Transcript of Budget Process

National and Local Budget Process Budgeting Concepts and Principles Starts
from the time the Sanggunian receives the executive budget submitted by
the Local Chief Executive (on or before October 16 of the current fiscal year )
and ends with the enactment of the appropriation Ordinance and approval
thereof by the LCE. Starts from the time the reviewing authority receives the
Appropriation Ordinance for review and ends with the issuance of the review
action. It involves the release of allotments and certification of available
appropriations and cash; the recording of actual obligations and
disbursement of funds for authorized PPAs to produce goods and services
that will benefit the general public. A critical aspect is the collection of funds,
such that disbursements do not exceed appropriations. While seemingly a
separate activity, the collection and/or receipt of revenues are considered an
integral part of budget execution. Involves the accurate recording and
reporting of LGUs income and expenditures and the evaluation of LGU’s
physical and financial performance.

Article 454 (s) of IRR of RA 7160

Posting of the Summary of Income and Expenditures
- Local treasurers, local accountants, local budget officers, and other
accountable local officers shall, within thirty (30) days from the end of each
fiscal year, post in at least three (3) conspicuous and publicly accessible
places in the LGU a summary of all revenues collected and fund received
including the appropriations and disbursements of such funds during the
preceding fiscal year.
The following fundamental principles shall govern local government
budgeting:

1.National planning shall be based on regional and local planning to ensure

that the
needs and aspirations of the people as well as those of the LGUs shall be
considered
in the formulations of budgets of National Government Agencies;

2.Local budget plans and goals shall, as far as practicable, be harmonized

with na
tional development goals and strategies in order to optimize the utilization of
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sources and to avoid duplication in the use of fiscal and physical resources;

3.LGUs shall formulate sound financial plans and local budgets shall be
based on
functions, activities and projects in terms of expected results;

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4.LGUs shall ensure that their respective budgets incorporate the
requirements of
their component LGUs and provide for equitable allocation of resources
among these
LGUs;

5.Local government budgets shall operationalize approved Local

Development Plans;

6.No money shall be paid out of the local treasury except in pursuance of an
appropriations ordinance or law;

7.LGU shall endeavor to have a balanced budget in each fiscal year of

operation;

8.Local government funds and monies shall be spent solely for public
purposes;

9.Trust funds in the local treasury shall not be paid out except in fulfilment of
the
purpose for which the trust was created or the funds received;

10.Fiscal responsibility shall be shared by all those exercising authority over

the financial affairs transactions and operations of LGUs;

11.Local revenue is generated only from sources expressly authorized by law

or ordi
nance and collection thereof shall at all time be acknowledged properly;

12.All monies officially received by a local government officer in any capacity

or on any
occasion shall be accounted for as local funds unless otherwise provided by
law; and

13.Every officer of LGU whose duties permit or require the possession or

custody of
local funds shall be properly bonded and such officer shall be accountable
and re
sponsible for said funds and for the safekeeping thereof in conformity with
the pro
visions of law.
The Philippine budget process at least from the budget preparation phase to
the legislative phase, may be described as both stimulating and lackluster.
The responsibility of reviewing all the special and general provisions in the
proposed budget and preparing matrices for the Executive Review Board
deliberations dramatically heightens one's senses even in the wee hours of

