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Transcript of Budget Process
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 re
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;
4.LGUs shall ensure that their respective budgets incorporate the requirements of
their component LGUs and provide for equitable allocation of resources among these
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 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
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 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 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.
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 penalties as provided under these Rules & other applicable laws. Budget Process Let's start the journey Budget
Authorization Budget Review 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
of financing 1 2 3 4 and finally 5 budget of
expenditures and Starts with Sanggunian recieves
Executive Budget Ends with the Enactment of the
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
Funds 3 Major
Activities Allotments and certification
appropriations and cash; to produce goods
that will benefit the general public. A critical aspect such that the recording of
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
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
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 such 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