Question & AnswerQ&A (DBM LOCAL BUDGET CIRCULAR NO. 57)
The total appropriations for personal services shall not exceed forty-five percent (45%) of the total annual income from regular sources realized in the next preceding fiscal year for first to third class provinces, cities, and municipalities.
For fourth class or lower LGUs and barangays, the maximum allowable appropriations for personal services shall not exceed fifty-five percent (55%) of the total annual income from regular sources realized in the next preceding fiscal year.
Section 306(k) of RA 7160 defines personal services as appropriations for the payment of salaries, wages, and other compensation of permanent, temporary, contractual, and casual employees of the local government unit.
Examples include terminal leave benefits, per-diem compensation, retirement and life insurance premiums, representation and transportation allowances (commutable), honoraria, bonuses and incentives, overtime pay, pensions, personnel economic relief allowance (PERA), and clothing/uniform allowance.
Yes, consultants' and specialists' fees and allowances are included as part of the personal services component.
Lump-sum for salary adjustment, lump-sum for reclassification of positions, and lump-sum for creation of new positions.
Personal services appropriations of officials and employees of public utilities and economic enterprises owned, operated, and maintained by the local government are exempt and are charged against their respective agencies instead.
Exemptions include continued implementation of the Salary Standardization Law, payment of the minimum compensation to barangay officials, absorption of devolved personnel, creation of mandatory positions, and payment of not less than fifty percent (50%) of the total requirement for the Magna Carta benefits of public health workers.
Cases not covered by the provisions of this Circular shall be referred to the Secretary of Budget and Management for resolution.
The limitation ensures that LGUs allocate only an allowable percentage of their regular income to personnel costs, preventing overspending on salaries and benefits and ensuring fiscal discipline and budget balance.