Publicus-js-ncpag-The Budget Process for Dap

8/3/2019 Publicus-js-ncpag-The Budget Process for Dap

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The Budget ProcessDr.BenjaminE.DioknoSchoolofEconomics

UniversityofthePhilippines(Diliman)


2/29

Significanceofthenationalbudget

Thenationalbudgetisthemostimportantbillthat

Congress

has

to

pass

every

year.

It

also

has

the

biggesteffectonthelifeofeveryFilipino.

Itrepresentsthepolicydirectionsofthe

country,the

sources

of

revenues

to

fund

the

governmentsprograms,projectsandactivities,andidentifiesthesourcesoffinancing

the

deficit. Theannualbudgetisthetrueannualplanofthe

government.

Property of Dr. Benjamin Diokno 2 7/22/2010


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Thepoliticsofthebudgetprocess

Thebudgetprocessisnotonlyatechnicaland

administrativeprocess;

it

is

a

political

process.

HaroldLasswell,aknownpoliticalscientistdefinespoliticsaswhogetswhat,whenandhow.Butthats

exactly

what

the

budget

process

is:

who

paysforitandwho benefitsfromit,when andhowwillthebenefitsreachtheintendedbeneficiariesand

some

unintended

individuals.

ThebudgetisthemostpoliticalbillthatCongress

approvesevery

year.



4/29

TheBudgetProcess

BudgetPreparation

BudgetLegislationandAuthorization

Budget

Execution

and

Implementation

BudgetAccountabilityandReview



5/29

TheBudgetProcess

Preparation[Yeart1]

Authorization{Yeart1]

ExecutionandImplementation

[Yeart]

ReviewandAccountability[Yeart andt+1]

7/22/2010Property of Dr. Benjamin Diokno 5


6/29

BudgetPreparation

TheDevelopmentBudgetCoordination

Committee[chaired

by

Budget

Secretary

and

co

chairedbyFinanceSecretarywithNEDADirectorGeneralandBSPDeputyGovernorasmembers]setsthebudgetparametersfortheensuingbudget.

[April

the

year

before]

DBMissuesBudgetCalltodepartmentsand

agencies[April]

Deadlineforpastyearsandactualobligationsandcurrentbudget



7/29

BudgetPreparation

BudgetconsultationbetweenDBMstaffand

representativesof

agencies

and

corporations

[May]

Deadline

for

submission

of

proposed

budget

[endMay]

DBMconductstechnicalbudgethearingsand

consultations[June]

DBMseniorofficialsbudgetreview[endJune]



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BudgetPreparation DBCCdeliberation,finalreviewandvalidation

[endJune]

DBMsubmitstheproposedbudgettothePresidentinaCabinetmeeting[Week1July]

FinalizationoffourbudgetdocumentsBudgetofExpendituresandSourcesofFinancing(BESF),theNationalExpenditureProgram

(NEP),

the

Staffing

Summary,

and

the

PresidentsBudgetMessage(PBM)[Weeks1and2July]



9/29

BudgetPreparation

Submissionofproposedbudgetdocumentstothe

President

[end

July] SubmissionofPresidentsBudgettoCongress

[endJuly]

ArticleVII(ExecutiveDepartment)Section22:ThePresidentshallsubmittotheCongresswithinthirtydaysfromtheopeningofeveryregularsessionasthebasisofthegeneralappropriationsbill,abudgetofexpendituresandsourcesoffinancing,includingreceiptsfromexistingandproposedrevenuemeasures.



10/29

LegislativeBudgetProcess

PursuanttotheConstitution,allexpenditureandrevenuebillsshallexclusivelyemanatefrom

the

House

of

Representatives

of

Congress.

ThePresident

submits

the

Budget

of

ExpendituresandSourcesofFinancing(BESF)totheHouseofRepresentatives,andlatertothe

Senate.

Also

submitted

is

the

National

ExpenditureProgram(NEP)whichisthebasis

of

the

General

Appropriations

Bill

(GAB).Property of Dr. Benjamin Diokno 10 7/22/2010


11/29


TheBESFisreferredtotheHouseAppropriationsCommittee(HAC).Themothercommittee

conducts

hearings

on

the

macroeconomicassumptions.

TheHAC

prepares

the

General

Appropriations

Bill(GAB)basedontheBESFandtheNEP.

HAC

breaksup

into

several

sub

committees

(SubCom).SubComsconductbudgethearings.



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TheGABissponsored,debatedandapprovedonSecondReadingontheflooroftheHouse.

TheHACincorporatesamendmentstotheGABforapprovalonThirdReading.

TheHouseofRepresentativesapprovestheGAB.

TheGABissubmittedtotheSenateforconcurrenceoramendment.



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TheSenateFinanceCommittee(SFC)conducts

budgethearings.

SFC

is

broken

down

into

5

sub

committeesforthepurposeofbudgethearings.

The

proposed

amendments

are

presented,debatedandvotedon.ThechairoftheSFCandthechairofthesubcommitteessponsor

and

defend

the

amendments

on

the

floor.

SenateapprovestheproposedamendmentsonSecondandThirdReadings.



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ThirdChamber

Calledthebicameralconferencecommittee(BICAM),theConstitutiondoesnotexpressly

providefor

it.

Itsresponsibilityissupposedlytoreconcile

conflictingprovisions

between

the

House

versionandtheSenateversion.Lately,itcanbeaforumforintroducinganythingunderthesun.

Thedeliberationsarenottransparent.Therearenominutesofdiscussion.



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ThirdChamber

Recently,thediscussionismorerestricted.Only

thechairs

of

the

HAC

and

the

SFC,respectively,meetandmakedecisions inwhatiscalledfoureyesonlymeetings.But

decisionsare

ratified

by

the

members

of

the

BICAMasabody.

