the congressional power of the purse : myth or reality

7/29/2019 The Congressional Power of the Purse : Myth or Reality

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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 PartylistNational College of Public Administration and Governance

University of the Philippines

September 5 2013


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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


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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


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ALLOCATION?


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ALLOCATION? Legal bases for the President's authority

to use "savings" and transfer funds


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Presidential discretion

The budget system is essentially aMarcos law, which succeedingadministrations took advantage of (E.O.

292 was based largely from P.D. 1177) The President holds power over certain

appropriations such as lump sumappropriations, the authority to suspend

the release of funds (impoundment),and use of savings in appropriations tocover 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


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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 Users 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


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1987 Administrative Code (E.O. 292)

Administration of Lump Sum Funds. Section 38,Book IV Chapter 5 designates the Department ofBudget (now called DBM) to administer theLump-Sum Funds appropriated in the GeneralAppropriations Act (GAA).

The Power of Impoundment. Section 38, Book IVChapter 5 states that the President is authorizedto suspend or otherwise stop further expenditureof funds allotted for any agency, or any otherexpenditure authorized in the GAA, except for

personal services appropriations used forpermanent officials and employees


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1987 Administrative Code (E.O. 292)

Authority to use Savings inAppropriations to Cover Deficits.Section 39, Book IV Chapter 5 states thatany savings in the regular appropriations

authorized in the GAA for programs andprojects of any department, office oragency, may, with the approval of thePresident, be used to cover a deficit in

any other item of the regularappropriations


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2014 NEP on Release and Use of

Funds While Secs. 59-60 prohibits impoundment of

appropriations, retention or deduction of funds,DBMs Withdrawal of Agencies UnobligatedAllotments (National Budget Circular No. 541)may lead to discretionary fund transfers.

Sec. 65 adopts the constitutional power toaugment any item in the GAA for respectiveoffices from savings, adding the Office of theOmbudsman in the list of authorized governmentheads

The reason why savings are usually used for

bonuses, etc. Sec. 67 states that Priority in the Useof Savings to augment amounts set aside forbonuses, cash gift, retirement gratuity, old-agepension, personnel benefits


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Lump Sum Appropriations Special Purpose Funds

Unprogrammed Funds

Automatic Appropriations


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Proposed Special Purpose Funds for 2014

SPECIAL PURPOSE FUNDS GAA 2012 GAA 2013 2014 ProposedBudgetary Support toGovernment Corporations 21,576,603,000 44,664,500,000 46,696,697,000

Allocation to Local

Government Units18,303,490,000 17,529,452,000 19,705,022,000

Calamity Fund 7,500,000,000 7,500,000,000 7,500,000,000

Contingent Fund 1,000,000,000 1,000,000,000 1,000,000,000

DepEd School Building Program 1,000,000,000 1,000,000,000 1,000,000,000

E-Government Fund 1,000,000,000 1,000,000,000 2,478,900,000

International Commitments

Fund2,683,248,000 2,636,723,000 4,815,644,000

Miscellaneous Personnel

Benefits Fund109,296,738,000 69,089,206,000 80,713,614,000

Pension and Gratuity Fund

(formerly Retirement Benefits

Fund)

34,437,891,000 98,715,143,000 120,495,952,000

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


13/31Source: GAA 2012 & 2013; National Expenditure Program: DBM, 2014

Proposed Special Purpose Funds for 2014

1 The PhP22.4 Billion Priority Social and Economic Projects FSPECIAL PURPOSE FUNDS

und proposed in the 2013 National Expenditure Program was later realigned toconcerned 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 the2013 GAA but placed under the SPFs for 2013. However, this was only indicated in the2014 Proposed Budget.

