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SOME INITIAL FINDINGS*
In October 2007, the Sangguniang Panlungsod, through Councilor Jose A. Tuason, sought the
conduct of a study on the economic and political feasibility of merging the city of Naga and
its neighboring towns of Camaligan and Gainza.
The longterm objective of the proposal is to enable Naga to qualify for a highly urbanized
city (HUC) status that will accord it the right of its own representation in Congress.
As an initial input into the discussion, this paper will explore the cost and benefit of the
proposal, primarily from the perspective of fiscal management. It will not explore the political
feasibility of the proposal; in so doing, it will try to answer the following questions:
1. Will the proposed single LGU secure a bigger share in the Internal Revenue Allotment
(IRA) that what its components are presently getting?
2. Who will benefit and who will lose under the proposed merger?
3. Are there other alternatives to merger that the city and its neighboring towns can pursue to
attain the same objective?
Independent IRA shares
The table below presents the respective 2007 shares in the Internal Revenue Allotment (IRA)
of the three municipalities, taken from the website of the Department of Budget and
Management.
Of the P266.8 million combined IRA of the three, Naga contributes 85%, Camaligan 9% and
Gainza the remaining 6%.
It must be noted though that when compared to their respective land areas appearing in
Wikipedia, the factor being used by DBM in computing the IRA of Camaligan and Gainza is
actually smaller (4.7 vs 13 sq km for the former, 14.8 vs. 18.2 sq km for the latter).
Projected IRA of Merged LGU
Nonetheless, even factoring in the adjusted land area, the IRA share of the merged LGU will
still be lower than their combined individual shares. This is evident from the following table.
*
Prepared by the City Planning and Development Office, Naga City.
The merged LGU, under this bettercase scenario, is projected to get an IRA share of P260.3
million, P6.5 million lower than the current situation. The shortfall rises to P10.3 million if
no adjustments are made on the land area data being used by DBM.
LGU 2000 Land CODEF** Share, Share, Equal 2007 IRA
Population Area Pop Land Sharing
Area
Camaligan 19,188 13.0 1,393,788 11,594,753 230,629 10,009,424 23,228,595
Gainza 8,412 18.2 1,163,260 5,083,128 726,876 10,009,424 16,982,689
Naga 137,810 84.5 7,268,652 106,009,947 26,855,626 86,474,737 226,608,963
TOTAL 165,410 115.7 9,825,700 122,687,829 27,813,132 106,493,585 266,820,247
The key factor behind the shortfall is the unchanged equal share of the newly merged LGU in
the IRA due to cities because the number of Philippine cities remains the same. Consequently,
Philippine municipalities will benefit as their equal share in the IRA increases because it is
now divided by the total number of towns less two (Camaligan and Gainza).
Possible upsides
Viewed differently, the proposed merger has some possible upsides that can compensate for
this initial IRA loss.
One is the increased land area amounting to as much as 31 sq km. At present, real property
taxes in the city already accounts for around 25% of its annual income. At this rate, a tighter
land valuation, assessment and real property collection system – which is already in place at
City Hall – has the potential of raising P10 million, which can already make up for the IRA
shortfall in the highend scenario.
The other lies in urban agglomeration opportunities, especially in the case of Camaligan.
Together with Canaman and Milaor, Camaligan actually hosts the immediate urban sprawl
radiating from the city center. There are already housing projects in the area – the most recent
of which is Deca’s Northfield Estates – that straddle the NagaCamaligan boundary. The
Camaligan Fishing Port, while underutilized, can expand and diversify the city’s industrial
base. The AbellaJolly Neighbors roadlink, once completed, will also open up the Queborac
area to new development opportunities.
These numbers however are preliminary and needs to be validated by hard data, especially in
regard to the real local tax potentials in Gainza and Camaligan.
Winners and losers
Given that the proposed new LGU will actually lose between P610 million under the current
IRA sharing formula, who are the expected winners and losers under the proposed merger?
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Winners
• Gainza and Camaligan. Public services in said areas will effectively be subsidized by
Naga as these will be upgraded to the level currently provided to its residents.
• Municipal government workers of Gainza and Camaligan. Municipal workers of Gainza
and Camaligan who will be absorbed by the new LGU will benefit from salary upgrades
equal to what their city counterparts are currently enjoying.
• Public schools in Gainza and Camaligan. They will now be entitled to share in the annual
budget of the Naga City School Board.
Losers
• Naga City. At present, its IRA ratio for every resident and square kilometer is 13% and
30% higher, respectively, than Camaligan and Gainza combined. This will go down in
view of the net reduction in the IRA share of the merged LGU. Further, its IRA share and
robust local revenues will now be used to subsidize services over a territory than is 36%
bigger, with a population 20% more.