Theproposed

version

of

the

national

budget

as

approvedbythethe BICAMisthensubmittedtobothHousesforapproval.Nofurtherdebate

isallowed.

The

House

and

the

Senate

vote

on

theBICAMreportentoto(initsentirety).Property of Dr. Benjamin Diokno 15 7/22/2010


16/29

BudgetLegislation

TheBICAMreportisratifiedbytheHouseand

theSenate,

voting

separately.

[If

any

or

both

chambersrejecttheBICAMreport,anewbicameralcommitteewillbeorganized.Buta

rejectionhas

never

happened

before]

Ajointtaskforceconsistingofsomemembers

ofthe

House

and

Senate

technical

staffs

supervisesthepreparationoftheenrolledcopyoftheGeneralAppropriationsBill.



17/29

BudgetLegislation

AnadvancedcopyoftheGABisforwardedtotheDBM.TheSecretaryofBudgetandManagement,

with

the

assistance

of

senior

staff,reviewstheGAB,identifiesitemsandprovisionsforpossiblelineitemveto,draftsPresidentsVetoMessage(PVM).

ArticleVI(LegislativeDepartment),Sec.27(2)provides:

The

President

shall

have

the

power

to

veto

anyparticularitemoritemsinanappropriation,revenueortariffbill,butthevetoshallnotaffecttheitemoritemstowhichhedoesnotobject.



18/29

Lineitemvetopower

ThelineitemvetoisanawesomepowerofthePresident.Itallowshimtocontroltheabusesof

legislatorsby

inserting

pork

barrel

items

and

provisionsinthebudget.

TheU.S.

President

does

not

have

line

item

veto

power.CongresspassedabillduringthetimeofClintongivingtheU.S.Presidentthispower.It

wasquestioned

before

the

U.S.

Supreme

Court.

TheCourtdeclaredthelawunconstitutionalsinceitwillchangethebalanceofpower.



19/29

BudgetLegislation

DBMSecretarywiththehelpoftheOfficeoftheExecutiveSecretarydraftsthePresidentsVeto

Message

(PVM).

ThedraftPVMisdiscussedbytheSecretaryof

Budgetand

Management

with

the

Chairman

oftheHouseAppropriationsCommitteeinprivatesessions.

ThefinalversionofthePVMisthenpresentedtothePresidentforsignature.



20/29

PresidentialAction

ThePresidenthasthreeoptions:

Signthe

enrolled

copy

of

the

GAB

in

its

entirety

ExerciseherlineitemvetoandthensigntheenrolledcopyoftheGABtogetherwiththePresidents

Veto

Message

Vetothebill

[The

veto

may

be

overriden

by

two

thirds

of

all

themembersofeachHouse,votingseparately.



21/29

BudgetExecution

Definitionofterms:

Appropriation=FundsapprovedbyCongress

Allotment =FundsreleasedbyDBM

Disbursement=FundsusedbytheAgency

_____________________________________Savings =Fundsnotreleased/not

disbursed

Savingsmay

be

re

aligned

by

the

President

for

itemsotherthanwhatwasoriginallybudgeted.Thishasbeenasourceofpresidentialabuseofpower.



22/29

BudgetExecutionRules

NomoneyshallbepaidoutoftheTreasuryexceptin

pursuance

of

an

appropriation

made

by

law.

(Art.

VI,

Section29(1).

Nopublicmoneyorpropertyshallbeappropriated,

applied,paid

or

employed,

directly

or

indirectly,

for

the

use,benefit,orsupportofanysect,church,denomination,sectarianinstitution,orsystemofreligion,

or

of

any

priest,

preacher,

minister,

or

dignitary

as

such,

exceptwhensuchpriest,preacher,minister,ordignitaryisassignedtothearmedforcesortoanypenalinstitution,orgovernmentorphanageorleprosarium.



23/29

BudgetExecutionRules

Allmoneycollectedonanytaxleviedfora

specialpurpose

shall

be

treated

as

a

special

fundandpaidoutforsuchpurposesonly.Ifthepurposeforwhichthespecialfundwas

createdhas

been

fulfilled

or

abandoned,

the

balance,ifany,shallbetransferredtothegeneralfundsoftheGovernment.

Examples:RoadUsersTax,SpecialEducationFund



24/29

ReviewandAccountability

Thisisafullyearactivityexercisedbythe

Commissionon

Audit

(COA).

Allfunds(national,localorcorporate)and

whethergeneral,

special

or

confidential

are

subjecttoaudit.Forintelligencefund,itsreleaseissubjecttoapprovalofthePresident

andis

audited

directly

by

the

COA

Chairman.



25/29

StateofPublicFinance

Taxeffort,definedastaxesaspercentofgross

domesticproduct

(T/GDP),

is

falling

Budgetdeficits,thedifferencebetween

revenuesand

expenditures

(R

G),

is

ballooning

Outstandinggovernmentdebtishighand

rising



26/29

Weaker,lowyieldingtaxsystem

Tax-to-GDP ratio risks going back to levels during Marcos final years

PropertyofDr.BenjaminDiokno 26 7/22/2010


27/29

Fiscalhouseonvergeofcollapse

GMA run large deficits from 2001-04; huge deficits have reemerged in recent years

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Target Actual



28/29

Highandrisingpublicdebt

As the world economy recovers, interest rates rise, leading to higher debt service

0.00

0.50

1.00

1.50

2.00

2.503.00

3.50

4.00

4.505.00

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Double Your Debt In 10 Years

Debtof

Nat'l

Gov't



29/29

Thank

you!

BenjaminE.Diokno,Ph.D.SchoolofEconomics,[email protected]


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Publicus-js-ncpag-The Budget Process for Dap