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the morning. In contrast, the long uneventful waiting game along the august
halls of Congress forthe budget deliberations is an easy test of one's
patience and professional
endurance.
But how exactly is the national budget legislated? It begins with the
submission of the National Expenditure Program (NEP) by the President to
Congress. The preparation of the NEP kicks off with the issuance of the
budget call. For the preparation of the FY 2012 NEP, the budget call, which is
ordinarily issued in May of each year, was distributed to all government
agencies in December of last year. The current DBM leadership was
determined on submitting the executive's proposed budget for FY 2012 atthe
opening of the regularsession of Congress
in July of this year, instead of the traditional August submission. And it did.
It may be noted that no less than the Philippine Constitution mandates the
President to submit to Congress within thirty (30) days from the opening of
the regular session, as basis of the general appropriations bill (GAB), a
Budget of Expenditures and Sources of Financing (BESF), including receipts
from existing and proposed revenue measures.1 The BESF, as the term
implies, reflects the annual program of estimated expenditures presented by
the executive branch to the legislature for spending authority, accompanied
by an estimate of the expected sources of financing. Interestingly, the NEP
draws more attention than the BESF because it details the executive's
proposed expenditure program for the ensuing fiscal year. Moreover, the NEP
submitted by the President serves as a blueprint for the GAB.
Like most countries, our national budget, be itthe general orsupplemental
appropriations, requires legislation. The Constitution expressly states that
"[n]o money shall be paid out of the Treasury except in pursuance of an
appropriation made by law".2 Thus, Congress alone may authorize the
appropriation of public funds for public purposes. In :he recent case of
Ernesto B. Francisco, Jr. and Jose Maria 0. Hizon vs. Toll Regulatory Board
(TRB) et al.,3the Supreme Court held that the TRB by warranting to
compensate the Manila North Tollways Corporation with the loss of revenue
resulting from the implementation of the periodic and interim toll fee
adjustments, violates the very constitutionally guaranteed power of the
Legislature, to exclusively appropriate money for public purpose from the
general fund.
Indeed, the spending power of Congress, coupled with its exclusive power to
impose taxes, gives the Philippine legislature the enormous "powerof the
purse". In particular,
the House of Representatives has the authority to initiate all appropriation,
revenue or
tariff bills, bills authorizing increase of public debt, bills of local application
and private bills, but the Senate may propose or concur with amendments.4
With such great spending and taxing powers entrusted to the legislature, the
Constitution has built in safeguards to ensure the balance of powers and
prevent abuses in the exercise thereof. Basic among these is the prohibition

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on the increase in the appropriations recommended by the President for the
operation of the government as specified in the budget.5 The rationale for
this, as revealed in the Records of the 1986 Constitutional Commission, is to
avoid huge budget deficits if Congress is given unbridled hand in passing
upon the appropriations recommended by the President. Similarly, in the
case of supplemental appropriations, the same shall be supported by funds
actually available as certified by the National Treasurer, or to be raised by a
corresponding new revenue proposal.
But even without this provision, it is simply logical for the executive
department to determine how much thegovemme.r.4.7. 0d3 for its
operations and relative thereto how much the government affords to spend
given its projected revenues and financing sources. It is thus imperative that
the appropriations authorized by Congress will be covered by available funds
come implementation time based on the projected income of the
government. Congress, may, however, change, modify, alter, increase or
decrease specific items of expenditure in the President's submitted budget
for as long as the entire
appropriation does not exceed the proposed total amount of the budget.'
Likewise, to avoid crippling the operations of the government, the
Constitution allows for an automatic re-enactment of the previous budget law
if by the end of the current fiscal year Congress failed to pass the GAB for the
next fiscal year.' It may be noted that as underscored in the President's Veto
Message, Congress passed the FY 2011 General Appropriations Act (GAA) on
time, the first time in over a decade, avoiding the partial re-enactment of the
previous year's GAA.
Upon submission of the executive's proposed budget, the House of
Representatives through its Committee on Appropriations transforms the NEP
into the GAB and so begins the painstaking task of scrutinizing the
executive's proposed budget. After deliberating over the items and
provisions in the GAB, the House of Representatives transmits the third
reading of the GAB to the Senate for consideration. The Senate Committee
on Finance then prepares the Senate Committee Report on the GAB.
Thereafter, a bicameral conference committee is created in order to
harmonize all the conflicting provisions in the GAB and Senate Committee
Report, and resolve such other matters to avoid delays or impasse in the
passage of the GAA. Once approved by both houses of Congress, the enrolled
GAB is then presented to the President for his approval.
The President has thirty (30) days from receipt of the enrolled GAB to either
sign it without objection, veto the same in its entirety or portions thereof, or
let the same lapse into law. No President in recent times has ever allowed an
enrolled GAB to lapse into law nor has elected to veto the GAB in its
entirety. And only once, in 2005 did it happen when then President Gloria
Macapagal-Arroyo opted for a Budget Affirmation Message instead of the
usual veto message. The most preferred action for any President is the
exercise of the veto power.
While as a rule the President must veto a bill in its entirety, the same does

