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The Congressional Power of the Purse : Myth or Reality

The Congressional Power of the Purse : Myth or Reality

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Presentation by PROF. EMERITUS LEONOR MAGTOLIS BRIONES
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Presentation by PROF. EMERITUS LEONOR MAGTOLIS BRIONES
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Part 1: http://momblogger.podomatic.com/entry/2013-09-06T02_31_02-07_00
Part 2: http://momblogger.podomatic.com/entry/2013-09-06T02_28_33-07_00

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THE CONGRESSIONAL POWER OF THE PURSE: Myth or Reality?

PROF. EMERITUS LEONOR MAGTOLIS BRIONES
Lead Convenor, Social Watch Philippines Chairman, Kaakbay Partylist National College of Public Administration and Governance University of the Philippines

September 5 2013

THE BUDGET PROCESS
• Budget preparation- done by the Executive • Budget appropriation- done by Congress • Budget implementation-done by the Executive • Budget accountability- done by executive and COA

WHO EXERCISES THE POWER OF ALLOCATION?
• the President's authority to use "savings" and transfer funds • lump sum appropriations • automatic appropriations • intelligence funds • off-budget funds

WHO EXERCISES THE POWER OF ALLOCATION?

WHO EXERCISES THE POWER OF ALLOCATION?
• Legal bases for the President's authority to use "savings" and transfer funds

Presidential discretion
• The budget system is essentially a Marcos law, which succeeding administrations took advantage of (E.O. 292 was based largely from P.D. 1177) • The President holds power over certain appropriations such as lump sum appropriations, the authority to suspend the release of funds (impoundment), and use of savings in appropriations to cover deficits.
Padre-Isip, R. (2011, August 15). Presidential Decree 1177: A Legacy of Secrecy and Manipulation of the National Budget that Needs Repeal. Retrieved from www.transparencyreporting.net

1987 Constitution
• • Power to augment any item in the GAA for respective offices from savings (Sec. 25(5), Article VI) – Authorized are the following: the President, Senate President, House Speaker , SC Chief Justice, Constitutional Commissions There is no mention of special purpose funds (SPFs) in the Constitution, only Special Funds. Section 29, Article VI mentions of Special Funds as “money collected on any tax levied for a special purpose”. Examples of these are Motor Vehicles User’s Charge, Special Education Fund, etc. – With the definition, SPFs are liberally construed as Special Funds – But Special Funds are more akin to special revenue funds which are proceeds of specific revenue sources (other than trusts for individuals, private organizations, or other governments or for major capital projects) that are legally restricted to expenditure for specified purposes – SPFs are widely utilized by the President for discretionary transfer of lump sum funds

1987 Administrative Code (E.O. 292)
• Administration of Lump Sum Funds. Section 38, Book IV Chapter 5 designates the Department of Budget (now called DBM) to administer the Lump-Sum Funds appropriated in the General Appropriations Act (GAA). • The Power of Impoundment. Section 38, Book IV Chapter 5 states that the President is authorized to suspend or otherwise stop further expenditure of funds allotted for any agency, or any other expenditure authorized in the GAA, except for personal services appropriations used for permanent officials and employees

1987 Administrative Code (E.O. 292)
• Authority to use Savings in Appropriations to Cover Deficits. Section 39, Book IV Chapter 5 states that any savings in the regular appropriations authorized in the GAA for programs and projects of any department, office or agency, may, with the approval of the President, be used to cover a deficit in any other item of the regular appropriations

• While Secs. 59-60 prohibits impoundment of appropriations, retention or deduction of funds, DBM’s “Withdrawal of Agencies’ Unobligated Allotments” (National Budget Circular No. 541) may lead to discretionary fund transfers. • Sec. 65 adopts the constitutional power to augment any item in the GAA for respective offices from savings, adding the Office of the Ombudsman in the list of authorized government heads • The reason why savings are usually used for bonuses, etc. Sec. 67 states that Priority in the Use of Savings to augment amounts set aside for bonuses, cash gift, retirement gratuity, old-age pension, personnel benefits

2014 NEP on Release and Use of Funds

Lump Sum Appropriations
• Special Purpose Funds • Unprogrammed Funds • Automatic Appropriations

