• End budget savings, underspending



    THE administration of President Rodrigo Duterte can effect meaningful fiscal reforms by ending the regime of budget savings and underspending blatantly followed by his unlamented and forgettable predecessor.

    Senate Minority Leader Ralph Recto gave notice that the Senate minority would be on the lookout for any underspending of the proposed P3.3-trillion national budget for 2017, the very first under the Duterte administration.

    “The minority will be asking what guarantees are in place that will prevent the repeat of the scourge that was underspending which we saw in the just recent past,” Recto said at the start of the sponsorship period of the 2017 General Appropriations Bill.

    Former President BS Aquino The Last (remember him?) immediately went on an underspending spree on the first budget under him by not using P339 billion of the P1.711 trillion appropriated by Congress for 2011. He refused to touch the amount although Congress had meekly approved his proposed budget without any amendment.

    The underspending resulted in a lower gross domestic product growth rate, fewer jobs created and little or no infrastructure.

    Former senator Edgardo J. Angara, who chaired the Senate committee on finance, once said: “In public finance, money unspent is a useless asset.”

    Angara, one of the best senators after EDSA 1, stressed that there was no justification for underspending when there were so many sectors crying out for funds.

    Well, it turned out that Aquino and his Budget Secretary Butch Abad weren’t actually unaware of the consequences of budget underspending. They gleefully declared the amount unspent as “savings” that could be spent in fiscal year 2012.

    The late Rep. Rolando R. Andaya Sr. of Camarines Sur, arguably the best appropriations chairman the House has ever had, was very much opposed to any savings in appropriated funds.

    Household budgets may be praised for having savings but not government budgets.

    “Savings in government is a cardinal sin,” said Andaya who finished in the Top 10 of both the certified public accountants and bar exams.

    During his tenure as appro chair, Andaya automatically reduced the budget of government offices that had failed to spend their entire budget in the previous fiscal year.

    What Andaya had termed a cardinal sin, the Aquino administration and the Yellows considered a virtue. The savings realized by underspending became the source of more pork barrel funds for legislators and the Disbursement Acceleration Program that were later declared unconstitutional by the Supreme Court.

    It is hoped that President Duterte will follow the SC decision on the DAP and pork barrel, unlike his predecessor who ignored it while allegedly pursuing a “tuwidnadaan.” Prof. Leonor Magtolis Briones, former chairman of Social Watch Philippines and now Secretary of Education, said that the Aquino administration “had effectively defied the Supreme Court decision by inflating budgets that contain legislator-identified projects, arbitrarily redefining savings and augmentation, as well as inserting the concept of reallocation of allotment and re-prioritization.”

    During the Aquino administration, funds for “slow-moving projects” could be withheld and declared as savings any time, even before the end of the fiscal year. Senator Recto should also seek guarantees that the Duterte administration wouldn’t follow the schemes of the previous administration decried by Secretary Briones.

    Incidentally, the Senate aims to finish plenary debates on the 2017 General Appropriations Bill in just five days. Well, good luck on this. (The plenary debates, which come after the period of sponsorship, is followed by the period of amendments, the voting on second reading, and the voting on third reading.) I hope the approval of the GAB will not be a hasty one.

    This reminds me of the fastest-ever passage of the budget while I was covering the Senate. The chamber approved the 2008 budget after less than two weeks of deliberations, from sponsorship to voting on third reading. Perhaps, Senator Loren Legarda, chair of the finance committee, can take a leaf from the old master, former senator Juan Ponce Enrile.

    Before the start of the plenary on the 2008 budget, JPE, who chaired the finance committee and was the budget bill sponsor, set the ground rules.

    Rule No. 1: Senators scheduled for interpellation should be on time and we’ll-prepared. A senator couldn’t ask for postponement if he was ill-prepared or absent or late on his scheduled interpellation. Those who couldn’t come on time lost their chance to ask questions about the budget.

    Rule No. 2: Matters not related to the budget were not entertained during the plenary debates. This speeded up the deliberations and dulled the knives of opposition senators who were aching to ask questions about controversies involving then NEDA chief Romulo Neri, Transportation Secretary Leandro Mendoza, and other Cabinet members.

    Before the last day of the plenary debates, JPE asked the senators to submit their individual amendments by 12 midnight. Only those that he didn’t accept would be discussed during the period of amendments.

    Oh, yes, the budget deliberations were further speeded up by the decision of then Senate President Manny Villar to hold morning and afternoon sessions Monday to Friday. On Dec. 11, 2007, the Senate approved the GAB on third and final reading, a few minutes after passing it on second reading. The measure was certified urgent by Malacanang so the Senate dispensed with the three-day rule intervening from the distribution of the clean copy of the bill as amended and approved on second reading, and the voting on third and final reading.



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    1. Underspending includes deferment of hiring and filling vacant positions on purpose then declaring the saved manpower expenses as savings for realignment as bonuses, etc.

      While this fuels unemployment, inefficiency and red tape it also encourages corruption.

      Then they hire contractual or voucher employees who are deprived of benefits due a government employee making the government the most guilty of illegal contractualization.

    2. The Budget deliberation should be done carefully. They also have to include statement in the budget law that prohibits funds from being transferred from one line item to another item or a new item and all line item funds not spent by December 31st are cancelled and the money is to be returned to the Treasury.

      Let’s get away from all of this manipulating the budget. Every June the Executive should report to Congress the actual YTD results vs the budget. A budget supplement or changes should be made if required.