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Posting the following privilege speech delivered by Rep. Neri Colmenares of Bayan Muna party list which partially details the huge pork barrel funds under the Executive Branch. Colmenares is part of the Makabayan Bloc spearheading the abolish pork barrel efforts in Congress but he insists that not only congressional but presidential pork should be included.

IT IS TIME FOR CONGRESS TO TAKE BACK THE POWER OF THE PURSE:
ABOLISH THE PRESIDENTIAL PORK IN THE BUDGET!

Privilege Speech
Bayan Muna Party-List Rep. Neri J. Colmenares
September 2, 2013

Colleagues, I rise on a matter of privilege, on a very important issue plaguing the country today—the abolition of lump sum amounts in the Budget and the need for Congress to take back its constitutional power over the purse.

Public funds can never be appropriated or spent except by law as provided under Art. VI Section 29 of the Constitution which provides that “No money shall be paid out of the Treasury except in pursuance of an appropriation made by law”. In fact even the spending of discretionary funds requires regulation as provided in Section 25 (6) which requires that “Discretionary funds appropriated for particular officials shall be disbursed only for public purposes to be supported by appropriate vouchers and subject to such guidelines as may be prescribed by law”.

The Congress is constitutionally given the power to approve the budget submitted by the executive into a law called the “General Appropriations Act” (GAA). The budget should originate from the House of Representatives through a “General Appropriations Bill” and the Senate is mandated to propose or concur with amendments, as provided in Article VI Section 24:

Section 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.

As a general rule, an amount once appropriated to an item by the GAA cannot be realigned except if savings were incurred, as provided under Art. VI Section 25 (5)

No law shall be passed authorizing any transfer of appropriations; however, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations law for their respective offices from savings in other items of their respective appropriations.

On the other hand, budget is defined as the “financial plan of a government for a given period, usually for a fiscal year, which shows what its resources are, and how they will be generated and used over the fiscal period.” It is further defined as “a table/schedule of expenditures, based on either obligations or cash concepts and the corresponding sources of financing, either from revenues, borrowings or cash balance drawdown.” In short it is a list of expenditures and the proposal for financing them.

Why do we “budget”?

“Budgeting” is defined as “allocation of revenues/borrowed funds among agency programs and projects to attain socio-economic goals and within bounds of fiscal sustainability/prudence”. We budget so that we can predict the expenditures for the next year and efficiently allocate scarce resources to the most important expenditures.

However, the budget submitted by the executive every year, devotes billions of pesos on lump sum amounts, which practically violates the intention of efficient allocation of scarce resources. These lump sum amounts are abhorrent to the policy intent of “sustainability” nor does this stem from budgetary prudence. Why? Not only is this “lump sum” system a source of graft and corruption, or skewed allocation of resources, but also, because the power to allocate these lump sum amounts are given to the President, virtually negating the constitutional power of the purse of Congress.

A study for example warned that while the Philippine Congress was focused on investigating gargantuan graft in the fertilizer scam and NBN ZTE deal, the hundreds of millions involved in these scandals were dwarfed by the billions of pesos of “lump sum amounts” regularly and “legally” lost through an inefficient and un-transparent budgetary process.

When I became a member of Congress barely four years ago, I found that budgetary scrutiny is easier said than done. The budget is one of the most complicated and difficult to comprehend pieces of legislation that passes the legislative mill—and I suspect the drafters of the budget purposely made it so.

Budget Transparency

Other than the off-budget lump sums of the President, some of the most important weapons for budgetary hocus pocus which seeks to overwhelm Congress’ capacity for budgetary scrutiny are the tricks applied in Special Purpose Funds, Unprogrammed Fund, Over all savings and seemingly innocuous special provisions that actually centralize appropriated funds back to the President for his final disposition.

While we debate on the regular budget of each government agency, little discussion is given on lump sum amounts not found in the “regular” budget of the agencies. For example, I noticed vaguely described items like the “Special Purpose Fund” which gives these agencies billions of pesos as “budgetary support” when in fact, they will also have another huge appropriation for “budgetary support” in other budget items. Special purpose funds are conveniently described as “appropriations in the GAA provided to cover expenditures for specific purposes for which recipient agencies/departments have not yet identified during budget preparation”. These shall be available for allocation to agencies/departments in addition to built-in appropriations, during budget execution, pursuant to special conditions. Among such “Special Purpose” funds are the Calamity Fund, Contingent Fund, E-Government Fund, International Commitments Fund, Pension, Gratuity Fund and even the controversial Priority Development Assistance Fund.

