Budget reform bill gets House nod

Mar. 21, 2018

MANILA, Philippines – The House of Representatives on Tuesday approved on third and final reading House Bill 7302 or the “Budget Reform Act,” a measure certified as urgent by President Rodrigo Duterte.

The bill, which was approved on third and final reading by a vote of 158-8 with one abstention, seeks to improve the budget process by enforcing greater accountability, strengthening the power of the purse of Congress, and increasing budget transparency and participation.

It also mandates Congress to monitor and review government performance against the requirements of appropriations and related laws, and hold government agencies accountable for their financial and non-financial performance

Likewise, it empowers the President of the Philippines to approve the following: Statement of Fiscal Policy; Medium-Term Fiscal Strategy for submission to Congress; and changes in the functional, operational and organizational structure within and among the Department of Budget and Management (DBM), Department of Finance (DOF), and National Economic and Development Authority (NEDA), as may be necessary, to ensure the effective implementation of the Act.

The President is also given power to impound appropriations, subject to the approval of Congress. The said impounded appropriations could not immediately be used except by subsequent legislative enactment.

It also shifts the country’s current two-year budget validity to one year, with no provision for carry-over, except for a three-month Extended Payment Period in the next fiscal year.

The other key provisions of the budget reform bill include the following:

  • Shifts from an obligation-based budgeting to an annual cash-based budgeting making the appropriations law the authority of agencies to contract out and disburse funds within the fiscal year.

  • Enforces one-fund-concept wherein monies received by the national government shall accrue to the general fund and remitted to the national treasury. Special funds shall be authorized by law and limited to trust fund, revolving and retained funds.

  • Special Purpose Funds are limited to National Disaster Risk Reduction and Management Fund, the Contingent Fund, and the Statutory Shares of local government units (LGUs) and the details of which could not be determined during the budget preparation stage.

  • Savings can be declared due only to the completion, fiscal discontinuance or abandonment of an activity or project for which the appropriation is authorized.

  • In case fiscal discontinuance or abandonment shall be used as basis, such activity or project shall no longer be proposed for funding in the next two fiscal years. Allotments not used due to fault of the agency shall also not be considered savings.

  • Authorizes constitutional officers to use savings to cover a deficiency in any existing item of appropriation within their respective offices.

  • Provides integrated financial management information system, a single portal of all financial transactions and reports to be used by national government agencies, government-owned or controlled corporations (GOCCs) and LGUs to integrate budgeting cash management and accounting processes.

The bill also provides sanctions and penalties for failure to comply with the reporting and posting of requirements, among which are:

  • The Department of Budget and Management will not approve any request for release of allotments under the negative list; modifications or use of savings;

  • Commission on Audit may disallow any expenditure;

  • Disbursement may be rendered void.

‘Prone to abuse’, ‘Weakens Congress’ power of the Purse’

Kabataan Rep. Sarah Elago slammed the impoundment provision embedded in the budget reform bill, as it “heavily outweighs the positive impact of the proposed measure on budget reform.”

Elago said the impoundment provision creates a situation wherein the president can withhold fund releases when he deems the appropriations are no longer necessary.

“If this provision is enacted, the president will have the power to discontinue funding for programs and projects deemed no longer required and will in effect, usurp the congressional power of the purse. This power can be used by the president as a leverage to control the release of funds based on political motivation,” she said.

“With impoundment powers, the president can easily subvert the will of Congress as expressed in the General Appropriations Act… This essentially widens the President’s discretion over the national budget, clips the Congressional power of the purse, and can be abused to serve patronage politics and a looming dictatorship,” she added.

Bayan Muna Rep. Carlos Isagani Zarate also opposed the bill as it “further corrodes and diminishes Congress’ power over the purse” and “does not reform the budget system to truly serve and cater to the needs of the people, which, apparently is unachievable in the present system of governance.”

Zarate said the bill supposedly limits the Special Purpose Funds but in the same Section 27 of the Bill it allowed the existence of “other SPFs not falling under any of the preceding purposes, the details of which could not be determined during the budget preparation state and based on the parameters to be set by the IRR.”

“As in the past, so it is now, and even in the future, if this Bill is passed, the power of Congress over our budget process is nothing but a mere power of the coin purse,” he said.

Following its approval at the lower Chamber, the bill would then be submitted to Senate subject to its own deliberations and approval. (davaotoday.com)

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