses and forecasting is not formally defined. The use of a systematic set of analytical tools seems to be lacking, especially on the revenue assessment side. Trend extrapolation techniques are rarely, if ever, used.

7. Typically: No detailed analyses of specific revenue sources. No formal adjustments made for the revenue anticipating effects of proposed capital investments. No explicit matching of investment proposals and available financial resources. No summary of assumptions in the capital investment program document. No historical analyses in the capital investment program document. No breakdown of revenue forecasts into revenue types. The concept of a rolling investment program is often not implemented; no formal and regular review process for the investment program. Most of the LGU capital investment program document lacks in transparency. This hampers legislative council as well as general public appreciation and understanding during the associated hearings.

12. All LGU expenditures: Capital investment or Operating expenses.

13. Sample list of capital projects that may be included in the PDIP: New or expanded facilities (such as police and fire stations, government offices and facilities, water and wastewater treatment facilities, public works facilities, etc.); Large-scale rehabilitation or replacement of facilities (repaved streets, remodeled buildings, etc.); Major pieces of equipment (such as fire engines, trucks, backhoes, etc.); Costs of land acquisition, engineering and/or architectural work related to new or rehabilitated facilities; and Soft capital-type LGU-wide human resource, employment and business development program like credit facilities and livelihood programs.

15. A document that formalizes and ranks PPAs (identified in the PDPFP) and matches the prioritized project list with the investment financing capacity of the province. A multi-year (a 6-year period time frame with the first 3 years firmed up along the priorities of the LCE) planning tool used by LGUs to identify needed capital projects and to coordinate the financing and timing of investments in a way that maximizes the benefits to the citizens. Not limited to PPAs funded out of the 20% of the IRA. It covers all development investments to be implemented within the province, including those to be financed from national funds and other external sources. A rolling program, because subsequent year projects are moved up with each new program year.

16. Improves the coordination of development investments with the PDPFP. Provides a structured mechanism for development investment decision making at the provincial level. Serves as a key provincial financial management tool. Improves LGU credit rating. Improves LGU administration. Promotes intra-provincial cooperation.

18. Starts with the formation by the Governor of an organization that will be directly responsible for the preparation of the PDIP.

19. Recommended composition of the PDIP Committee: The Executive Committee (EXECOM) of the Provincial Development Council (PDC) -- empowered to represent the PDC and act as its implementing arm as provided for in the 1991 LGC The Provincial Finance Committee (PFC) Other local officials who could provide substantive inputs to the formulation of the PDIP Other members of the PDC who could provide substantive inputs to the formulation of the PDIP

22. Investment policies guide the whole PDIP process. Key policy issues: Methods of financing Criteria for prioritization Policies developed within overall planning, financial, institutional and legal framework governing operations of LGUs, especially the 1991 LGC. E.g. LGUs must continuously operate within framework of a balanced budget; borrowings not allowed for LGUs with deficits.

23. Prioritization criteria limited to development objectives in PDPFP. Approximately 60% of annual regular revenues of province allocated for PDIP project financing. Amount from annual regular revenues available for PDIP projects will be leveraged via direct loans or bond flotation. Alternative PDIP financing tools evaluated based on total financing costs including all financial and time-related transaction costs. Land re-adjustment and special assessment will be major cost recovery tools for urban road and drainage projects. Full cost recovery for economic enterprise projects under the PDIP.

24. In general, prioritization criteria should be consistent with PDPFP objectives and PDIP policies (Step 1). Not all criteria will apply to every project. The suggested approach is a variant of the Goals Achievement Matrix (GAM).

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