"Expenditures have to be needs-driven, not supplier-driven, not kinship-driven."
Quezon City was a notorious bad payer. Payment to suppliers and contractors was often delayed, as well as remittances to various government agencies. The city hall's bloated bureaucracy of 12,000 permanent and contractual employees had to wait for months to get their salaries. When Mayor Feliciano "Sonny" Belmonte, Jr. assumed the post in July 2001, he discovered that Quezon City owed suppliers and commercial banks close to P3 billion. The city had also used up its budget for the year. Naturally, basic and social services such as garbage collection, healthcare, schoolhouses and roads were sacrificed. The city lamed poor revenue collection and an unrealistic budgetary system for its cash woes. Officials unmindfully spent more than the city could afford. Worse, corruption was rampant at all levels.
On his first day on the job, Mayor Belmonte put improving fiscal management and governance capacity building as his first order of business. Until now, the first report he requires to see on his desk every morning is a copy of the city's budget. "City officials had to be clear about what we wanted to achieve and what kind of leaders we wanted to become," he says. The task of bringing the city coffers back to the pink of health was an arduous one for the new administration. To raise revenues, it used both carrot and stick. Real property tax laws were strictly enforced, and regulatory fees were changed to reflect market rates.
Incentives were also offered to lure voluntary tax payment. The tax payment system was computerized, procedures were simplified, and a "taxpayer-friendly" payment hall was constructed. Payment claims were strictly validated to reduce fake collections. Commissions on Audit rules were seriously implemented. To rein in spending, city officials identified the biggest expense accounts and tried to reduce them. Two items found eating up a big chunk of the budget were garbage collection and personnel salaries. From the more expensive system of collecting trash per trip, the city engaged contractors to do a "pakyaw" or wholesale collection. To cut the bureaucratic fat, the city laid off about 3,000 casual employees. "Most of them were mere '15-30' employees anyway," says the mayor, referring to city hall personnel who reported for work only during paydays on the 15th and 30th of every month.
The Quezon City government posted a dramatic turnaround in its finances with an impressive P2.2-billion budget surplus in 2002, from a deficit of nearly P600,000 in 1999. Improvements in the collection of business taxes jumped by almost 160% during the period. Streamlining and reorganization of offices pruned the city's expenditures by 32%. By licking its fiscal woes, Quezon City now has funds to improve its roads, clean up creeks and esteros, provide healthcare and sanitation needs and other social services. "With enhanced finances through more effective fiscal management, and improved governance capacity, we are on the move towards our goal of becoming a 'Quality City'," says Mayor Belmonte.