Local Government Budgeting:

GUIDING
PRINCIPLES
 Local Government Code R.A. 7160
SECTION 2
Fundamental Principles. 
Local government financial affairs, transactions, and operations shall be
governed by the fundamental principles set forth hereunder;

(a)
No money shall be paid out of the treasury
except in pursuance of a lawful appropriation or
other specific statutory authority.

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 Local Government Code R.A. 7160
SECTION 2
(b) Public funds and monies shall be
spent solely for public purposes.

(c ) Revenue is obtainable only from

sources expressly authorized by
law and collection thereof shall at
all times be acknowledged
properly.

(d) All monies officially received by a

public officer in any capacity or upon
any occasion shall be accounted for
as government funds, except as may
otherwise be specifically provided by
law or competent authority. 3
 Local Government Code R.A. 7160
SECTION 2
(e) Trust funds shall not be paid out of
the treasury except in fulfillment
of the purpose for which the trust
was created or fund received.

(f) Every officer of the government

whose duties permit or require the
possession or custody of
government funds shall be
properly bonded and such officer
shall be accountable and
responsible for said funds and for
the safekeeping thereof 4 in
conformity with the provisions of
 Local Government Code R.A. 7160
SECTION 2
(g) Local governments shall formulate
sound financial plans and the local
budgets shall, by and large, be
based on functions, activities, and
projects, in terms of expected
results.

(h) Fiscal responsibility shall, to the

greatest extent, be shared by all
those exercising authority over the
financial affairs, transactions and
operations of the local
governments.

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Guidelines on
Participatory Budgeting
To ensure the genuine and meaningful engagement of civil society, the
following parameters shall guide both the LGUs and CSOs:

1.2.1 LGUs shall allow and practice genuine participation of people in the
planning and budgeting processes to promote and establish transparency
and accountability in all transactions related to PFM.

1.2.2 LGUs shall encourage participation and involvement of the CSOs, as

part of the Local Development Councils (LDC) and as observers in the
Local Finance Committees (LFCs), in the processes of setting directions and
allocating available resources. The purpose is to draw concerned citizens
together to participate and give inputs in decision-making related to local
plans and budget.

1.2.3 LGUs shall apply democratic principles in group decision-making

techniques to arrive at choices and preferences that are genuinely
responsive to people’s needs, particularly those of the marginalized and
disadvantaged members of society

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1.2.4 LGUs shall embody decisions arrived at in the plan and budget
as products of broad–based consultation and participation that
engender people’s collective consensus, commitment and
ownership.

1.2.5 LGUs are encouraged to enhance participative planning in

different venues, such as:

• In training workshops - more work than listening to lectures.

• In focused group discussions - discuss/resolve the issues at hand.
• In formal institutions - schools and formal classes are used.
• Digital Governance - wide use of electronic system or computers to
communicate with constituents via social media and other inter-
active platforms.

1.2.6 LGUs shall establish priorities and allocate resources during

investment programming of Programs, Projects and Activities (PPAs)
as major links to budgeting. The ranked PPAs and their
corresponding resource requirements become the bases for
preparing the annual budget proposals.
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 Principles of Engagement (LGUs &
CSOs)
DBM1 -National Budget Circular
TRANSPARENCY No. 536 dated3 -January
2 - ACCOUNTABILITY INTEGRITY 31, 2012
4 - PARTNERSHIP

5 – CONSULTATION & 6 – RESPECT FOR 7 - SUSTAINABILITY

MUTUAL IMPROVEMENT INTERNAL PROCESSES

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BENEFITS OF PARTICIPATORY
BUDGETING
01 Helps the LGU
maximize the
use of resources

02 Reduces delay in
the implementation
of urgent projects

03 Develops trust in
Government

04 Ensures continuity and

sustainability of plans and
budgets
05 Ensures continuity and
sustainability of plans and
budgets
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THANK YOU