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not apply to appropriation bills. The President may veto an item, a provision
or a proviso in an appropriation bill without affecting all the other items and
provisions therein. The President must then communicate his veto to the
House of Representatives, which may, by a vote of two-thirds of all its
members, override the President's veto. The GAB is then sent to the Senate
for consideration, which may, by a similar vote of two-thirds of all its
members, overturn the President's veto. The President's veto power has yet
to be challenged and overturned by Congress in recent history.
The signed enrolled GAB togetherwith the President's Veto Message is then
published in the Official Gazette and shall be known as the GAA. With the
enactment of the GAA, the execution stage of the budget process begins.
(Endnotes)
Section 22, Article-VII, 1987 Constitution
2 Section 29 (1), Article VI, 1987 Constitution
3 G.R. Nos. 166910, 169917, 173630, and 183599, October 9, 2010
4 Section 24, Article VI, 1987 Constitution
5 Section 25 (1), Article VI, 1987 Constitution
6 Andres Sarmiento, et al.,vs. The Treasurer of the Philippines and the
Secretary of Budget and Management and Philippine Constitution Association
et al., vs. Hon. Celso Gangan et al., G.R. Nos. 125680 and 126313,
September 4, 2011
Section 26 (2), Article VI, 1987 Constiution of Linking Planning with
Budgeting One of the local Budgeting principles specified in the Code is that
"local government budgets shall
operationalize the approved local development plans." This emphasizes the
need and the importance of linking planning with budgeting. The plan
specifies the programs, projects and activities which shall be supported by
the funds being budgeted for the period. Without the plan or priority
programs and projects, there is no basis for the programming of funds. There
is no basis for budgeting.

The plan sets the priority areas of services and specifies the target outputs
and accomplishments. The budget, on the other hand, programs or allocates
the resources available to carry out the activities required to accomplish the
targets. The national planning and budgeting processes follow this principle.
So do the local planning and budgeting processes. National Local
Fundamental Budgeting Principles of Local Government Units IMPORTANCE
The local chief executive shall prepare the executive budget for the ensuing
fiscal year in accordance with the provisions of Section 318-Chapter 3, Article
1, Title 5, Book 11 of RA 7160.

The local chief executive shall submit the executive budget to the
sanggunian concerned not later than the 16th day of October of the current
fiscal year. If the local chief executive also fails to submit the budget within
the prescribed date, he shall be subject to such criminal & administrative

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penalties as provided under these Rules & other applicable laws. Budget
Process Let's start the journey Budget
Preparation Budget
Authorization Budget Review Budget
Execution Budget
Accountability 1.Governor 2. City Mayor 3. Municipal Mayor Provincial
Governor City Mayor Municipal
Mayor Local Chief
Executive These three documents shall consist the Executive Budget to be
submitted to the Local Sanggunian. The budget preparation proper starts
with the issuance of 1 the local government budget call, cost estimation,
preparation
of budget proposals, executive review
of budget proposals the preparation of the budget
message, Local
Expenditure
Program
(LEP)
sources
of financing 1 2 3 4 and finally 5 budget of
expenditures and Starts with Sanggunian recieves
the
Executive Budget Ends with the Enactment of the
Appropriation Ordinance
&
Approval thereby of
the Local Chief
Executive The Constitution expressly states that no money shall be paid out
of the Treasury except in pursuance of an appropriation made by law. Thus,
Congress alone may authorize the appropriation of public funds for public
purposes.
Likewise, under Budget Authorization, the Sanggunian authorizes the annual
budget through an Appropriation Ordinance.
Appropriation refers to an authorization made by ordinance directing the
payment of goods and services from local government funds under specified
conditions or for specific purposes Starts End Reviewing Authority
receives the Appropriation
Ordinance Review Phase the Issuance of Review
Action when the Its primary purpose is to determine whether the ordinance
has complied with the budgetary requirement and general limitations set
forth in the Local Government Code of 1991 as well as provisions of other
applicable laws. While seemingly a separate activity, the collection and/or
receipt of revenues are considered an integral part of budget execution.
Budget
Execution The Release of: Collection/
Receipt of Revenues Collection of