3 Inclusive of PhP2.072 Million Retirement and Life Insurance Premium

GAA 2012 GAA 2013 2014 ProposedPriorityDevelopment

Assistance Fund

24,890,000,000 24,790,000,000 25,240,000,000

PAMANA Fund 1,764,300,000 - -

Priority Social

and Economic

Projects Fund1

Feasibility

Studies Fund- - 400,000,000

Tax Expenditures

Fund2

TOTAL 223,452,270,000 267,925,024,000 310,047,901,0003


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UNPROGRAMMED

FUNDS GAA 2012 GAA 2013 2014 ProposedBudgetary Support to

GOCCs (Recording of

Relent Loans in the 2014

NEP)

25,214,549,000 16,826,406,000 36,268,000

Support to Foreign-

Assisted Projects

1,224,790,000 2,226,655,000 16,124,491,000

General Fund

Adjustments1,000,000,000 1,000,000,000 1,000,000,000

Support for Infrastructure

Projects and Social

Programs

26,000,000,000 23,000,000,000 56,349,000,000

Disaster Risk Reduction

and Management14,200,000,000 - -

Debt Management

Program85,182,506,000 60,363,130,000 25,000,000,000


Proposed Unprogrammed Funds for 2014


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UNPROGRAMMED

FUNDS GAA 2012 GAA 2013 2014 ProposedAFP Modernization

Program- 10,632,180,000 10,894,000,000

Risk Management

Program- - 30,000,000,000

Payment of TotalAdministrative

Disability Pension

- 3,000,000,000 -

Peoples Survival Fund - 500,000,000 500,000,000

TOTAL 152,821,845,000 117,548,371,000 139,903,759,000*


Proposed Unprogrammed Funds for 2014

* Details of the proposed amount for Unprogrammed Fund (UF) are notcompletely disclosed in 2014 National Expenditure Program. Specialprovisions would only identify Debt Management Program, Recording ofRelent Loans and Risk Management Program. The complete listing of lineitems are instead indicated in the Details of Selected Programs/Projectsfor 2014.


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AUTOMATIC APPROPRIATIONS GAA 2012 GAA 2013 2014 ProposedInterest Payments for Debt

Service

333,107,000,000 333,902,000,000 352,652,000,000

Internal Revenue Allotment 273,309,592,000 302,304,001,000 341,544,726,000

Tax Refunds 9,969,209,000 15,518,556,000 -

Pension under RA 2087 & 5059 331,000 331,000 -

Grant Proceeds 1,094,084,000 545,844,000 -

Custom duties and taxes,

including Tax expenditures33,043,000,000 26,900,000,000 26,900,000,000

Net Lending 23,000,000,000 26,500,000,000 24,950,000,000

Employees retirement and life

insurance premiums23,270,917,000 28,125,611,000 28.9 billion

Rewards and Incentives Fund - 2,182,808,000 -

Special accounts in the general

fund26,834,442,000 19,240,064,000 21.1 billion

TOTAL 723,628,575,000 755,219,215,000 796,046,726,000


Proposed Automatic Appropriations for 2014


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Intelligence Funds under the

2014 Proposed Budget Office of the President

Department of National Defense

Department of Interior and Local Government


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Intelligence Funds

Office of the President

PARTICULARS AMOUNT (PhP)Issuance of Presidential

Directives, Special Powers

and Authorities and

Clearances

256,872,000

Oversight management on

national security concerns

552,359,000

Presidential security andclose-in functions

37,059,000

TOTAL 846,290,000

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


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Intelligence Funds


AGENCY PARTICULARS AMOUNT (PhP)

DND (OSEC) Development,

implementation and

monitoring of the Defense

System of Management

(DSOM)

71,765,000

DND (OSEC) Development,

implementation and

monitoring of the

International Defense

Engagement (IDSE)

41,765,000

DND (Philippine Army) Force Development 852,029,000

DND (Philippine Army) Force Sustainment 34,657,460,000

DND (Philippine Air Force) Force Development 4,735,438,000



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Intelligence Funds



DND (Philippine Air

Force)

Force Sustainment 5,027,641,000

DND (Philippine Navy) Force Development 8,025,022,000

DND (Philippine Navy) Force Sustainment 1,907,440,000

DND (AFP Wide

Services Support Units)

Military strategic

planning

296,403,000

DND (AFP WideServices Support Units)

Presidential Securityand Protection

403,692,000

TOTAL 56,018,655,000



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Intelligence Funds

Department of Interior and Local Government


DILG (OSEC) Public Order and Safety 9,613,000

DILG-Bureau of Fire

Protection

Conduct of fire

investigation activities

16,522,000

DILG- National PoliceCommission

Conduct of criminologicalresearches and studies

6,694,000

DILG- National Police

Commission

Development and

Management of Crime

Prevention Programs

10,539,000

DILG- National Police

Commission

Oversight of police

administration,

operations and activities

5,274,000



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Intelligence Funds

Department of Interior and Local GovernmentAGENCY PARTICULARS AMOUNT (PhP)

