URDANETA CITY—A P52 million buffer fund on top of the city's budget for this year has been set up in anticipation of the local effects of the global financial crisis.
A pioneering move in the province, the buffer fund, according to Mayor Amadeo Perez Jr. can be tapped in case tax collection falls below expectations so that programs and projects lined up for the year will not be jeopardized.
The contingency fund comes from the P28 million savings of the local government from last year's budget and P24 million from savings of the Urdaneta City University, which is run by the city government.
"We will reserve our savings as a buffer fund for any eventuality that might affect our income in 2009 due to the problem about the economy," Perez said.
The savings or budget surplus goes back to the general fund and can be re-appropriated any time to finance programs and projects.
The savings, the mayor said, will make up for the reduction of the Internal Revenue (IRA) share of the city in the amount of P30 million following the creation of new cities that take in shares from the IRA pie.
But Perez said so far there is no sign that the income of the city is sliding as collections from business permits and licenses still remain within projections.
Perez expressed optimism that the city can still reach its collection target.
He said of the city's total budget of P537 million for 2009, at least P207 million will come from the city's share of the IRA.
"In the remote possibility that the national government would not be able to collect all the taxes due to the economic crisis, the city government will have a fall back because of its buffer fund," the mayor added.—LM
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