Deficit Reduction Achieved Through Cost-Cutting
One year after declaring a fiscal crisis, Cebu City Mayor Nestor Archival announced that his administration narrowed the City's budget deficit by more than P2.3 billion through cost-cutting measures and tighter spending controls. However, the local government still faces a P1.12-billion funding gap.
During his first State of the City Address on July 7, 2026, Archival presented financial figures showing the deficit dropped from P3.43 billion as of June 30, 2025, to P1.12 billion as of June 30, 2026, a reduction of approximately P2.31 billion.
Financial Highlights
The improvement came as total available funds increased from P9.36 billion in June 2025 to P10.28 billion this year, while total obligations declined from P12.79 billion to P11.40 billion, according to the financial report.
The City's General Fund slightly decreased from P1.64 billion to P1.60 billion. Legally restricted funds increased: Local Development Fund rose from P3.59 billion to P4.06 billion, Trust Funds from P1.84 billion to P2.13 billion, and Special Education Fund from P2.29 billion to P2.50 billion. Combined, these restricted funds now total P8.69 billion and cannot be used for regular operating expenses.
Key Cost-Cutting Measures
Archival attributed the improved financial position to measures introduced after he assumed office on June 30, 2025, including a "No Appointment, No Work" policy limiting hiring to essential frontline positions, and stricter expenditure controls. Energy-saving initiatives included installing solar power systems in government buildings, reducing electricity consumption, implementing fuel-saving measures, and adopting a compressed four-day workweek in selected offices.
Manpower requests for the first six months of the year dropped from P497.61 million in 2025 to P365.10 million in 2026. The unobligated balance also declined from P182.81 million to P155.31 million.
Capital Outlay and Revenue
One of the biggest reductions was in capital outlay obligations, which plummeted from P2.86 billion in June 2025 to just P101.78 million a year later, reflecting the administration's focus on fiscal recovery. Meanwhile, accounts payable increased from P2.03 billion as of March 2025 to P2.46 billion as of February 2026.
Despite the remaining deficit, Archival said the City will continue settling financial obligations supported by necessary documents while working to improve revenue collections. "What needs to be paid, we will pay. As long as the necessary documents are there, we will settle those obligations. Then, as our revenues continue to increase, we will make sure those obligations are covered," he said.
The mayor noted that projected revenue increased from P8.8 billion under last year's budget to P9.1 billion this year despite not imposing new taxes. "Another thing is that based on last year's budget, our projected revenue was P8.8 billion. Now, it has increased to P9.1 billion," Archival said.
Ongoing Challenges
Archival acknowledged that the City has yet to achieve a balanced financial position, with obligations still exceeding available resources by P1.12 billion. He emphasized the administration remains committed to restoring long-term fiscal stability through sustained spending controls, improved revenue collection, and expanded efficiency measures.
