By IME SORNITO
ILOILO — Municipal mayors across Iloilo Province are opposing a new Department of Budget and Management (DBM) requirement that could disqualify local government employees from receiving their 2026 cash incentives because of delays in development projects beyond their control.
The League of Municipalities of the Philippines (LMP)–Iloilo chapter has appealed to the DBM to scrap or suspend a provision under Budget Circular No. 2026-1 requiring local government units (LGUs) to obligate at least 75 percent of their 20-percent Development Fund by September 30 to qualify for the Fiscal Year 2026 Collective Negotiation Agreement (CNA) incentive.
In a position paper signed by LMP-Iloilo president and Badiangan town mayor Suzette Mamon and other municipal mayors, the league warned that the requirement unfairly penalizes rank-and-file employees for procurement delays, bureaucratic bottlenecks and other circumstances unrelated to their performance.
The mayors argued that tying employee incentives to development fund utilization effectively punishes government workers for institutional shortcomings they neither caused nor have the authority to prevent.
The CNA incentive rewards qualified government employees for improving productivity, operational efficiency and cost-saving measures, while the 20-percent Development Fund, sourced from the National Tax Allotment, finances infrastructure and socioeconomic development projects.
The league maintained that linking the two through a rigid eligibility requirement defeats the purpose of rewarding deserving public servants.
It cited failed public biddings, lengthy procurement procedures, delayed permits, right-of-way disputes, engineering adjustments, contractor shortages and adverse weather conditions as factors that could prevent municipalities from meeting the September 30 deadline.
These delays, it stressed, do not necessarily reflect inefficiency or poor performance among municipal employees.
The mayors also questioned the September 30 assessment cutoff, arguing that development projects are implemented throughout the fiscal year, with some legitimately reaching the obligation stage only during the final quarter.
As an example, the league cited a municipality that had obligated only 65 percent of its Development Fund by September 30 but subsequently reached 90 percent by December 15.
Under the DBM requirement, that municipality would still fail the eligibility threshold despite substantially improving its fund utilization before year-end.
The league warned that the policy could disproportionately affect smaller, resource-constrained municipalities and undermine employee morale, productivity and public service delivery.
It also raised concerns over fairness, proportionality and local fiscal autonomy.
To prevent qualified employees from losing their incentives, the mayors urged the DBM to remove or suspend the 75-percent obligation requirement.
Alternatively, they proposed extending the assessment period to December 15, allowing exemptions for documented project delays and introducing conditional or proportionate eligibility instead of automatic disqualification.
The league also recommended that newly introduced performance requirements be applied prospectively, giving LGUs sufficient notice and reasonable time to comply.
“In view of the foregoing, the League of Municipalities of the Philippines Province of llode respectfully and strongly appeals to the Department of Budget and Management to reconsider and amend Budget Circular No. 2026-1 by removing or suspending the 75% obligation requirement for the 20% development fund as a mandatory condition for the grant of the FY 2026 CNA Incentive to qualified LGU employees,” the position paper stated.
The mayors emphasized that fiscal discipline and efficient development fund utilization should not come at the expense of employees who have fulfilled their responsibilities.
They maintained that an effective performance-based incentive system must uphold fairness, recognize genuine employee contributions and strengthen the morale of public servants rather than penalize them for circumstances beyond their control./PN