It is possible for an agency not to identify a certain budgetary expenditure during budget preparations, but that already shows inefficiency in that particular agency. But to fail to identify, every year, Billions of pesos in the same budgetary items like “e-government fund”or pension or allocation to LGUs is definitely coupled with intent to commit anomalies or to deprive Congress of its constitutional power to scrutinize and approve the budget.

There is also that little noticed portion called “Unprogrammed Funds” which even if it also allots billions of pesos, gets little attention because it cannot be allocated, supposedly, unless there is “surplus funds or revenue” or realization of loans. Strangely, these supposedly “stand by” funds were spent every year when the Philippines never had a surplus budget since 1998. These huge amounts were not “stand by” funds after all, but were actually funds programmed to be implemented each year even if they are called “Unprogrammed Funds” through increase of debt and loan agreements. Members may never bother with these “unprogrammed funds” thinking that these are stand by funds, without knowing that every time they approve unprogrammed funds, they practically increase our Trillion peso debt.

As if the above is not sufficient to overwhelm Congress, members are confounded by the difficult to trace amorphous amounts called the “Overall Savings”. This phenomena of large savings in agencies (proudly denoted by the item called “Transfer From”) is, more often than not, strangely coupled by the entry of a large amount in that same agency which managed to save (innocuously called “Transfer To”). Because the President has the power to realign the savings of various government agencies, the items meticulously provided under the appropriations law are rendered useless practically transferring the power of the purse to the executive.

Then we add the unique phenomenon under former Pres. Gloria Macapagal-Arroyo called the ”re-enacted budget” and the budgetary scrutiny gets murkier. This is so because under a re-enacted budget the entire government budget, essentially becomes one big lump sum.

For example, the 2009 regular budget of the DND-AFP of P56.483 billion was delayed when the General Appropriations Act (GAA) was only approved in April 2009. As a result, the DND-AFP spent P13.948 billion pesos from January to March from its “re-enacted” 2008 budget. However, instead of deducting the P13.948 billion from its allocated regular budget, the Arroyo government simply added both appropriations, thereby spending, as its appropriations and obligations for 2009, a total of P70.431 billion. And all the while, Congress thought it only appropriated P56.483 billion to the DND-AFP.

Couple this with the amorphous items beyond the approving power of Congress during the budget hearings called the “Automatic Appropriation” allocation and the “Confidential and Intelligence” fund amounting to hundreds of billions of pesos, we now have the ingredients for corruption, inefficiency and regression, a recipe for disaster to an impoverished country and people.

These “lump sum items” to the regular budget are the reason why, even if we allocated only so much in the regular budget for a fiscal year, Congress will belatedly find out more than a year later that the total appropriations and obligations of government is double than the regular budget allocated by Congress. The rule in budgetary process is itemized budgeting or expenditure, because the intention of budgeting is to predict the expenditures in the next year in order to efficiently allocate scarce resources. In the Philippine budgetary process however, amorphous lump sum amounts are the rule instead of the exception.

The next problem resulting from this allocation of lump sum amounts is the location of the authority to disburse the same — the power is given to the President instead of Congress. Lump sum amounts in the Special Purpose funds are always accompanied by special provisions that require presidential approval. In fact, even the controversial congressional pork called “PDAF” is a Special Purpose Fund, subject to the absolute control of the President, who can suspend its release, order its itemization, realign it or abolish it by withholding its release. The proliferation of lump sump amounts subject to the control of the executive, not only takes away the power of the purse from Congress, but also subjects Congress to the control and dictates of the Executive branch, violating the checks and balance principle required by the Constitution. Add the off-budget lump sums of the Executive, such as the Malampaya fund, then you have a powerful Executive who not only spends the country’s resources but also appropriates and allocates them.

The total Special Purpose Funds, which are lump sum amounts, in the last three years (2010-2012) for example is P1.23 Trillion while the Regular Budget funds total P2.3 Trillion. The Unprogrammed Funds in the same period totaled P338 Billion. Because many of these funds are subject to presidential allocation and approval, these are called the presidential pork barrel.

Does Congress really exercise the power of the purse? Under these conditions, certainly not. The budgetary process must be reformed, and reformed big time. Budget proposals and processes should be transparent and scrutiny-friendly —something that can never be achieved as long as lump sum amounts liter the General Appropriation Act.

PRESIDENTIAL PORK

These lump sum discretionary fund, constitute what we call the Presidential Pork Barrel. The Presidential Pork is gargantuan, and consists of many items in the budgetary process and government appropriation.

