Prioritizing Growth and Congressional
Authority Over the Budget

(Sponsorship Speech delivered on 06 October 2009 by Rep. EDCEL LAGMAN on HB 6767 or the proposed FY 2010 General Appropriations Bill)
 

The President’s National Expenditure Program (NEP) for 2010, which is initially adopted by tradition as the proposed General Appropriations Bill (GAB), is torn between the drive for more expenditures to propel growth and the constraint to limit expenditures to contain the fiscal deficit.

As it now appears from the Executive’s budget proposal, expenditures to enhance development have been held back in favor of what conservative economists call a “manageable fiscal deficit”.

Major departments have suffered reduced allocations compared to their current appropriations like the following:

1. Department of Transportation and Communications (DOTC) – P39.3% reduction;

2. Department of Tourism (DOT) – 25.7%;

3. Department of Public Works and Highways (DPWH) – 23.5%;

4. Department of Environment and Natural Resources (DENR) – 16.4%;

5. Department of Science and Technology (DOST) – 15.8%; and

6. Department of Agriculture (DA) – 11.1%.

The Department of Health (DOH) stagnated at its 2009 level while the Department of Education (DepEd) has a measly increase of 0.8%.

The fetish for a smaller fiscal deficit must not be allowed to prevail over the critical necessity of accelerating the momentum of growth.

Prioritizing growth and development becomes more imperative in the wake of the recent tragic calamities which call for rehabilitation and reconstruction, which in effect impede growth because ordinarily there is no 100% restoration of a damaged infrastructure, facility and production.

Verily, it is imperative to allocate or reallocate sufficient funds for the principal indicators of human development like quality education, adequate health care, extensive mass housing, stable food supply, and high level of employment.

The 2009 Human Development Report (HDR) released yesterday by the United Nations Development Program (UNDP) places the Philippines’ human development index (HDI) at a low rank of 105th out of 185 countries, lower than Singapore (23rd), Brunei (30th), Malaysia (66th) and Thailand (87th).

We are lagging behind our commitment to achieve the Millennium Development Goals (MDGs), particularly on eradication of extreme hunger and poverty, achievement of universal primary education, reduction of infant mortality and improvement of maternal health.

Although the superior and advanced economies are the principal culprits in the problem of climate change, it is developing nations like the Philippines which bear the brunt of this global phenomenon as attested to by the recent typhoons and floods. Consequently, we must fund adequately through our own efforts climate change mitigation and adaptation in order to protect our people, particularly the marginalized and disadvantaged.

We have also to revisit the cuts on capital outlay and make restorations in order not to stifle a principal engine of growth.

The opportunity to maximize growth in human capital and infrastructure once lost may be irremediable, while a relatively higher fiscal deficit is reversible through improved tax collection efficiency, rational selective borrowings and purging unproductive and insensitive expenditures.

Due to the foregoing overriding reasons, Mr. Speaker and distinguished colleagues, your Committee on Appropriations is disposed to recast the NEP with your support and concurrence.

Together, let us exercise fully and judiciously the constitutional power of Congress, particularly of the House of Representatives, to appropriate public funds.

In upholding the legislative primacy in appropriating the people’s money, the Supreme Court in Philippine Constitution Association vs. Enriquez (235 SCRA 506), unequivocally pronounced:

“Under the Constitution, the spending power called by James Madison as the power of the purse, belongs to Congress, subject only to the veto power of the President. The President may propose the budget, but still the final say in the matter of appropriations is lodged in the Congress.

“The power of appropriation carries with it the power to specify the project or activity to be funded under the appropriation law. It can be as detailed and as broad as Congress wants it to be.

“x x x x x x x x x

“It is also a recognition that individual members of Congress, far more than the President and their congressional colleagues are more likely to be knowledgeable about the needs of their respective constituents and the priority to be given each project.”

