Is there a need for a supplemental budget?

Is there a need for a supplemental budget?

Opinion

Written by Liling Magtolis Briones / Boiled Green Bananas

Sunday, 04 October 2009 22:33



No. There is no need for both houses of Congress to pass a supplemental budget.



This is the position of the Alternative Budget Initiative (ABI), led by Social Watch Philippines, which was presented to the appropriations committee of the House of Representatives, led by chairman Junie Cua and cochaired by Edcel Lagman.



Earlier, the same position was presented to the members of the opposition, led by Reps. Ronaldo Zamora, TG Guingona, Darlene Custodio, Erin Tañada and Bayan party-list representatives led by Teddy Casino.



While ABI/Social Watch agreed with the House and the Senate that the Calamity Fund balance of P29 million was itself in a state of calamity, there is no need to pass a supplemental budget.



Other funds can be transferred to the Calamity Fund, as has been done in the past. However, Congress has to be informed and consulted since the Appropriations Act is passed by the legislature.



The 2009 budget is already operational. ABI/Social Watch noted that Congress could advise the Executive to use the remaining balances in the Special Purpose Funds (SPFs), as well as in accumulated savings. The national budget is generally divided into two main classifications: the SPFs and the budgets of departments and agencies.



The SPFs are handled directly by the Office of the President through the Department of Budget and Management (DBM). Usually, the SPFs are not examined in great detail. The budgets of the departments and agencies are subjected to exhaustive and, oftentimes, stressful hearings by both houses of Congress.



In the 2009 budget, SPFs totaled P715.698 billion against P710.304 billion for departments and agencies. Obviously, SPFs are larger than the regular budgets. Unspent balances in the big-ticket items can be utilized to augment the Calamity Fund. Items which can be deferred can be pooled to give priority to urgent needs.



Unprogrammed Fund. The Unprogrammed Fund for 2009 is P75.070 billion. Unspent balances of this account can be utilized for urgent disaster-response operations.



Overall Savings. One of the most important items in the budget is Overall Savings. During the year, the President, through the DBM, transfers budget allocations from budgets or regular departments and agencies to Overall Savings. In turn, these funds are transferred to other units of government. The magnitude of transfers to and from agencies has been unusually large under the present administration.



In 2008, a total of P178 billion was transferred from different agencies to Overall Savings. On the other hand a total of P38 billion was transferred from Overall Savings to different agencies, resulting in a net transfer P140 billion. This is reported as Unreleased Appropriation. Presumably, the balance was carried over to 2009. A mere one-tenth of this amount, or P14 billion, will already cover the P10 billion which Congress wants to raise via a supplemental budget.



Why not a supplemental budget?

Funds are desperately needed to help the country recover from the devastation wreaked by successive calamities. While both houses of Congress mean well when they propose a supplemental budget, the immediate implication is that it will raise the deficit levels. As of end-August, the accumulated deficit is already P210 billion. Already, the Department of Finance has stated it will borrow for the proposed supplemental budget.



How about the 2010 budget?

Both houses of Congress are rushing to conclude the hearings on the 2010 budget. It is to the credit of current appropriations committee chairman Junie Cua and cochairman Edcel Lagman that they gave ABI/Social Watch the opportunity to present an alternative climate-change sensitive budget for education, health, agriculture and the environment.



The hearing took on the atmosphere of a workshop instead of the usual interrogation sessions. Each proposal was carefully considered by the committee. The issues were clear: how to generate funds for disaster recovery and growth without raising the spectre of a fiscal deficit. On the revenue side, ABI/Social Watch proposed a moratorium on the passage of laws which decrease government revenues, as well as deferment of full-year implementation of revenue-eroding laws. It also proposed increased efficiency and vigor in the collection of direct taxes.



On the expenditure side, the appropriations committee and ABI/Social Watch went through the exercise of examining all the items in the SPFs which now total P881.880 billion, or 57 percent of the total budget.



For starters, the Miscellaneous Personnel Benefits Fund is P76.496 billion. It is estimated that about P60 billion will go to the increases for salary standardization. This leaves more than P10 billion which can be realigned.



Good budgeting is not just about knee-jerk borrowing. It is also a careful examination of proposed expenditures and their responsiveness to the current crisis.



