The President's Budgetary Power by Emilia Boncodin

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THE PRESIDENT’S BUDGETARY POWERS Emilia T. Boncodin Forum on the Powers of the Presidency: Preventing Misuse and Abuse Asian Institute of Management, 30 January 2010 © 2010 Emilia T. Boncodin

SCOPE •! Budget Powers –!Focus on Expenditures of Public Funds

•! National Government Budget –!Indirectly, Goccs and LGUs

© 2010 Emilia T. Boncodin

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KEY BUDGET POWERS •! setting the budget level •! authorizing the expenditure of appropriate funds •! suspension of appropriations •! use of savings •! approval of lump sum appropriations •! grant of personnel benefits 3

© 2010 Emilia T. Boncodin

BUDGET SETTING •! President prepares and submits budget of expenditures as basis of general appropriations for approval by Congress •! Congress may not increase appropriations recommended by the President (Sec. 25 (1), Art. VI, Constitution) •! Power to veto any particular item or items in an appropriation, revenue or tariff bill … (Sec 27 (2), Art. VI, Constitution) © 2010 Emilia T. Boncodin

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IN PRACTICE: •! an effective instrument of fiscal discipline –!expenditures are based on identified sources of revenues and financing –!budget allocations specified as to purpose and recipient

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CHALLENGED BY: –! addition of continuing (or carry-over) appropriations and use of “Unprogrammed Fund” in GAA •! In 2008, P 132 billion of continuing appropriations added to the budget (10.8% of 2008 budget) •! In 2008, P29 billion of “Unprogrammed Funds” was released, increasing the budget by the same amount. –! realignment of debt service appropriations to fund programs and projects •! In 2009, P50 billion was transferred from “debt servicing” to other GAA items. Actual debt service payments, however, exceeded the reduced level. –! discretionary rules on the treatment of “reenacted budget” •! In 2007, actual allotment releases exceeded authorized appropriations by P36 billion due to the addition of the reenacted budget. © 2010 Emilia T. Boncodin

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EXPENDITURE OF PUBLIC FUNDS •! President is Chief Executive, with the authority to implement authorized appropriations as prescribed •! FLOW OF EXPENDITURES –!appropriations of money by Congress –!allotment of appropriations by Executive (through DBM) –!obligation of allotment by spending agencies –!payment of obligations by agencies 7

© 2010 Emilia T. Boncodin

IN PRACTICE •! an effective mechanism by which the Executive exercise control over the use of government funds –!ensure budget allocation to government agencies and instrumentalities –!track funds accountability

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IN PRACTICE •! system suffers from complaints of non-predictability of fund releases disrupting delivery of public services –! delayed enactment of budget by Congress •! all budgets from 2001 to 2010 have been reenacted: full: 2001, 2004, 2006 partial: all others –! weak link: revenue collection •! revenue targets submitted to Congress fell short of target in 2008 and 2009 –! centralized decision making in many agencies •! 93% of DA and 40% of DAR budget in 2009 centrally managed –! political accommodations 9

© 2010 Emilia T. Boncodin

WITHHOLDING OF APPROPRIATIONS •! Suspension of expenditure of appropriation when public interest so requires, except otherwise provided in GAA (Sec. 38, Book VI, EO 292) •! Modification or amendment of allotment previously issued, arising from shortfall of revenue and other receipts (Sec. 23 (6) Book VI, EO 292) © 2010 Emilia T. Boncodin

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IN PRACTICE •! a necessary instrument for keeping public expenditures in line with fiscal objectives –!when there exists an unmanageable fiscal deficit •! imposition of reserves in 1998 as an aftermath of the 1997 Asian financial crisis

–!withholding of appropriations in 2003 when fiscal crisis was declared (deficit at 5% of GDP) 11

© 2010 Emilia T. Boncodin

USE OF SAVINGS •! use of savings to cover deficit in any other item of appropriation (Sec. 38 and 49, Book VI, EO 292) •! In practice –! a practical approach to augment appropriations for similar items in the GAA; likewise provides incentives to agencies to economize –! commonly subject to abuse: •! forced savings to fund personnel benefits •! use of savings to fund non-related items (ex., in 2008, P 140 billion used)

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APPROVAL OF LUMP SUM APPROPRIATION •! Special budgets to identify approved lump sum appropriations in the GAA –! Priority Development Assistance Fund –! Calamity Fund –! Contingent Fund •! Special budgets for earmarked funds specifically provided by law –! AFMA –! AFP Modernization Fund –! Agrarian Reform Fund 13

© 2010 Emilia T. Boncodin

IN PRACTICE •! an effective tool to cover contingencies •! provides flexibility in operations •! however, suffers from general lack of transparency and abuse of discretion –!ex., selective release of PDAF and other lump sum funds

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GRANT OF PERSONNEL BENEFITS •! RA 6758, as amended by Joint Resolutions 1 and 2 by Congress on the increase in salaries and benefits •! Grant of performance incentives

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CHECKS TO PRESIDENTIAL POWERS •! Congressional oversight •! Civil society participation •! Public information system –!budget transparency –!periodic reporting –!citizen-friendly budget

•! Abolition of unprogrammed funds © 2010 Emilia T. Boncodin

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END OF PRESENTATION

© 2010 Emilia T. Boncodin

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