In a significant development for Eastern Visayas, 106 out of 136 municipalities have been elevated to higher income classifications, according to the Department of Finance’s new guidelines. This upgrade was announced by Maria Rosaura Espejo, the head of the regional financial, monitoring, and evaluation unit of the Bureau of Local Government Finance, during a press briefing in Tacloban City.
The reclassification spans across the region, with 34 municipalities in Leyte, 18 in Samar, 18 in Northern Samar, 17 in Eastern Samar, 12 in Southern Leyte, and 7 in Biliran receiving upgrades. This shift is expected to enhance the municipalities’ ability to implement development programs, as they will receive a larger share of national taxes, thereby improving public services.
The income classification criteria categorize municipalities into different classes based on their average annual income over three years. First-class municipalities have an income of PHP200 million or more, second-class between PHP160 million and PHP200 million, third-class between PHP130 million and PHP160 million, fourth-class between PHP90 million and PHP130 million, and fifth-class less than PHP90 million.
Additionally, four provinces in the region have also seen upgrades: Biliran moved from fourth to second class, Eastern Samar and Northern Samar from second to first class, and Southern Leyte from third to first class. Three cities have also been reclassified: Baybay City in Leyte from a first-class municipality to a first-class city, Catbalogan City in Samar from fifth to third class, and Maasin City in Southern Leyte from fourth to third class.
This reclassification, the first since 2008, was mandated by a Department of Finance order issued in November 2024. It follows the signing of Republic Act 11964 by President Ferdinand R. Marcos Jr. on October 24, 2024, which institutionalizes the automatic income classification of local government units. This law aims to promote local autonomy and enable local governments to reach their full economic potential.
The new income classification will influence various aspects of local governance, including the allocation of administrative and statutory aids, financial grants, and other forms of assistance to local government units. It will also affect the determination of an LGU’s capability to undertake development projects, the annual supplemental appropriation for personal services, and compensation adjustments for LGU personnel as per the Salary Standardization Law of 2019. Furthermore, it could impact the creation of new LGUs, the number of elective members in local councils, land titling, minimum wage settings for domestic workers, insurance of LGU properties, and the reclassification of agricultural land.