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Jul 07

The Explainer: Towards a People’s Budget

 

LAST week we embarked on exploring how the National Budget’s put together. It involves a lot of work by the Office of the President, and then by Congress. This time, we’ll look at how Congress goes about it, and how a revolution of sorts is taking place.

Never have so many been involved, in a budgetary process that once only occupied a few. Towards a People’s Budget is what we’ll be covering tonight.

 

I. From the Palace to the House

Last week, we got a glimpse of how the initial proposal for the national budget’s put together. The President’s Budget Message, which is supposed to be submitted to the House when the President delivers the State of the Nation Address, is supposed to summarize the budget policy thrusts and priorities for the  year. It contains an annual theme. It also grants the chief executive a tremendous amount of flexibility in designing things to the executive department’s advantage.

Our guest last week,  who wrote this book:

“Your Guidebook to Effective and Transparent National Budget Legislation: Philippine Setting.”

http://www.budgetlegislation.com/CNBLbook.pdf

which you can download online at this extremely informative website: http://www.budgetlegislation.com/index.php

or obtain at most bookstores, brought up some interesting things.

 

To recap,

The first is, that the vast majority of our national budget pertains to the Executive Department. The next biggest chunk goes to paying the national budget. Surprisingly, Congress, which we tend to think of as expensive and extravagant, represents a relatively modest portion of the whole, followed by the judiciary and constitutional commissions.

He also gave us a glimpse of the national budget in chart form. That chart came from  PAGE 125 of his book.

You’ll remember that he color-coded the contents of the budget. The yellow part are the expenses for the various offices of the government. This is the portion that most members of Congress take a look at, and spend time dissecting.

There’s also this blue part, which Mr. Ranola told us, is supposed to be the supplementary budget for these offices and agencies in yellow.

However,  the total amount for the offices of the government, is actually smaller than what’s supposed to be the supplementary funds for those offices and other programs.

The supplementary funds are called Special Purpose Funds, and if you break them down, in turn, they contain what’d called the Unprogrammed Fund. These are supposed to come in from whatever extra income the government makes.

In turn, the Unprogrammed Fund is growing, almost by leaps and bounds.

We also learned of something called Earmarked Funds, which are taxes whose income’s supposed to go for specific purposes. One example Mr. Ranola gave us was the Motor Vehicle Users’ Charge. It’s the third largest source of tax revenue in our government, totaling over 40 billion pesos collected to date, since it was established by law in 2001.

The Motor Vehicle Users’ Charge is supposed to be spent for only four purposes, three of them under the Department of Public Works and Highways, and one by the Department of Transportation and Communications.

The only problem is, according to Mr. Ranola’s group, is that it takes a lot of time and effort to figure out where that money’s gone –and they’re still looking into it.

We also very briefly looked at the budgetary process. Let’s take a closer look at it now.

Here’s a FLOW CHART from PAGES 52 to 53 from the book, outlining the 11  step process for coming up with the national budget. Let’s go through them.

 

1. First, the  Development Budget Coordinating Committee  (DBCC) composed of heads of DBM, NEDA, DOF,  BSP & the Executive Secretary, convenes and sets about laying down the parameters for agencies to follow.

2. Then, the National Budget Call is made to all government agencies sounded by the Department of Budget & Management (DBM)

3.  A budget review by the DBM task force then takes place.

4. This is followed by the DBM executive review of the proposed Budget  Chaired by the DBM Secretary

5. A Cabinet presentation then takes place. This is when the President more often than not, weighs in. One congressman told me the President goes through the national budget line by line, sometimes spending 3 hours discussing each line, leading the awed but exasperated congressman to call our President a “fussbudget.”

6. Once the President’s Budget Message is approved and printed, a presentation of the proposed budget by the DBCC to Congress takes place. By this time, six books have been prepared: Staffing Summary (SS),  Budget of Expenditures & Source of Financing (BESF), Details of Selected Programs & Projects (DSPP), National Expenditure Program (NEP), Organizational Performance Indicator Framework (OPIF) and The President’s Budget Message— these are the budget documents used to formulate the General Appropriations Bill.

The General Appropriations Bill is different from most bills. It originates solely from the Lower House of Congress, taking the form of a House Bill, although it is almost entirely developed by the Executive branch.  It is never introduced with a companion bill in the Senate.

7. Congress then holds its Budget hearing. In the House of Representatives, the Committee on Appropriations takes center stage, which makes the Chairman of the Committee on Appropriations has traditionally been one of the most powerful figures in the House.

8. After the House is done, its proposed General Appropriations Bill is then submitted to the senate for its own Budget hearing

9. BiCam “haggling” then takes place.

10. Then the Bill is submitted to the President. Unlike all other bills approved by Congress, presidential veto is applied not to the entire Appropriations Bill, but only to specific items. These presidential objections are listed in the veto message by the President.

11. And finally, the breaking out of the champagne takes place with the signing of the GAA. When this is done, the Appropriations Bill becomes the General Appropriations Act, a Republic Act designated by a  number.

 

When we return, how Congress goes about slicing, dicing, and processing the budget.

 

II. From House to House

 

THE Philippine Center for Budget Legislation says you can break down the membership of the House of Representatives into five basic groups.

 

Group 1 would comprise legislators who are experts in the constitution and parliamentary procedure.

Group 2 would comprise legislators who excel in handling and tackling highly controversial issues.

Group 3 are experts in their own advocacy.

Group 4 would comprise legislators who belong to the “silent majority”

and

Group 5 are Congressmen who are able to demonstrate their expertise in budget legislation.

 

At the beginning of each session of Congress, though, it’s Group 5 who are the most powerful and the most necessary. That’s because the start of every session marks the start of budget deliberations.

The Philippine Center for National Budget Legislation says that this doesn’t have to be the case. It claims that if you clumped the membership of the House in groups of 5, every single item (there are fifty such items) in the proposed national budget could get a thorough going-over.

The problem is that not every member of the House wants to be involved, or that they have the skills required to contribute to intelligent budget-making.  After all, one of the perennial problems of the House is many members can’t even be bothered to show up for work.

So what happens is that the President’s influence on the budget is magnified: how you propose something gives you an edge, and if the House accepts the President’s way of organizing things, then as we’ve seen, all sorts of easter eggs can be hidden in the budget.

Another problem is that aside from the way the budget’s organized, there is actually very little wiggle room for congressmen, when it comes to what will be spent. For example, salaries can’t really be reduced, or the number of personnel: that remains pretty constant and takes up a big chunk of the budget.

Another big chunk’s taken up by debt payments.  So much of the talking and debating really has to do with sums that are pretty small, compared to the total.

And even if the House and the Senate manage to put in cuts, the President can simply veto those reductions –which Congress can theoretically override, but it requires such an overwhelming vote as to be practically impossible.

Not least, because overriding a presidential veto takes time. And time is a luxury Congress has increasingly little of. President Arroyo, as we all know, tends to submit her budgets late, which narrows the window for Congressional opportunity, because if Congress fails to enact a budget in time –then the old budget applies.

But don’t lose hope! Something very interesting is going on, and it happens to be an encouraging example of our elected officials actually welcoming the public into the budgetary process. We’ll meet someone deeply involved in this process, when we return.

 

My view

 

Our guest tonight has been part of the process that aims to bring People Power from out in the streets, into the halls of our institutions. I think members of the House of Representatives like veteran legislator Edcel Lagman, deserve credit for partnering with the citizenry.

But a lot more needs to be done: if the House and Senate have proven themselves accommodating of civil society, the executive department needs to do a lot more: beginning with returning to the tradition of submitting a proposed budget on the day of the State of the Nation Address.

 

 

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