Why does LTO need PHP 2.5 billion to produce 18 million motorcycle plates?

There has been a lot of controversy about the Land Transportation Office (LTO) in the last 24 hours after the chief of the agency, Assitant Secretary Edgar Galvante, supposedly requested for PHP 2.5 billion to produce 18 million motorcycle plates.

Many motorists believed that they have to pay again for a license plate that they have already paid for, and some wondered why the LTO needs to request for the budget when they actually get their budget from license driver's renewals, student permits, as well as from other legal fees/requirements.

But it seems to be one massive misunderstanding. To be more specific, the issue is understanding how government agencies operate with regard to budget. 

The issue was clarified by the LTO together with their parent agency, the Department of Transportation (DOTr), wherein it was explained that the LTO does not hold or maintain any revenue collected from motorists. Any fees paid to the LTO are remitted to and held by the Bureau of the Treasury (BTr) under the Department of Finance (DOF).

For the LTO to be able to get the funds (the PHP 2.5 billion) to be used for the intended purpose (the plates) they have to make a request from the concerned agencies. 

LTO: No need to pay extra for backlogged license plates image

Lahat po ng kita o ‘yung mga ibinabayad ng motorista sa LTO - kesyo bayad sa huli, lisensya, plaka, rehistro, etc., hanggang sa kahuli-hulihang sentimo - ay nire-remit sa National Treasury. Wala pong natitira sa LTO,” the agency reiterated.

[All income or payments made by the motorist to the LTO - late fees, licenses, license plates, registrations, etc., up to the last centavo - are remitted to the National Treasury. Nothing is left in LTO]

Once remitted, it is the Department of Budget and Management (DBM) and Congress that decide how much will be allotted to fund specific projects or services. This means that the DBM and Congress are the ones that approve the LTO's annual budget. LTO chief Galvante was even asked how much funds need to be allocated to the LTO in order to make the backlogged 18 million motorcycle license plates – to which Galvante answered was at PHP 2.5 billion. It was not an extra funding allocation, according to the LTO.

Aside from needing a big budget to produce the plates, the LTO is also eyeing other manufacturers to help ramp up the production of motorcycle plates. According to Galvante, the LTO's plate-making facility does not have enough equipment capacity that they will be able to meet the June 2022 target.

Should the LTO be able to tap into another manufacturer to make the license plates, they plan on contracting 10 million plates in order to meet the June 2022 deadline.

With the public confused and angry at the prospect of having to pay extra for something they already paid, the LTO clarified that motorists will not have to pay again for their license plates.

Wala pong babayarang muli ang mga motorists dahil one-time lang po ang pagbabayad para sa plaka,” the LTO said in a statement.

[Motorists do not have to pay again because the payment for the license plate is only one-time]

With that sorted out, the LTO hopes that their request will be granted by the DBM and by Congress so they can make the plates. They're also hoping that they will be able to ask another manufacturer to outsource some of their pending plates.