CSC Forum, the final cut

Sounds like a movie sequel but it is not. This final installment of my presentation was intended to prick or tickle the imagination and creativity of personnel involved in the operation of LOEs on how to enhance the revenue generating capacities of their enterprises.

Funding sources. There are only two main sources that LOEs can operate on namely, their own internally-generated income from user fees or charges like rental of stalls, market tickets, sale of medicines, occupancy fees for patients, etc.; and subsidy or advances from the General Fund. Normally, the latter constitutes the biggest source of operational fund. Guimaras Provincial Hospital for example, is heavily dependent on this subsidy, constituting 79% of its operating budget. LGUs can also request financial assistance from their legislator's Priority Development Assistance Fund (PDAF) or other special purpose funds in the GAA. The capitation fund from PhilHealth can also be a potential source to augment the operational needs of hospitals. Loans from GFIs or DOF's LOGOFIND can likewise be resorted to. Aklan has tapped the LOGOFIND to finance the construction of its multi-storey hospital building. Bond flotation similar to the one initially done for the Caticlan and Boracay Jetty Port can also be replicated by other LGUs. Build-Operate-Transfer scheme and its variants as well as Lease-to-Own scheme can be a potential funding sources for capital expenditures.

Tax exemption as a Subsidy. I emphasized the fact that LGU owned enterprises are tax exempt. If these were operating as private entities, these could have been paying real property taxes and the mayor's permit and related fees, ergo, this privilege if monetized is a form of LGU subsidy.

Policy Considerations. There is a need for LGUs to take a closer look that their existing fiscal policies related to LOEs. For example, there should be a cap or conditionality on subsidy, grants or advances by limiting the utilization to deficit financing (loan payment), and meeting the cost of development projects or capital expenditures. There should likewise be policy on how much rate of return should be remitted to the General Fund once LOEs' operation is stabilized.

This complete my four-part series on LOEs. Hope my readership will find worthwhile this sharing of information.