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Views and Analysis



Calamity fund in a state of calamity
THE BUSINESS OF GOVERNANCE | LEONOR MAGTOLIS BRIONES ABS-CBN Interactive 10/05/2009 12:43 AM

The devastation wreaked by typhoons Ondoy and Pepeng has triggered a frenzied search for funds to finance the necessary rehabilitation of destroyed facilities as well as assistance for typhoon victims. The two houses of Congress were informed by NDCC Chair Gilberto Teodoro that the P2 billion Calamity Fund managed by the Office of the President through the Department of Budget and Management is down to a measly P29 million.

Both the Senate and the House are seriously contemplating the passage of a supplemental budget of P10 billion to augment the depleted fund. The Alternative Budget Initiative, a network of more than 60 civil society organizations convened by Social Watch Philippines has stated that a supplemental budget is not necessary. What is needed is to tap the unspent balances of the Special Purpose Funds and Overall Savings account to augment the Calamity Fund. However, both houses of Congress need to be informed about these transfers since the appropriations act was passed by them.

The calamitous state of the Calamity Fund

Even during the pre-Ondoy and pre-Pepeng periods, the Calamity Fund has a history of being depleted and augmented from various funds. The practice is for the Office of the President to transfer funds from various sources to operating departments purportedly in charge of overseeing disaster relief and rehabilitation.

In 2008 for example, the Department of Budget and Management reported that the new general appropriations stood at P2.152 billion which included P152 million from the previous year’s reenacted budget. This amount was augmented by continuing appropriations for capital outlays and unreleased MOOE, also from the reenacted budget, in the amount of P2.484 billion. Thus, available appropriations in 2008 totaled P4.636 billion.

Furthermore, this amount was augmented by transfers to the Calamity Fund from the Overall Savings account in the amount of P1.856 billion. Theoretically, more than P6 billion was available for the Calamity Fund.

To whom were the funds of the Calamity fund transferred in 2008? Eleven departments received transfers from the Calamity fund. The big ticket items among the recipients include the Department of National Defense at Ph1.469 billion plus P120 million for the Office of the Secretary; Department of Public Works and Highways at P1.773 billion; Department of Agriculture for P836.4 million; Department of Social Welfare and Development, P614.5 million; and “special financial assistance to local government units” for P620.6 million.

Other departments which have received transfers from the Calamity Fund are the Departments of Education , Health, Interior and Local Governments, Labor, Science and Technology, and two state colleges in Leyte.

In addition to the regular departments, the National Housing Authority received P250 million while the Philippine National Railways P375 million. Until I saw this transfer, I was not aware that the PNR was in a state of calamity in 2008!

There are smaller but curious transfers like P120 million for the Philippine Veterans Affairs Office and P1 million for the Military Shrines Service. Were they also victims of calamities?

Now, it is said that the 2009 Calamity Fund is down to P29 million from a starting balance of P2 billion. This starting balance does not include transfers and augmentations which were made during the course of the year.

Accounting for the Calamity Fund

Before dashing off another supplemental budget Congress, with the support of media and civil society, must demand for an accounting of the 2009 Calamity Funds as of end September. How much in new appropriations and continuing appropriations were pooled in the Calamity Fund? How much was transferred to the Calamity Fund?

Equally important, who were the recipients of transfers from the Calamity Fund? Are these agencies directly involved in relief and rehabilitation from calamities?

Financing the Calamity Fund

A supplemental budget, while seemingly heroic on the part of Congress, will only increase the level of the deficit which is already at dangerous levels.

Mention has already been made of existing funds like the SPFs and Overall Savings account.

While Congress is in a hurry to pass the 2010 budget, it must take time to review the status of the 2009 Calamity Fund, as well as the proposed expenditure items in 2010. The latter is proposed to

ensure that duplication, waste and double charging of expenditures will not go unnoticed.

How about the MVUC funds?

Sen. Miriam Defensor Santiago has proposed that the MVUC funds should be tapped. This is the Motor Vehicles Users’ Charge. MVUC funds are not included in the national budget. It is managed by a board headed by the DPWH secretary. Unlike other revenue raising agencies, it does not have to chase its clientele to raise revenue. Every day of the year, MVUC receives income from car registration. Registration for new cars are collected three years in advance.

MVUC income is supposed to fund the maintenance of roads, etc. It would be the understatement of the year to say that all the roads destroyed by calamities need maintenance!

Is a supplemental budget the answer to the state of calamity in the Calamity Fund? Obviously not.



as of 10/05/2009 12:43 AM