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8/3/2019 Publicus-js-ncpag-The Budget Process for Dap
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The Budget ProcessDr.BenjaminE.DioknoSchoolofEconomics
UniversityofthePhilippines(Diliman)
8/3/2019 Publicus-js-ncpag-The Budget Process for Dap
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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.
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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.
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TheBudgetProcess
BudgetPreparation
BudgetLegislationandAuthorization
Budget
Execution
and
Implementation
BudgetAccountabilityandReview
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TheBudgetProcess
Preparation[Yeart1]
Authorization{Yeart1]
ExecutionandImplementation
[Yeart]
ReviewandAccountability[Yeart andt+1]
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BudgetPreparation
TheDevelopmentBudgetCoordination
Committee[chaired
by
Budget
Secretary
and
co
chairedbyFinanceSecretarywithNEDADirectorGeneralandBSPDeputyGovernorasmembers]setsthebudgetparametersfortheensuingbudget.
[April
the
year
before]
DBMissuesBudgetCalltodepartmentsand
agencies[April]
Deadlineforpastyearsandactualobligationsandcurrentbudget
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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]
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BudgetPreparation
Submissionofproposedbudgetdocumentstothe
President
[end
July] SubmissionofPresidentsBudgettoCongress
[endJuly]
ArticleVII(ExecutiveDepartment)Section22:ThePresidentshallsubmittotheCongresswithinthirtydaysfromtheopeningofeveryregularsessionasthebasisofthegeneralappropriationsbill,abudgetofexpendituresandsourcesoffinancing,includingreceiptsfromexistingandproposedrevenuemeasures.
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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
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LegislativeBudgetProcess
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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LegislativeBudgetProcess
TheGABissponsored,debatedandapprovedonSecondReadingontheflooroftheHouse.
TheHACincorporatesamendmentstotheGABforapprovalonThirdReading.
TheHouseofRepresentativesapprovestheGAB.
TheGABissubmittedtotheSenateforconcurrenceoramendment.
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LegislativeBudgetProcess
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
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BudgetLegislation
TheBICAMreportisratifiedbytheHouseand
theSenate,
voting
separately.
[If
any
or
both
chambersrejecttheBICAMreport,anewbicameralcommitteewillbeorganized.Buta
rejectionhas
never
happened
before]
Ajointtaskforceconsistingofsomemembers
ofthe
House
and
Senate
technical
staffs
supervisesthepreparationoftheenrolledcopyoftheGeneralAppropriationsBill.
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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.
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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.
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BudgetLegislation
DBMSecretarywiththehelpoftheOfficeoftheExecutiveSecretarydraftsthePresidentsVeto
Message
(PVM).
ThedraftPVMisdiscussedbytheSecretaryof
Budgetand
Management
with
the
Chairman
oftheHouseAppropriationsCommitteeinprivatesessions.
ThefinalversionofthePVMisthenpresentedtothePresidentforsignature.
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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.
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BudgetExecution
Definitionofterms:
Appropriation=FundsapprovedbyCongress
Allotment =FundsreleasedbyDBM
Disbursement=FundsusedbytheAgency
_____________________________________Savings =Fundsnotreleased/not
disbursed
Savingsmay
be
re
aligned
by
the
President
for
itemsotherthanwhatwasoriginallybudgeted.Thishasbeenasourceofpresidentialabuseofpower.
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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.
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BudgetExecutionRules
Allmoneycollectedonanytaxleviedfora
specialpurpose
shall
be
treated
as
a
special
fundandpaidoutforsuchpurposesonly.Ifthepurposeforwhichthespecialfundwas
createdhas
been
fulfilled
or
abandoned,
the
balance,ifany,shallbetransferredtothegeneralfundsoftheGovernment.
Examples:RoadUsersTax,SpecialEducationFund
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ReviewandAccountability
Thisisafullyearactivityexercisedbythe
Commissionon
Audit
(COA).
Allfunds(national,localorcorporate)and
whethergeneral,
special
or
confidential
are
subjecttoaudit.Forintelligencefund,itsreleaseissubjecttoapprovalofthePresident
andis
audited
directly
by
the
COA
Chairman.
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StateofPublicFinance
Taxeffort,definedastaxesaspercentofgross
domesticproduct
(T/GDP),
is
falling
Budgetdeficits,thedifferencebetween
revenuesand
expenditures
(R
G),
is
ballooning
Outstandinggovernmentdebtishighand
rising
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Weaker,lowyieldingtaxsystem
Tax-to-GDP ratio risks going back to levels during Marcos final years
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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
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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
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Thank
you!
BenjaminE.Diokno,Ph.D.SchoolofEconomics,[email protected]
Property of Dr. Benjamin Diokno 29 7/22/2010