Nobody would disagree that the National Expenditure Program or the President’s annual budget proposal is not sacrosanct. The Congress, more specifically this August Chamber, can subject the proposed allocations in the NEP to realignment, modification, reduction and/or augmentation within the budgetary ceiling proposed by the President.

These revisions which the House of Representatives may effect on the NEP are in the exercise of what is traditionally known as the “Power of the Purse”.

Unfortunately, however, once the enrolled General Appropriations Bill is submitted to the President, Congress virtually loses its control over the annual budget. The congressional power of the purse dies with the drying of the Presidential ink which seals the approval of the General Appropriations Act.

The Presidential authority to release funds or “the power to disburse” becomes more ascendant than the legislative power of the purse.

All the revisions made by Congress not in align with the NEP are lumped together as congressional initiatives whose releases are subject to Presidential approval or impoundment.

Once impounded as “forced savings” these congressional initiative allocations may never see the light of day or the impounded amounts constitute an off-budget new lump sum which can be used by the Executive to fund projects which may not even find anchorage in the General Appropriations Act.

There are educated estimates that the amount of impounded funds since 2008 alone total to P140 billion.

The impounded congressional initiatives appear to be lost in perpetuity so much so that many of our colleagues call them “Mona Lisa” allocations because they just lie there and they die there.

Perforce, the derogation by the Executive of the congressional power to appropriate must end. This is a constitutional aberration which must not be allowed to perpetuate.

Accordingly, we must provide in the General Appropriations Bill a comprehensive prohibition barring the impoundment of congressional allocations not found in NEP or which modify, alter, realign, or revise items in the NEP.

When the Honorable Budget Secretary Rolando Andaya, Jr. was Chairman of the Committee on Appropriations in 2003, 2005 and 2007, he initiated the inclusion of a “Prohibition Against Impoundment of Appropriations” under the General Provisions of the GAA. Unfortunately, this bar was never realized because its effectivity was subject to the rules and guidelines to be issued by DBM, which were never formulated and issued. The same enfeebled proviso appeared in the 2008 and 2009 GAA.

As a result of the sharp clashes between Congress and the White House over President Nixon’s aggressive impoundment of appropriated monies, the US Congress passed the Congressional Budget and Impoundment Control Act of 1974. The major objective of this Act was to reassert the congressional role in budgeting and to constrain the use of impoundments.

This Act divided “impoundments into two distinct classes with different procedures for congressional consideration: rescissions or permanent cancellations of budgetary authority which would require congressional approval, and temporary deferrals of expenditures which would remain in force unless rejected by Congress.” In either case, the final authority is Congress.

We anticipate this anti-impoundment provision to be vetoed but we expect members of Congress to summon strong political will to override the veto.

Let this be not just wishful thinking.

Let us set the proper stage for a constitutionally correct and respectful Legislative-Executive relationship on the annual budget, albeit belatedly, for the remaining few months of the present administration, but well in advance for the next President, whoever he may be.

Let me hasten to appeal that we have to pass the General Appropriations Bill, as amended at the proper time, in order to foreclose the eventuality of the 2009 General Appropriations Act being reenacted.

A reenacted budget is a self-derogation of the power of Congress to appropriate due to its own default. We must prevent this from happening.

Moreover, a reenacted budget unduly favors the Executive because it is given a spending authority with the widest latitude that Congress could not adequately monitor.

Accordingly, it is earnestly recommended that we pass on time the General Appropriations Bill with the requisite and vital amendments.

Thank you, Mr. Speaker and distinguished colleagues.
 

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ALTERNATIVE BUDGET 2010

Protecting the People in Times of Crisis

Introduction

Analysis of the FY 2010 Proposed National Budget

Alternative Budget for Education: Fast Tracking to Meet EFA 2015

Alternative Budget Proposal for Agriculture

Alternative Budget Proposal for Environment

Alternative Budget Proposal for Health

Summary of Alternative Budget Proposals

Proposed Sources of Financing

Annex A. Fast Facts on the Environment

The Alternative Budget Initiative Consortium