The House of Representatives on Tuesday approved on second and third reading a Legislative-Executive Development Advisory Council priority measure introducing reforms in the country’s budgetary system.
This, after President Duterte has certified as urgent the proposed “Budget Reform Act.”
In a letter to Speaker Pantaleon D. Alvarez dated last Monday, Duterte asked Congress to immediately approve House Bill (HB) 7302 or “An Act to Reform the Budget Process by Enforcing Greater Accountability in the Public Financial Management [PFM], Promoting Fiscal Sustainability, Strengthening Congress’ Power of the Purse, Instituting an Integrated PFM System and Increasing Budget Transparency and Participation.”
“Pursuant to the provisions of Article VI, Section 26 of the 1987 Constitution, I hereby certify to the necessity of the immediate enactment of House Bill 7302 to address the immediate need for budget reforms, and to remedy the gaps in public spending, which hamper the ability of the government to deliver direct, immediate and substantial service to the people,” the letter said.
With the urgent certification, a bill need not undergo the three-day rule between the second and third reading, with approval on both levels within the same day.
The bill, which was approved by 158 and opposed by eight lawmakers 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.
The provisions of the bill shall apply to the management of revenue, expenditure, financing arrangements, and assets and liabilities of national government agencies (NGAs), government-owned and -controlled corporations (GOCCs), and local government units (LGUs).
The bill 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 nonfinancial performance.
It also empowers the President of the Philippine 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 departments of Budget and Management (DBM), and of Finance (DOF), and National Economic and Development Authority (Neda), as may be necessary, to ensure the effective implementation of the Act.
It mandates the DBM not to approve any request for release of allotments for items of appropriation covered in the negative list or modification in the allotment nor recommend the use of savings by the President until such time the noncompliant agency has submitted the reports required under the act.
The bill also allows the Commission on Audit (COA) to suspend and/or disallow any expenditure charged against augmentation, using savings and any expenditure due to modification in the allotment, which were made within the period succeeding the reporting period when the agency failed to comply with the reporting requirements under the Act.
Likewise, the measure holds accountable public officials who fail to report on the income and funds retained at the end of a reporting period. It seeks to void all disbursements against such income or funds in subsequent reporting period when the agency failed to comply with the reporting requirements under the Act.
Congress, through its appropriate oversight committee, may motu proprio or upon the request of COA or DBM compel the head of the noncompliant agency, under the pain of contempt, to produce the required report or reports and to explain failure of submission of such report or reports.
Any public official or employee who shall cause the inclusion of fraudulent information in any accountability report shall be penalized with imprisonment of up to five years, or a fine not exceeding P1 million, or both, without prejudice to disallowances that may be made by the COA against expenditures related to such fraudulent information, provided that this fine is reviewed and adjusted periodically to be reasonable.
Any public official or employee who knowingly incurs any contractual commitment or authorizes any expenditure in violation of the provisions of the act or takes part therein shall, likewise, be removed or dismissed from office, after due notice and hearing, even if no criminal charge is instituted against him.
House Committee on Appropriations Chairman Karlo Alexei B. Nograles of Davao City said the measure will strengthen accountability and integrity in the use of public resources by ensuring transparency, fiscal responsibility, results-orientation, efficiency and effectiveness.
“The annual budget is the most important legislation that should be timely enacted by government. It is through this tool that the government delivers basic services and provides public goods to the people. In order to fortify the budget process, there is a need to introduce budget reforms that will enforce greater accountability in public financial management,” he said.
“The passage of this bill will ultimately improve the ability of [the] government to deliver direct, immediate and substantial services to the people, especially the poor, as well as strengthen government’s accountability to the people for its use of public funds. It will, likewise, establish a comprehensive legal framework on the allocation, use and accounting of public funds,” Nograles added.
Despite the proffered objective of the proposed “Budget Reform Act” of “strengthening Congress’s power of the purse,” Rep. Edcel C. Lagman of the First District of Albay said the bills failed to excise current practices, which derogate the plenary authority of Congress to appropriate public funds.
“The following practices that defeat the legislature’s power of the purse still subsist in the bill: automatic appropriations; use of savings; impoundment of approved appropriations; and lump- sum appropriations,” he said.
“All of these practices impugn the authority of Congress to specifically appropriate the expenditure of inordinately huge amounts of funds,” he added.
According to Lagman, the bill shields automatic appropriations and imprimatur payment of debt service, among others, from the congressional scalpel.
“Use of savings grants the Executive widest discretion of spending public funds without specific and prior appropriation from Congress,” he said.
“Impounding of approved appropriations in the General Appropriations Act by the President subverts the congressional power of the purse and makes more ascendant the Executive power to disburse or not to disburse,” Lagman added.
He also said the lump-sum appropriations are virtual sequestration of funds for the exclusive disbursement of the Executive without appropriate particularization from the legislature.