Proposed Special Purpose Funds for 2014
SPECIAL PURPOSE FUNDS Budgetary Support to Government Corporations Allocation to Local Government Units Calamity Fund Contingent Fund DepEd School Building Program E-Government Fund International Commitments Fund Miscellaneous Personnel Benefits Fund Pension and Gratuity Fund (formerly Retirement Benefits Fund) GAA 2012 21,576,603,000 18,303,490,000 7,500,000,000 1,000,000,000 1,000,000,000 1,000,000,000 2,683,248,000 109,296,738,000 34,437,891,000 GAA 2013 44,664,500,000 17,529,452,000 7,500,000,000 1,000,000,000 1,000,000,000 1,000,000,000 2,636,723,000 69,089,206,000 98,715,143,000 2014 Proposed 46,696,697,000 19,705,022,000 7,500,000,000 1,000,000,000 1,000,000,000 2,478,900,000 4,815,644,000 80,713,614,000 120,495,952,000

Source: GAA 2012 & 2013; National Expenditure Program: DBM, 2014

Proposed Special Purpose Funds for 2014
GAA 2012 Priority Development Assistance Fund PAMANA Fund Priority Social and Economic Projects Fund1 Feasibility Studies Fund Tax Expenditures Fund2 TOTAL
1

GAA 2013 24,790,000,000

2014 Proposed 25,240,000,000

24,890,000,000

1,764,300,000

-

-

-

-

400,000,000

223,452,270,000

267,925,024,000

310,047,901,0003

The PhP22.4 Billion Priority Social and Economic Projects FSPECIAL PURPOSE FUNDS und proposed in the 2013 National Expenditure Program was later realigned to concerned agencies as a result of the campaign of ABI for the 2013 Budget. 2 Tax Expenditures Fund of PhP26.9 Billion was NOT a budget item appropriated in the 2013 GAA but placed under the SPFs for 2013. However, this was only indicated in the 2014 Proposed Budget. 3 Inclusive of PhP2.072 Million Retirement and Life Insurance Premium Source: GAA 2012 & 2013; National Expenditure Program: DBM, 2014

Proposed Unprogrammed Funds for 2014
UNPROGRAMMED FUNDS Budgetary Support to GOCCs (Recording of Relent Loans in the 2014 NEP) Support to ForeignAssisted Projects General Fund Adjustments Support for Infrastructure Projects and Social Programs Disaster Risk Reduction and Management Debt Management Program GAA 2012 25,214,549,000 GAA 2013 16,826,406,000 2014 Proposed 36,268,000

1,224,790,000 1,000,000,000 26,000,000,000

2,226,655,000 1,000,000,000 23,000,000,000

16,124,491,000 1,000,000,000 56,349,000,000

14,200,000,000 85,182,506,000

60,363,130,000

25,000,000,000

Source: GAA 2012 & 2013; National Expenditure Program: DBM, 2014

Proposed Unprogrammed Funds for 2014
UNPROGRAMMED FUNDS AFP Modernization Program Risk Management Program Payment of Total Administrative Disability Pension People’s Survival Fund TOTAL
*

GAA 2012 -

GAA 2013 10,632,180,000 3,000,000,000

2014 Proposed 10,894,000,000 30,000,000,000 -

152,821,845,000

500,000,000 117,548,371,000

500,000,000 139,903,759,000*

Details of the proposed amount for Unprogrammed Fund (UF) are not completely disclosed in 2014 National Expenditure Program. Special provisions would only identify Debt Management Program, Recording of Relent Loans and Risk Management Program. The complete listing of line items are instead indicated in the Details of Selected Programs/Projects for 2014.
Source: GAA 2012 & 2013; National Expenditure Program: DBM, 2014

Proposed Automatic Appropriations for 2014
AUTOMATIC APPROPRIATIONS Interest Payments for Debt Service Internal Revenue Allotment Tax Refunds Pension under RA 2087 & 5059 GAA 2012 333,107,000,000 273,309,592,000 9,969,209,000 331,000 GAA 2013 333,902,000,000 302,304,001,000 15,518,556,000 331,000 2014 Proposed 352,652,000,000 341,544,726,000 -