DILG-Philippine National

Police

Research and Development on the

upgrading of the logistics capabilities of

PNP, inc. weapons, transportation and

criminalistic equipment

41,392,000


Police

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

61,747,421,000

DILG-Philippine NationalPolice

Conduct of intelligence andcounterintelligence activities

590,053,000


Police

Conduct of criminal investigation and

other related confidential activities

451,679,000

Total 62,879,187,000



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Off-Budget Funds Philippine Gaming and Amusement Corporation

Motor Vehicles Users Charge

Malampaya Funds

Philippine Charity Sweepstakes Office


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Motor Vehicles Users Charge1

AGENCY PARTICULARS LEGAL BASIS AMOUNT (PhP) 2

DPWH (OSEC) Special RoadSupport Fund (80%

of MVUC [Fund

151])

RA 8794 9,688,000,000

Special Local Road

Fund (5% of MVUC

[Fund 152])

RA 8794 605,500,000

Special Road Safety

Fund (7.5% of

MVUC [Fund 153])

RA 8794 908,250,000

DOTC (OSEC) Special Vehicle

Pollution ControlFund (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.2281 Revenue Projections from Land Transportation Office MVUC Tax collections2 Based on DOF data of motor vehicle tax


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Malampaya Funds (In PhP)1

AGENCY 2012 2013 20142

DOE (OSEC) 29,070,637,000 23,765,727,000 26,260,645,000

Source: 2014 Budget of Expenditures and Sources of Financing: DBM, 2014, p.2801 Non-Tax revenue Program, By Collecting Department/Agency, By Source, FY 2012-20142 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


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Philippine Charity Sweepstakes Office

The PCSO allocates to local government units a five percent (5%) share from thetotal 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 SportsCommission 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% ofCharity Fund to the Comprehensive and Integrated Shelter and UrbanDevelopment Financing Program (National Shelter Program)

RA#8042 Sec.20 and 77 of the Omnibus Rules provides for the appropriation ofPhp10 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 Php150 million shall be funded from the proceeds of lotto draws taken from theCharity Fund for the Congressional Migrant Workers Scholarship Fund


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RA#8175 10% of net income for the Crop InsuranceProgram

RA#8313 Php100 million from lotto agents for theupgrading of the Quirino Memorial Medial Center

RA#8371 Php 50 million contribution to the NationalCommission on Indegenous Peoples for the Ancestral

Domain Find

RA#8492 Php 250 million from the annual net earningsfrom lotto for the Museum Endowment Fund

RA#9165 10% share on forfeited rpizes as specialaccount in the general fund of Dangerous Drugs Board


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E.O.#201 Php 1 billion Standby Fund for thefinancial requirement for Severe Acute

Respiratory Syndrome (SARS) awareness andhealth promotion campaign

E.O.#218 Php 1 billion Standy Fund for theoperations and programs of the Philippine Drug

Enforcement Agency

E.O.#280 Php 250 million standby Fund forthe financial requirements of the AvianInfluenza or Bird Flu Viruses

E.O.#357 5% Lotto share of local governmentunits from the Charity Fund


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PCSO released a total of P218.71M inthe first quarter of 2013 as payment for

mandatory contributions includingshares to local government units, CHED,National Shelter Program, ChildrensTelevision, National Museum, DangerousDrugs Board, National BookDevelopment Fund, Juvenile Justice andWelfare Council of DOJ andCongressional Migrant WorkersScholarship Fund of OWWA.

http://www.pcso.gov.ph/mandatory-contributions.htmlOfficial Website of the Philippine CharitySweepstakes Office
http://www.pcso.gov.ph/mandatory-contributions.htmlhttp://www.pcso.gov.ph/mandatory-contributions.htmlhttp://www.pcso.gov.ph/mandatory-contributions.htmlhttp://www.pcso.gov.ph/mandatory-contributions.htmlhttp://www.pcso.gov.ph/mandatory-contributions.htmlhttp://www.pcso.gov.ph/mandatory-contributions.html


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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

the congressional power of the purse : myth or reality

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