CEBU CITY -- Cebu City did not have P1.3 billion of the P1.483-billion supplemental budget (SB) the legislative council and then mayor Tomas Osmeña passed and approved in February last year.
Yet then City Treasurer Ofelia Oliva certified that it had, and so this made SB 3 illegal, the Commission on Audit (COA) said.
Lawyer Eva Cabrera, State Auditor IV of COA Cebu City, said P1.3 billion of the P1.483-billion SB 3 was deemed illegal considering that the statement of funding sources Oliva had certified had no back-up funds available.
She said this violated Section 321 of Republic Act 7160 or the Local Government Code.
The provision states that no ordinance providing for a supplemental budget shall be enacted, except when it is supported by funds actually available as certified by the local treasurer of by new revenue sources.
In an audit observation memorandum, Cabrera said the sources of SB 3 totaled P1,482,717,207, which already included the City’s retained operating surplus of 2009 amounting to P1,476,352,290.
This amount, which Oliva certified, became the basis of the City Council to pass the Appropriation Ordinance No. 2229, which covered the SB 3, on February 26, 2010.
However, based on the statement of government equity prepared by the City Accounting Office, the retained operating surplus of the City in 2009 was only P505,525,675.35.
This made the statement certified by Oliva blown up by almost P1 billion.
Cabrera said any retained operating surplus does not always mean available funds.
“This is because included here were disbursements which were not yet recorded as expenses based on normal accounting procedures,” she said.
The procedures include unliquidated cash advances, financial assistance which are subject to liquidation and therefore recorded as receivables, unissued or unused inventory and continuing appropriations.
“Hence, despite the retained earnings reflected in the books of the local government unit, this is not an assurance that the corresponding amount is available or non-restricted,” Cabrera said.
If the approved supplemental budget had no actual funds, Cabrera said this meant that related disbursements would also be illegal and unauthorized.
She said funds that were already disbursed by the reason of the supplemental budget may have been funds already obligated for other purposes but which have not yet been paid.
Sought for comment, Oliva said she will review SB 3 and read COA’s audit observation memorandum.
In a separate interview, Councilor Jose Daluz III said SB 3 was not illegal because the treasury office had certified that funds were available.
Daluz was then part of the local finance committee being the chairperson of the council’s committee on budget and finance.
Daluz said Oliva was able to explain the amount she certified during the budget hearing of the Council.
“And we believed her that’s why we passed the budget,” he said.
Daluz said all approved appropriations of local government units go through the review and approval of the Department of Budget and Management (DBM).
With DBM reviewing and approving SB 3, the supplementary budget was legal and valid, Daluz said.
Osmeña, now congressman of the south district, said that if it was true that the retained operating surplus was only P500 million, then why did the City not run out of funds?
He said the City was even able to pass two more supplemental budgets after that.
The P1.483-billion SB 3 last year covered the City’s foreign loan payment incurred in the construction of the South Road Properties (SRP) amounting to P401.887 million.
It also included the P343 million for barangay infrastructure projects which became controversial after the materials used by its contractor, E.M. Arante Construction, were found to be substandard.
The budget also included P100 million for the City’s scholarship program, P175 million to further develop the SRP, P40 million for the rehabilitation of the Cebu City Sports Center and P5 million for senior citizens and a scholarship program for Cordova town.
Others include the purchase of vehicles for department heads (P20 million), hoses and barrels for mountain barangays affected by the dry spell (P5 million); the purchase of heavy equipment (P45 million); and financial assistance to the judiciary (P24 million).
SB 3 also contained P7 million for the purchase of fire tankers, P1.28 million for the purchase of communication equipment and P14.41 million for expenses of the Cebu City Medical Center emergency department.
SB 3 likewise included P18.482 million for a minibus each for 11 south district barangays and garbage trucks for other barangays in the south district. (Sun.Star Cebu)