Grant Proceeds
Custom duties and taxes, including Tax expenditures Net Lending Employees’ retirement and life insurance premiums Rewards and Incentives Fund Special accounts in the general fund
TOTAL

1,094,084,000
33,043,000,000 23,000,000,000 23,270,917,000 26,834,442,000 723,628,575,000

545,844,000
26,900,000,000 26,500,000,000 28,125,611,000 2,182,808,000 19,240,064,000 755,219,215,000

26,900,000,000 24,950,000,000 28.9 billion 21.1 billion 796,046,726,000

Source: GAA 2012 & 2013; National Expenditure Program: DBM, 2014

Intelligence Funds under the 2014 Proposed Budget
• • Office of the President • Department of National Defense Department of Interior and Local Government

Intelligence Funds Office of the President
PARTICULARS Issuance of Presidential Directives, Special Powers and Authorities and Clearances AMOUNT (PhP) 256,872,000

Oversight management on national security concerns Presidential security and close-in functions TOTAL
Source: 2014 Details of Selected Programs and Projects: DBM, 2014

552,359,000
37,059,000

846,290,000

Intelligence Funds Department of National Defense
AGENCY DND (OSEC) PARTICULARS Development, implementation and monitoring of the Defense System of Management (DSOM) Development, implementation and monitoring of the International Defense Engagement (IDSE) Force Development AMOUNT (PhP) 71,765,000

DND (OSEC)

41,765,000

DND (Philippine Army)

852,029,000

DND (Philippine Army)
DND (Philippine Air Force)

Force Sustainment
Force Development

34,657,460,000
4,735,438,000

Source: 2014 Details of Selected Programs and Projects: DBM, 2014

Intelligence Funds Department of National Defense
AGENCY DND (Philippine Air Force) DND (Philippine Navy) DND (Philippine Navy) PARTICULARS Force Sustainment Force Development Force Sustainment AMOUNT (PhP) 5,027,641,000 8,025,022,000 1,907,440,000 296,403,000

DND (AFP Wide Military strategic Services Support Units) planning

DND (AFP Wide Presidential Security Services Support Units) and Protection TOTAL
Source: 2014 Details of Selected Programs and Projects: DBM, 2014

403,692,000

56,018,655,000

Intelligence Funds Department of Interior and Local Government
AGENCY DILG (OSEC) PARTICULARS Public Order and Safety AMOUNT (PhP) 9,613,000

DILG-Bureau of Fire Protection
DILG- National Police Commission

Conduct of fire investigation activities
Conduct of criminological researches and studies

16,522,000

6,694,000

DILG- National Police Commission

Development and Management of Crime Prevention Programs Oversight of police administration, operations and activities

10,539,000

DILG- National Police Commission

5,274,000

Source: 2014 Details of Selected Programs and Projects: DBM, 2014

Intelligence Funds Department of Interior and Local Government
AGENCY DILG-Philippine National Police PARTICULARS Research and Development on the upgrading of the logistics capabilities of PNP, inc. weapons, transportation and criminalistic equipment Conduct of operations and other related confidential activities against dissidents, subversives, lawless elements and organized crime syndicate and campaign against kidnapping, trafficking of women and minors, smuggling, gunrunning, illegal fishing and trafficking of illegal drugs Conduct of intelligence and counterintelligence activities Conduct of criminal investigation and other related confidential activities AMOUNT (PhP) 41,392,000

DILG-Philippine National Police

61,747,421,000

DILG-Philippine National Police DILG-Philippine National Police

590,053,000

451,679,000

Total
Source: 2014 Details of Selected Programs and Projects: DBM, 2014

62,879,187,000

Off-Budget Funds
• Philippine Gaming and Amusement Corporation • Motor Vehicles Users’ Charge • Malampaya Funds • Philippine Charity Sweepstakes Office

Motor Vehicles User’s Charge1
AGENCY DPWH (OSEC) PARTICULARS Special Road Support Fund (80% of MVUC [Fund 151]) Special Local Road Fund (5% of MVUC [Fund 152]) Special Road Safety Fund (7.5% of MVUC [Fund 153]) LEGAL BASIS RA 8794 AMOUNT (PhP) 2 9,688,000,000

