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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WHO EXERCISES THE POWER OF
ALLOCATION?
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WHO EXERCISES THE POWER OF
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
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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
Source: GAA 2012 & 2013; National Expenditure Program: DBM, 2014
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*
Source: GAA 2012 & 2013; National Expenditure Program: DBM, 2014
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
Source: GAA 2012 & 2013; National Expenditure Program: DBM, 2014
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
Department of National Defense
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
Source: 2014 Details of Selected Programs and Projects: DBM, 2014
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Intelligence Funds
Department of National Defense
AGENCY PARTICULARS AMOUNT (PhP)
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
Source: 2014 Details of Selected Programs and Projects: DBM, 2014
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Intelligence Funds
Department of Interior and Local Government
AGENCY PARTICULARS AMOUNT (PhP)
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
Source: 2014 Details of Selected Programs and Projects: DBM, 2014
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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
DILG-Philippine National
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
DILG-Philippine National
Police
Conduct of criminal investigation and
other related confidential activities
451,679,000
Total 62,879,187,000
Source: 2014 Details of Selected Programs and Projects: DBM, 2014
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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