ExplainerAugust 17, 2026 · 8:35 AM7-minute read

FIVE THINGS TO KNOW ABOUT THE PROPOSED ₱58.32-BILLION LOCAL GOVERNMENT SUPPORT FUND

The fund can pay for useful local projects, but it is separate from the automatic tax share of local governments and still depends on national budget decisions.

The proposed 2027 national budget contains ₱58.32 billion for the Local Government Support Fund, or LGSF.

The name sounds technical. The practical idea is simple: a city, municipality, province or barangay may need money for a road, water system, health facility, livelihood program or another local project. The national government can provide additional support through this fund.

The concern is how the recipients and projects are selected. The fund is separate from the tax share that local governments receive automatically. A large part of the LGSF passes through a request, evaluation and release process involving the Department of Budget and Management.

Here are five things to know before treating the fund as either an automatic public benefit or political pork.

THE LGSF IS EXTRA SUPPORT, NOT THE AUTOMATIC TAX SHARE OF LOCAL GOVERNMENTS

Local governments are entitled to a share of national taxes. This is called the National Tax Allotment, or NTA.

The Constitution says the just share of local governments in national taxes must be released automatically. The Local Government Code also provides for its direct quarterly release without the need for another action by the national government.

The proposed NTA for 2027 is about ₱1.32 trillion. That money is different from the proposed ₱58.32-billion LGSF.

The LGSF provides additional money for specified programs and projects. Some components have their own eligibility rules, intended beneficiaries and release requirements. An eligible local government may have to submit a request through the Department of Budget and Management’s Ugnayang Bayan Portal.

This distinction is important. The national government cannot present the NTA as a favor because local governments are legally entitled to it. The LGSF contains more room for national officials to decide which requests qualify and when money is released.

WHAT TO WATCH

When officials announce aid for a city or municipality, check whether the money is part of its automatic NTA or an additional LGSF release. The legal basis and selection process are different.

THE FUND GREW SHARPLY IN 2026 AND WOULD SET ANOTHER RECORD IN 2027

The LGSF was ₱23 billion in 2025. It increased to about ₱57.88 billion in 2026, more than twice the previous amount. The proposed 2027 total is ₱58.32 billion.

The increase can allow more local projects to proceed. A municipality with limited local revenue may struggle to finance a water system, evacuation center, public market or health facility without national assistance.

The size of the fund also raises the stakes. The proposed 2027 budget is the final full-year spending plan of President Ferdinand Marcos Jr. before the 2028 national election. Local projects can provide real services while also improving the public standing of the national officials identified with their release.

That political effect does not make every LGSF project improper. A completed water system remains useful even when politicians claim credit for it. The test is whether allocations follow published need-based rules instead of party loyalty, personal access or electoral importance.

As of May 31, the Department of Budget and Management had reportedly released ₱35.45 billion, or about 61 percent, of the 2026 LGSF. Release data can help the public compare where the money went and whether the distribution matches the program’s stated criteria.

WHAT TO WATCH

Compare allocations across regions, provinces and income classes. A fair system should be explainable without reference to which mayor, governor or congressional district supports the administration.

THE FUND COVERS SEVERAL PROGRAMS WITH DIFFERENT PURPOSES

The largest reported component in the proposed 2027 fund is ₱37.49 billion in financial assistance to local government units.

Under the 2026 rules, eligible projects have included agriculture programs, farm-to-market roads, public markets, hospitals, water and sanitation systems, evacuation centers, digital infrastructure, support for small businesses and assistance for families in need. The final 2027 menu will depend on the appropriations law and implementing rules.

Other LGSF components support poor and disadvantaged local governments through the Growth Equity Fund, projects in barangays covered by the Barangay Development Program, and locally identified water or evacuation projects under participatory budgeting.

These programs should not be treated as interchangeable. A Growth Equity Fund project is supposed to address gaps faced by poorer local governments. A participatory-budgeting project is supposed to come from a process that involves the community. A project under the Barangay Development Program follows a different set of beneficiaries and objectives.

For residents, the label on the project should identify more than its funding source. It should reveal why the community qualified, which rule was applied and what result the project is expected to produce.

WHAT TO WATCH

Look for the final 2027 special provisions and implementing circulars. They should identify eligible projects, prohibited uses, funding limits, documentary requirements and the officials responsible for approval.

THERE ARE RULES AND DIGITAL TOOLS, BUT DISCRETION HAS NOT DISAPPEARED

The Department of Budget and Management says requests for financial assistance are submitted through the Ugnayang Bayan Portal. Its local-government bureau evaluates requests and recommends releases.

The 2026 rules say allocations should consider a scorecard covering governance standards, financial management, fiscal transparency, capacity to use funds, service delivery, economic development, environmental management, public safety and citizen engagement. The DBM must also consider necessity, equitable distribution and fund availability.

Those are relevant standards. Their value depends on how they are applied.

A scorecard does not ensure fairness if the public cannot see the scores, the competing requests or the reason one project was approved while another was not. A digital portal can improve recordkeeping without making the actual decision understandable to citizens.

DBM also operates an online dashboard showing LGSF releases by program and location. It can help residents see whether their local government received money. The dashboard does not by itself show whether a rejected request deserved approval or whether an approved project was completed properly.

WHAT TO WATCH

Ask for publication of recipient scorecards, project requests, approval dates, amounts, implementing agencies and completion reports. Transparency should cover the decision and the result, not only the release.

THE PUBLISHED 2027 BREAKDOWN CURRENTLY CONTAINS AN ARITHMETIC PROBLEM

A news report listed the proposed components as ₱37.49 billion for financial assistance, ₱10.3 billion for the Growth Equity Fund, ₱9.74 billion for the Barangay Development Program and ₱1 billion for participatory budgeting.

Those four figures total ₱58.53 billion. That is ₱210 million more than the stated ₱58.32-billion LGSF total.

The discrepancy may come from a typographical error, rounding or a figure copied from a different version of the budget. MCT has not found enough evidence to decide which component amount should be changed.

The responsible response is not to choose a number that makes the arithmetic work. The detailed 2027 National Expenditure Program table or a clarification from the Department of Budget and Management should settle the breakdown.

The error does not prove that money is missing or that the fund is corrupt. It shows why summaries should be checked against the actual budget tables before individual component figures are repeated as final.

WHAT TO WATCH

Watch for the complete 2027 NEP entry and DBM clarification. Congress should also require the total and all suballocations to reconcile before approving the budget.

BOTTOM LINE

The Local Government Support Fund can finance projects that communities genuinely need. It can help poorer local governments pay for services and infrastructure that their own revenue cannot support. The fund is not the same as the automatic National Tax Allotment. Because LGSF releases involve requests, evaluation and national budget decisions, the system needs safeguards against political favoritism. The strongest protection is a public record that connects every peso to a rule: who requested it, why the locality qualified, who approved it, what was built and whether the project worked. The proposed ₱58.32-billion total is still subject to congressional review. The unresolved arithmetic in the published component breakdown is one more reason to inspect the detailed budget before treating the figures as final.

MCT DAILY

THIS MORNING’S FIVE POLITICAL DEVELOPMENTS