RA 8794

605,500,000

RA 8794

908,250,000

DOTC (OSEC)

Special Vehicle Pollution Control Fund (7.5% of MVUC [Fund 151])

RA 8794

908,250,000

TOTAL

12,110,000,000

Source: 2014 Budget of Expenditures and Sources of Financing: DBM, 2014, p.228 1 Revenue Projections from Land Transportation Office MVUC Tax collections 2 Based on DOF data of motor vehicle tax

Malampaya Funds (In PhP)1

AGENCY
DOE (OSEC)

2012

2013

20142
26,260,645,000

29,070,637,000 23,765,727,000

Source: 2014 Budget of Expenditures and Sources of Financing: DBM, 2014, p.280 1 Non-Tax revenue Program, By Collecting Department/Agency, By Source, FY 2012-2014 2 Excludes privatization proceeds for DOF-PMO of PhP7,789 million for 2012, PhP539 million for 2013, PhP539 for 2014; and for DOJ-PCGG of PhP489 million for 2012, PhP424 million for 2013 and PhP 443 million for 2014

Philippine Charity Sweepstakes Office
• The PCSO allocates to local government units a five percent (5%) share from the total sales of on-line lottery (lotto) outlets operating within their jurisdictions, including a documentary stamp tax from the said donation. RA#6847 – Six (6) Sweepstakes Draws as contribution to the Philippine Sports Commission Program RA#7722 – 1% of lotto gross sales to the Commission on Higher Education RA#7660 – Documentary Stamp Tax – 10% of the gross sales RA#7835 – 10% of Charity Fund to the Comprehensive and Integrated Shelter and Urban Development Financing Program (National Shelter Program) RA#8042 – Sec.20 and 77 of the Omnibus Rules provides for the appropriation of Php10 million for the Shared Government Information System on Migration (SGISM) under the Department of Foreign Affairs RA#8042 – Article IX Section 37 known as the Migrant Workers Act of 1995 – Php 150 million shall be funded from the proceeds of lotto draws taken from the Charity Fund for the Congressional Migrant Workers Scholarship Fund

• • •

• RA#8175 – 10% of net income for the Crop Insurance Program
• RA#8313 – Php100 million from lotto agents for the upgrading of the Quirino Memorial Medial Center • RA#8371 – Php 50 million contribution to the National Commission on Indegenous Peoples for the Ancestral Domain Find

• RA#8492 – Php 250 million from the annual net earnings from lotto for the Museum Endowment Fund
• RA#9165 – 10% share on forfeited rpizes as special account in the general fund of Dangerous Drugs Board

• E.O.#201 – Php 1 billion Standby Fund for the financial requirement for Severe Acute Respiratory Syndrome (SARS) awareness and health promotion campaign • E.O.#218 – Php 1 billion Standy Fund for the operations and programs of the Philippine Drug Enforcement Agency

• E.O.#280 – Php 250 million standby Fund for the financial requirements of the Avian Influenza or Bird Flu Viruses • E.O.#357 – 5% Lotto share of local government units from the Charity Fund

• PCSO released a total of P218.71M in the first quarter of 2013 as payment for mandatory contributions including shares to local government units, CHED, National Shelter Program, Children’s Television, National Museum, Dangerous Drugs Board, National Book Development Fund, Juvenile Justice and Welfare Council of DOJ and Congressional Migrant Workers Scholarship Fund of OWWA.
• http://www.pcso.gov.ph/mandatory-contributions.htmlOfficial Website of the Philippine Charity Sweepstakes Office

HOW CAN CONGRESS REGAIN THE POWER OF THE PURSE?
1.Clarify interpretation of the President's Office as the entire government system and not just the Office of the President 2. Abolish special purpose fund which has no constitutional basis and which includes the PDAF 3. Insist on implementation of Section 86 of the Proposed GAA (2014 NEP) 4. Review automatic appropriations which are calculated by the Executive

5. Put in mechanism to get COA report on intelligence funds in confidence or in executive session
6. Include off-budget funds as part of GAA

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