ANGARA PANEL STARTS COMMITTEE DELIBERATION
ON BUDGET IMPOUNDMENT BILL
For PGMA's signature by December

Senator Edgardo J. Angara today said that now is the most opportune time to revisit our budget process since the national budget can be a powerful tool in combating poverty and enabling human development, as the country hurdles the havoc of the global financial crisis.

"A government's budget is the ultimate reflection of its priorities, policies, and responsiveness to concerns and problems besetting the country. This statement is trite and yet very true. The budget process, however, has always been an arena of power struggle between the legislature and the executive. In some instances, such power play has resulted to abuses in authority that constrained development.," said Angara who chairs the Senate Committee on Finance.

He then cited, "US history attests to this. The president's power to impound, or prevent the releases of certain budget appropriations, has been recognized since the Budget and Accounting Act of 1921 established a presidential budgetary system. Such power has been subject to compromise between Congressional leaders and the President, until the era of what Professor Allan Schick tagged as The Seven Year Budget War."

Angara shared that this has been attributed largely to US President Richard Nixon who in an attempt to put a cap on federal spending impounded billions of dollars worth of projects (a total of US$ 17 billion of grants to public housing, water pollution control, etc., in 1973) -- exercising the power to impound not as an emergency measure to complement economic policy, but to scrap unwanted programs initiated by Congress.

This led to the enactment in 1974 of the Congressional Budget and Impoundment Control Act, which curtailed the president's power to defer appropriations.

The senator, who led the Senate debates on the 2009 General Appropriations Act, said that as a democratic country whose system of check-and-balances has been modeled after the US, the Philippines has not been immune to such power struggle.

Last week, the Senate Committee on Finance held its first public hearing on the Budget Impoundment Control Act, authored by Senators Noynoy Aquino, Bong Revilla and Mar Roxas, and probably one of the most significant bills filed Post-EDSA.

The bill seeks to institute measures that will limit presidential prerogative over deferring or suspending the release of funds in the General Appropriations Act (GAA). It aims to balance the executive's power to veto line items in the budget with congressional oversight to ensure that items which don't get vetoed are actually spent as intended in the law.

Currently, the President has the power to defer or delay, and rescind appropriations in the GAA. This reverts back to the general fund as "savings", and these so-called "savings" can be used under the President's discretion.

Some studies show that since 2004, departments and programs at the forefront of poverty alleviation, such as the Department of Education (DepEd) and the Agriculture and Fisheries Modernization Act (AFMA) have been the frequent victims of deferments and rescission. In 2007, Php29.9 billion of Dep Ed's appropriations, and Php4.8 billion of AFMA's, were not released, adding up to the Php117.55 billion total generated savings that year.

Under the Budget Impoundment Control Act, the President may still defer or rescind items in the budget, but not without first reporting to Congress the reasons behind it and getting Congress's approval. The rescinded fund shall not be used without prior law providing for its use as a supplemental budget.

"The bill tackles the very heart of the checks and balances enshrined in our Constitution. Hopefully, through continued intelligent debate and study, we will be able to strike a balance between the Executive's power of the sword with the Congress's power of the purse, and make our budget process more accountable, transparent, and responsive. Used properly, the national budget can be a powerful tool in combating poverty and enabling human development. It is high time we revisit our budget process to ensure that whatever limited fund we have goes a long way," added Angara.

The Finance Committee chair is optimistic that Congress can pass the Budget Impoundment bill and submit the same for the president's approval by December.