Business World, 25 September 2012


In 2011, President Benigno Aquino III did not implement the national budget as approved by Congress. Stung by criticisms that his administration was slow in implementing government programs and projects, he authorized the Department of Budget and Management (DBM) to slice and dice the budget to come up with a package of new spending initiatives worth ₱72.1 billion called the Disbursement Acceleration Program (DAP). And before the year ended, the DAP was augmented by another ₱13.4 billion. That’s ₱85.5 billion new spending authority that did not get prior congressional approval.

Was the massive realignment of appropriations legal? Yes, if the so-called savings were used to augment items in the budget that were previously authorized by Congress. But it is illegal if savings were used to augment new (that is, not previously authorized by Congress) budget item.

In any event, because the changes in the priorities and composition of the budget were massive, at the very least, congressional concurrence should have been sought. Such move is consistent with the congressional power of the purse.

Seeking prior approval was the position of then Senator Aquino when he was in the Senate as he filed Senate Bill 3121, the Budget Impoundment Control Act. His bill seeks to correct the abuse and misuse of the President to impound appropriations and use them for programs not previously authorized by Congress. In his explanatory note, we was emphatic: “the power of the sword” belongs to the President, the “power of the purse” resides in Congress.

With the massive makeover of the 2011 budget, and the impending major revamp of the 2012, has President Aquino III changed his position on budget impoundment? What happened to policy consistency? One may ask: If the practice of budget impoundment were subject to misuse and abuse during Arroyo’s watch, were it not so too during Aquino’s watch? What happened to Daang Matuwid (Straight Path)?

Is Mr. Aquino’s commitment to Daang Matuwid a mere slogan or is it for real?

[By the way, the same question may be raised of his murky position on the Freedom on Information (FoI) bill.]


What’s the essence of the budget impoundment control bill? It is to help Congress regain its power over the budget process. It follows the practice in the United States where through the 1974 Congressional Budget and Impoundment Act, institutional changes were put in place to help Congress regain its power of the purse.

The act requires the President to ask Congress for a rescission (cancellation of all or part of the enacted appropriation which has not been spent or obligated) — or cutback — of appropriated funds for projects no longer considered necessary.

The budget impoundment act is not meant simply to set right the balance of power. It is designed to make the budget process transparent, easy to monitor, and to foster fiscal accountability.

When the head of an agency appears before Congress, he promises what outputs and outcomes its agency can deliver for a given budget. When in the budget execution phase, funds are not released on time or worse, rescinded, the agency will not be able to deliver on his promise. Lower and delayed budget releases mean that less outputs and outcomes would be delivered.

In Aquino’s Budget Control and Impoundment Act, the President is required to formally “transmit to both Houses of Congress a special message specifying: (1) the amount of budget appropriations which he proposes to be rescinded or which it to be so reserved; (2) any account, department, agency or instrumentality of the government to which such budget appropriation is available for obligation, and the specific projects or governmental functions involved; (3) the reasons why the budget appropriations should be rescinded or is to be reserved; (4) the estimated fiscal, economic and budgetary effect of the proposed rescission or reservation; and (5) all facts, circumstances and considerations relating to or bearing upon the proposed rescission or reservation upon the purposes, programs, activities and projects for which such appropriation is provided.”

The proposed act provides that Congress has within 60 calendar days to issue a joint impoundment resolution. If Congress does not issue a resolution within the specified period, the President shall not proceed with the rescission or reservation procedures; the implication being that the President is obligated to implement the budget as approved by Congress.

Aquino’s bill further provides that “in the event of a congressional approval to rescind, the funds corresponding to the rescinded appropriations shall revert to the unappropriated surplus of the general fund and shall not be made available for expenditure for any purpose except as provided for by a subsequent legislative enactment.” That’s a fiscally responsible position.

But it was not only Mr. Aquino who was the staunch champion for the budget impoundment act. Prominent members of his Cabinet and political party were strong advocates of this important reform. Interior and Local Government Secretary Mar Roxas filed Senate Bill 2885, “Budget Impoundment Control Act,” and Senate Bill 2996, when he was Senator.

Senator Teofisto Guingona III was another strong champion for budget impoundment. As a congressman in the 14th Congress, he filed House Bill 5580, “Impoundment Control Act of 1998.” He said in his explanatory note: “When the Executive Branch, through the President, wishes to impound duly appropriated funds and in effect, defeat the will of the people as reflected in the budget, it must do so under the strictest of terms. It is also imperative that the approval of Congress, as representatives of the people whose will shall be defeated by an act of budgetary impoundment, is acquired.”

Transportation and Communications Secretary Joseph Emilio Abaya filed two House bills on budget reform — House Bills 6030 and 6031, “An Act Prescribing Reforms in National Government Budgeting, Amending for These Pertinent Provisions of Book VI of Executive Order 292, Otherwise Known as the Revised Administrative Code of 1987, and Providing for Other Related Purposes.”

With such a formidable list of champions (Aquino, Roxas, Guingona and Abaya) how come the budget impoundment control is not even discussed in the corridors of power now?

Gentlemen: What happened? Why was the budget impoundment control act a great idea then when you were out of power, and forgettable now that you are in power, and in a position to do real, long lasting, reforms?

[To be continued…]