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Funds 3 Major
Activities Allotments and certification
of available
appropriations and cash; to produce goods
and services
that will benefit the general public. A critical aspect such that the recording
of
actual obligations
and
disbursement of funds
for authorized PPAs 1 2 Disbursements Appropriations do not exceed 4
Phases of the Budget Cycle References The legal framework of the Philippine
budget process
By: Atty. Rowena Candice M. Ruiz Director, Legal Service 5 Phases
of the LGU
Budget Cycle 2012 National Expenditure Program (NEP) — contains details of
the government's proposed program both for the national government
budget and the corporate operating budget. 2012 Budget of Expenditures
and
Sources of Financing (BESF)
— reflects of estimated expenditures presented by the executive branch to
the legislature for spending authority, accompanied by an
estimate of expected sources of financing New DBM publications available in
the DBM website
2012 President's Budget Message (PBM) — in this document, the President of
the Philippines -
briefly discusses the policy framework underlying the proposed budget and
the strategies used in crafting it. Also contained are details on the
government priorities that will be funded for the
upcomingyear
including program targets.

2012 Staffing Summary—this document reflects the overall staffing summary

of the national governmentfrom fiscal year2010 to 2012 as well as the
staffing summary of each national government agency wherein the number
and salaries of
permanent and unfilled positions are indicated. But how exactly is the
national budget legislated? Paano pinaplano ang pera ng bayan? Examples:
BESF GAA NEP Summary Budget Call A Budget Call is a directive from the
LCE
that contains the general objectives, specific sectoral objectives, policy
decisions, str prioritized PPAs by sector/office as reflected in the AIP. It
provides specific guidelines in the preparation of individual budget proposals:
Expenditure ceiling by sector/office
Allocation scheme by MFO and PPA

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Budget calendar and budget preparation forms
Other administrative guidelines Budget Message
-is a brief but comprehensive presentation of
Executive budget that is addressed
to the Local Sanggunian and the general
public of that LGU. It gives emphasis to
the development goals and objectives, policies, strategies and priority
programs, projects and activities for the budget year.

It also reflects income estimates, sources

of funds that will finance the budget and
how much suc
h income is allocated by sector,
office and by expenditure class to various PPAs. Legal Basis. The Local Code
provides that the budget document shall contain a brieg summary of the
functions, projects and activities to be accomplished in pursuit of the goals
and objectives of the Local government unit for ensuing fiscal year,
specifically the delivery of basic services or facilities enumerated under
Section 17 of this code (Section 314b2). The form and content of local
government budgets shall primarily consist of two (2) parts, namely, the
estimates of income and the proposed appropriations covering the current
operating expenditures and capital outlays (Section 314 of RA 7160). (BESF)

Budget Annual & Supplemental Budget Budgeting for ( 1 YEAR ) Plan –

Budget Linkage DEVELOPMENT PLANNING
(6 -15 YRS.) PLAN PDPFP/CDP PDPFP – Provincial Development and Physical
Framework

CDP – Comprehensive Development Plan for Cities & Municipalities (3-6 years
)
( 1 year ) LDIP – Local Development Investment Plan

AIP - Annual Investment Plan

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