Allotment Basis and Distribution Percentages
- Twenty percent (20%) of national internal revenue collections (excluding special funds and accounts) will be allotted to LGUs.
- The allotment is based on collections from the third fiscal year preceding the current fiscal year.
- Distribution of the allotment: 30% to provinces, 45% to municipalities, and 25% to cities.
Formula for Determining Each LGU’s Share
- Share allocation based on:
- 70% population
- 20% land area
- 10% equal sharing among all LGUs
Transitional Limitations on Changes in Allotment
- For fiscal years 1974, 1975, and 1976, the annual allotment of any LGU shall not:
- Increase by more than 15%
- Decrease by more than 50%
- These limits are in reference to the actual allotment of the fiscal year 1970-71.
- After this transitional period, the allocation depends solely on the prescribed formula.
Creation and Management of the Barrio Development Fund
- Established using 10% share of barrios in real estate tax collections (per RA No. 3590) and annual contributions from provinces, cities, and municipalities (up to P500 per barrio).
- Fund is dedicated exclusively to community development projects meeting criteria set by the Secretary of Local Government and Community Development.
- Provincial Treasurer custodian of fund, with releases channeled through Municipal Treasurer responsible for disbursement and accounting.
Local Government Development Budget Requirements
- Each province, city, and municipality must allocate at least 20% of their annual allotment for development projects.
- Development plans require approval by the Secretary of Local Government and Community Development.
- Secretary to issue guidelines to ensure compliance and proper planning.
Additional Local Government Fund from Revenue Collections
- Five percent (5%) of national internal revenue collections (excluding special funds and accounts) to form a Local Government Fund.
- Funds released by the President as financial aid to LGUs or for specific projects.
Implementation and Administrative Provisions
- The revised allotment system commenced on July 1, 1973.
- Secretary of Finance tasked with issuing rules and regulations for effective implementation.
- All inconsistent laws or parts thereof are revoked or modified to conform to this decree.
Issued Supporting Department of Finance Orders
- Finance Order No. 13-73 (April 5, 1973): Governs allotments of revenues to local governments.
- Finance Provincial Circular No. 21-73 (August 15, 1973): Provides guidelines for preparation and submission of requests for financial aid from the Local Government Fund.