Chiz to set ground rules on savings in budget
MANILA, Philippines – Senator Francis Escudero plans to set rules in the budget for declaring savings to comply with the Supreme Court’s decision on the administration’s spending program.
The chairman of the Senate finance committee said the executive branch’s proposed definition of savings in the 2015 national budget is not compliant with the Court decision on the Disbursement Acceleration Program (DAP). He added that his panel is looking at ways to change this.
In particular, Escudero said the issue lies with what he called the “stoppage” of project implementation, or the executive’s decision to declare savings by stopping slow-moving projects before the end of the year.
“It is in the definition in the proposed budget that savings include those from ‘stoppage.’ It is clear in the Supreme Court decision that the validity of the appropriation is for one year. You cannot say in the middle of the year, ‘I will not release funds’ because the appropriation is available, according to Congress, for one year,” Escudero said in a press briefing on Thursday, August 7.
He added, “So you have to wait for the end of that year, to give the [agency] the chance to implement the project, rather than saying at the middle of the year that you will stop the implementation. That is in the [National Expenditure Program] but that’s against the Supreme Court decision.”
As a remedy, Escudero said his committee will clarify the grounds or criteria for declaring savings. He said it should be the implementing agency, not the Department of Budget and Management (DBM), that will say that the project can no longer be implemented.
“If the agencies just personally do not want to implement the project or they changed their minds, they have to go back to Congress. But if they really cannot implement the project because of a temporary restraining order, a right of way issue or whatever technical or valid legal ground, then we will allow that. That is the criteria we plan to put,” said Escudero, a lawyer.
Another issue Escudero is looking into is the cap or the maximum amount for augmenting the budget.
“The Court said if there is an allocation, for example for the Department of Science and Technology’s research management and development of weather forecasting. From P500 million ($11.35 million*), it went up to P1.6 billion ($36.3 million). The Court said that does not cover the definition of the term ‘augment’ in the Constitution because you added 300% more than what Congress allocated. When you say ‘augment,’ you are just supposed to fill the gap, not give an amount 3 times bigger,” said Escudero.
Escudero said he is initially eyeing a 100% cap for augmenting items in the budget. “So if there is a P50 million allocation, perhaps the maximum amount you can augment that is P50 million but not triple the amount.”
Lawmakers are looking into the definition of the term “savings” as they craft the 2015 national budget. The debate comes after the Supreme Court struck down key acts under the DAP, including declaring withdrawn unobligated allotments and unreleased appropriations as savings before the end of the fiscal year.
The DAP was a stimulus measure meant to address underspending and pump-prime the economy from 2011 to 2013. It involved moving funds from projects that took time to be implemented to so-called “fast-moving projects" to expedite spending.
Congress is trying to find the right balance between what Senate President Franklin Drilon called “the strict, literal” interpretation of the Court, and giving the executive branch flexibility to address governance needs.
Two-year validity of funds
Under Section 67 of the general provisions of the proposed 2015 budget, the executive branch will be given the power to declare as savings, unused funds as a result of the following:
- Programs, activities or projects that were discontinued or abandoned "for justifiable causes at any time during the validity of the appropriations"
- Programs, activities or projects for which appropriations were authorized but have not commenced within the first semester of fiscal year 2015
- Non-commencement refers to the inability of the agency or its duly authorized procurement agent to obligate an allotment within the first semester of fiscal year 2015
- Decreased costs resulting from improved efficiency during the implementation or after agencies complete their programs, activities and projects
Yet Escudero said his initial reading of the definition in the proposed 2015 budget shows violations of the Court ruling. He said he is consulting with Senate lawyers to ensure that the budget will comply with the Court decision.
“We are still studying the provision. This is my own interpretation but I assure you we will make sure [the budget] is compliant with the Supreme Court decision, particularly on the definition of the utilization of savings,” he said.
Escudero added that he wants to make the validity of appropriations in the budget last for two years, instead of one.
“The validity of the budget should really be two years because you can no longer use savings to fund a project that has already lapsed.”
Yet with a two-year validity, Escudero admitted that it will be harder for the executive branch to declare savings before the end of the year.
“All the more they cannot declare savings [earlier] because the agency now has a longer period to implement the project they sought congressional approval for. All the more they cannot stop a project after just 6 months.”
Escudero reiterated that savings from infrastructure projects where the final bid is lower than the allotted amount are considered valid based on the Court decision, and can be used before the end of the year.
Break down lump sums
In the budget hearings, Escudero said he will ask the executive branch to submit details of some lump sum items including the Miscellaneous Personnel Benefit Funds (MPBF) worth P118 billion ($2.69 billion), provisions mainly allocated for unfilled and new positions in the bureaucracy.
He also wants details on the P1 billion ($22 million) Contingency Fund, the P1 billion ($22 million) E-Government Fund, and P200 million lump sum from the Local Government Support Fund (LSGF).
“We will ask for the itemized breakdown, what it’s for, if practicable…. If they won’t submit the breakdown [for MPBF], where they will spend it, and the reason, rhyme and logic or computation, we will reduce the budget accordingly and reallocate it to other projects the public can use as well,” Escudero said.
The Senate will have its first budget briefing from the economic managers on August 19. It will finalize the schedule of budget hearings next week.
Despite the changes after the DAP ruling, Escudero vowed to pass the budget before the year ends. – Rappler.com
*$1 = P44