• City government workers. As towns are allowed higher salary ceilings than cities, they can
be expected to have proportionately more staff than what City Hall current has. The
proposed merger will create a much bigger bureaucracy that its budget may have difficulty
supporting, especially in view of the pending Salary Standardization 3 measure that is
expected to raise government salary over the next few years.
• Elected municipal officials of Gainza and Camaligan. They will have to go. Alternatively,
they will have to compete for a seat in the city government.
• Residents of Gainza and Camaligan. They will pay more taxes than they currently used to,
owing to higher city tax rates and more efficient valuation and collection system, both for
businesses and real properties.
An alternative to merger
If the objective however is to secure better representation for Naga, the Sanggunian may
seriously consider supporting the redistricting of Camarines Sur, in view of the 2007 Census
results that place its population at 1.69 million.
Pursuant to the constitutional population threshold (at least 250,000) for a congressional
district, Camarines Sur is actually entitled to six districts already – two more than the current
four.
Two local bloggers have in fact put forward three possible configurations.
On April 24, 2008, right after results of the 2007 population count was issued, Irvin Sto.
Tomas, in his weblog “Filipinize,” suggested the following new district built around Naga:
3
IRVIN STO. TOMAS
Subtota
Municipality 2007 Population l District
CAMARINES SUR 1,693,821
GAINZA 9,404 271,026 Third
MILAOR 26,452
NAGA CITY 160,516
MINALABAC 43,957
SAN FERNANDO 30,697
Wilfredo Prilles, Jr. recently came up with two alternative configurations in his own
“Nagueño” weblog:
GEOGRAPHYORIENTED OPTION HISTORYORIENTED OPTION
Municipality 2007 Subtotal District Municipality 2007 Subtotal District
Population Population
NAGA CITY 160,516 276,771 Central CAMALIGAN 20,758 271,228 Metro
PILI (Capital) 76,496 Plains CANAMAN 31,583 Naga
OCAMPO 39,759 GAINZA 9,404
MAGARAO 22,515
MILAOR 26,452
NAGA CITY 160,516
Conclusion
To recapitulate, the following points stand out:
1. The proposed merger will yield a net IRA loss of between P610 million for the unified
LGU, using 2007 data. This indicates that the merger is a losing proposition in terms of
national transfers, equivalent to around 4% of the total which is manageable.
2. The loss can be compensated by a potential increase in real property tax collections,
leveraging the city government’s better tax collection machinery, and benefits arising
from urban agglomeration, particularly between Naga and Camaligan.
3. With fiscal upsides still more of potential than real, Naga is clearly at the losing end for
the short term. The combined population of the merger will not be enough to attain HUC
status and qualify it for its own congressional representation. Further, it will end up losing,
mainly because it will subsidize the cost of delivering urban basic services to Gainza and
Camaligan, including public education. The gain of the public sector in these two towns
will also come at the expense of city government workers.
On the other hand, elected town officials of Gainza and Camaligan will also stand to lose
their current positions. Their residents also face the possibility of paying more taxes.
4
4. Supporting the redistricting of Camarines Sur, which can add up to two more
congressional districts, will help attain the objective of better representation for the city in
the short term.
Given Item No. 4, is the proposed merger still worth pursuing? As a matter of strategy,
notwithstanding the shortterm costs, there are three reasons why it will make sense for the
long term.
• One, it gives Naga a bigger population base of 190,678 as of last year’s census. This
makes the city Bicol’s biggest in that respect, giving it an edge of more than 10,000 over
Legazpi City.
• Two, a bigger population base puts it in a better position to influence the election of its
congressional representative, especially if redistricting takes place.
• Finally, at a constant annual growth rate of 2%, the unified Naga will exceed the 250,000
population threshold by 2021 (instead of 2030, thus accelerating the process by 9 years),
qualifying it for HUC status and its own congressman by the time election takes place the
following year – assuming of course that current rules remain the same, and the proposed
merger is approved by the electorate of Naga, Gainza and Camaligan in the first place.
References:
“City dad proposes Naga merger with two towns, “ Naga City Journal, October 5, 2007.
http://www.naga.gov.ph/journal2/?module=popup&page=2&id=1342
Annex A, Local Budget Memorandum No. 52, FY 2007 Internal Revenue Allotment, January
5, 2007. http://www.dbm.gov.ph/issuance/issuance/lbm_2007_52/PCM/V_CY
%202007%20IRA%20PCM.pdf
“Camarines Sur,” Wikipedia. http://en.wikipedia.org/wiki/Camarines_Sur
“Reapportionment ng mga distrito sa Camarines Sur,” Filipinize, April 24, 2008.
http://filipinayzd.blogspot.com/2008/04/reapportionmentngmgadistritosa.html
“A new provincial geography,” A Nagueño in the Blogosphere, September 6, 2008.
http://nagueno.blogspot.com/2008/09/newprovincialgeography.html