BUDGET PROCESS SHOULD BE TRANSPARENT

The C-5 Extension Controversy

The 2008 budget, aka Republic Act No. 9498, or the General Appropriations Act for Fiscal Year 2008, appropriated the sum of P200 million for the C-5 extension in two entries. One is found on page 563 and the other is found on page 646. It appears to me that the explanation is that both are valid entries, because each one constitutes an installment on the total amount of appropriation which was reportedly estimated at P 4 billion. This budget has been approved both by Congress and the President.

It appears that the center of this controversy is not the Senate President, but the Department of Budget and Management. It is the responsibility of the Secretary of Budget and Management and the Office of the Executive Secretary, with the assistance of the line departments, to review the enrolled copy of the GAA, identify the differences in the proposed President’s Budget and proposed budget as approved by Congress, and recommend appropriate actions for the identified differences and the budget in its entirety.

The process can be described as follows:

First, the key DBM officials are mobilized to identify the changes made on the President’s Budget. They consult with line agencies and produce a document called Statement of Difference.

Second, appropriate recommendations are prepared for each item of difference. Some changes may be allowed (this shows respect for the legislature, recognizing that the executive department does not have a monopoly of good ideas), others vetoed expressly, and others may be mentioned under Observations.
Third, the Deputy Executive Secretary for Legal Affairs reviews the draft veto message.
Fourth, the draft veto message is discussed informally with the chairperson of the House appropriations committee. This step is optional but recommended in order to maintain good working relationship with members of Congress and avoid an override of the veto.

In the light of the process I have just outlined, I reach the following conclusions and observations:

First, Congress inserted a new budget item worth P200 million, at the request of a legislator.

Second, the Secretary of Budget and Management confirmed that there was double appropriation but that no funds will be released for the second appropriation. This raises the following questions. If there were double appropriation, why didn’t the DBM Secretary recommend a line-item veto of the redundant budget item? How can his statement be reconciled with the alleged statement by DPWH authorities that the road project has two components, including a flyover, which necessitated the additional P200 million?

Third, the additional appropriation for the C-5 road project still stands. It might be used to form part of the ‘general savings’ and then realigned to augment any existing item in the budget – including the original C-5 road project proposed in the President’s Budget.

Fourth, the ‘double appropriation’ for the C-5 road project casts serious doubt on the integrity of the FY 2008 general appropriations act. Hence, yesterday I filed a resolution for this Congress to create an independent group to review the FY 2008 GAA in its entirety, and to recommend measures to prevent double appropriation in the future.

Reforms in Congressional Insertions

A strict interpretation of budgetary powers of Congress is that it has the power to cut, but not add to or initiate, the funding of programs and projects not proposed in the President’s Budget. The Constitution provides that Congress may decrease but not increase the budget as proposed by the President. A strict interpretation of this provision is that it applies not only to the aggregate level of the budget, but also to the proposed budget for every program or project contained in the President’s Budget. This strict interpretation has long been abandoned.

It is now accepted practice that Congress may cut the appropriation for any program or project of the President’s Budget, and use the pool of appropriation cuts to increase (augment) the budget of any proposed – or even new – items in the President’s Budget. For example, the budget for fertilizer subsidy may be reduced by P100M and then use the cut to increase the appropriations for a proposed road Alpha (say from P100 to P200M) or use the P100M to fund congressional initiatives (say P50M for road Beta and P50M for road Omega).

Abstracting from the constitutionality of the current practice, what is inherently wrong in the current practice is the lack of transparency and the abuse of authority of the conference committee.

I humbly submit that the current practice violates the Constitution, Article 3, aka Bill of Rights:

Sec. 7. The right of the people to information on matters of public concern shall be recognized. Access to official records and to documents and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law.

I am not aware that Congress has passed any law limiting this constitutional right with respect to the budget process.

First Reform: Three days’ Notice of Bicam Decisions

The proceedings of the bicameral conference committee, which political analysts call the “third chamber”, are conducted under the most secretive environment. There are no minutes of proceedings. Only the co-chairpersons and the members of the bicameral committee can now identify, from memory, who initiated a particular change and how the committee addressed it. During the last bicameral committee meeting, the matter of reconciling the House and Senate versions of the appropriations bill was delegated to the respective heads of the House and Senate contingents. On the one hand, this ‘four-eyes’ arrangement facilitates decision-making; on the other hand, it heightens the lack of transparency of the whole process.

I submit that for good governance, promoting transparency should take precedence to speedy decision-making. The following rule should be adopted: all decisions made by the conference committee should be printed and circulated to members of both houses of Congress three days before the final ratification of the bicameral committee report.

Second Reform: Limit Bicam to Reconciliation of Disagreeing Provisions

The bicameral committee is mandated to reconcile conflicting provisions of the House version and the Senate version of the appropriations bill. Yet, it is not uncommon to find in past conference committee decisions where new changes are introduced in the proposed, although they are not contained in either the House version or the Senate version of the bill.

For example, under current rules, with a budget proposal of P1.0 trillion pesos, the House may approve a P 900 billion budget (with a cut of P100 billion), while the Senate may cut deeper and approve a P850 billion budget, and yet the conference committee may agree to approve a P1.0 trillion-peso budget. There is no assurance, however, that the composition of the P1-trillion bicameral-committee approved budget would be the same as the composition of the P1 trillion President’s Budget. The P900 million House-approved appropriations bill may contain congressional initiatives totaling P10 billion; the P850 million Senate-approved appropriations bill may contain additional congressional initiatives totaling P5 billion; yet, the final appropriations bill as recommended by the bicameral conference committee may contain a total of P20 billion congressional initiatives. Hence, the bicameral conference committee goes beyond reconciling the differences between the House and Senate versions of the budget bill. It introduces budget items that are non-existent in both budget bills, under the most secretive conditions.

The following rule should be introduced: the mandate of the bicameral conference committee shall be limited to reconciling the disagreeing provisions of the House and Senate versions of the appropriations bill. No new budget programs, projects and activities shall be introduced during the process of budget reconciliation.

Third Reform: Limit Amount of Congressional Insertions

Like the pork barrel, the congressional insertions which are usually made in the budget of the DPWH, should be limited to a uniform amount for members of the Senate, and to a uniform amount for members of the House. And just like the pork barrel, the practice of congressional insertions should be made available to all legislators wishing to avail of it.

Fourth Reform: Indicate Installment Number

The budget should indicate if an appropriation is part of a multi-year “installment plan.” If the total amount for a public works project is too big to be appropriated in one budget alone, it might be appropriated in several budgets at smaller installments. In this case, every appropriation should be marked as “Installment 1.” Thus, we shall avoid public suspicion of an improper double entry.