. Special purpose funds and why they are presidential pork

​According to estimates, the total presidential pork of former President Gloria Arroyo in 2009 for example amounted to at least P 222.64 Billion. These are the funds she can play around with, providing projects here and there depending on her personal and individual discretion. This does not yet include the pork barrel items embedded in the regular budget and the unobligated and unreleased funds which President Arroyo can realign, release or obligate at her whim.

Pres. Aquino on the other hand, has a bigger Presidential Pork Barrel, considering that while Pres. Arroyo had a P1.5 Trillion budget in 2009, Pres. Aquino’s budget in 2012 for example amounted to P1.8 Trillion. The minimum amount of Pres. Aquino’s pork barrel using his 2012 Budget, for example, amounted to P 362 Billion, excluding other off-budget items, namely:​

. IN BUDGET ITEMS (Funds in the NEP and GAA)

a. Special Purpose Funds

1) Allocation to Local Govt Units (ALGU)​ To the IRA of local government units
a. Special Share of LGU ​P 16.70 Billion in the proceeds of National Taxes
b. Financial Subsidy To LGU​P 200 million
————
​Sub-total ALGU Pork Barrel​ ​P 16.90

2) PDAF (Pork Barrel of Legislators)​P 24.89 Billion
3) DepEd School Building​​P 1 Billion
4) E- Government Fund​P 1 Billion
5) Budgetary Support to GOCC​P 21.57 Billion
6) Misc. Personnel Benefit Fund​P 109.29 Billion
7) PAMANA​P 1.76 Billion

b. Unprogrammed Fund and Automatic Appropriation

1) Budgetary Support to GOCCs​P25.21 Billion
2) Support to Infra Projects and Social Programs ​P26 Billion
3) Debt Management Pogram​​P85.18 Billion
4) Net Lending​​P23 Billion
5) Special Account ​P26.83 Billion
—————–
P362.63 Billion

. The overall savings—Presidential power over savings

As a policy of sound and efficient budgeting, the Constitution generally frowns upon transfer or realignment of appropriations, when it provides: “no law shall be passed authorising any transfer of appropriations.” As an exception, it allows augmentation in the budget from savings (However, the President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court and the heads of Constitutional Commissions may, by law, be authorized to augment any item in the general appropriations laws for their respective offices from savings in other items of their respective appropriations.)

Despite efforts by the agencies/departments to plan their budgets for the following year, scrutinised by congress during budget hearings and justified by the same agencies in their answers, their budgets results to huge amount of savings. Whether this is due to poor fiscal capacity or bad faith, fact is overall savings by the government amounts to billions yearly.

Certain provisions of EO 292 empowers the president to control the use of savings accumulated in the national budget. Considering the amount of yearly savings our government accumulates, it cannot be denied that the President’s power of the purse is more awesome than that of the legislature.

In Section 28, Book VI, Chapter I, the president has the power to authorize the use of savings realized by an agency during a given year to meet non-recurring expenditures in a subsequent year.

Likewise in Section 39, the president has the power to authorize the use of savings to cover deficits in any other item of the regular appropriations.

. Off-budget lump sums like the Malampaya Fund and the PS Fund

Malampaya Fund as Presidential Pork Barrel

Nothing exemplifies the inherent anomaly in the Presidential Pork barrel fund than that of the Malampaya Fund. This fund is collected yearly from the government share in the contract with Chevron and Shell to extract natural gas in Malampaya, near the province of Palawan. This fund, which has so far collected P 173 Billion is placed in Special Account 151, does not form part of the general fund that is subject to appropriation by Congress in the GAA. Only the President of the Philippines can select what project he wishes to fund, where and how much of the funds he would obligate.

The presidential use of the funds range from agrarian reform (P 900 Million reportedly went to fake NGOs through DAR) to buying a generator for the Philippine Military Academy to giving discounts to Jeepney drivers (Tawid Pasada Program) or procuring a military ship. Many of the transactions were tainted with corruption, political patronage to allies and whimsical spending of public funds. According to a COA report in 2008, anomalies took place in the disposition of the Malampaya funds, among which, were:

a. Certain private contractors were favored by local officials to implement a total of 217 Malampaya projects without following the standard bidding procedures

b. Graft and criminal charges should be filed against former Palawan Gov. Joel Reyes and members o f the Bids and Awards Committee for alleged irregularities in the use of Malampaya funds

. Malampaya: The Arroyo Years

A look at how Pres. Arroyo dispensed with the Malampaya funds from 2002-2010 is aptly described by an audit report of the Department of Energy itself in 2010:

“Analysis of the fund releases from SAGF-Malampaya Funds revealed that, out of the P19.643 Billion released to national government agencies, only P250 Million or 1.27% represented release to DOE for electrification of 211 barangays while P19.393 Billion or 98.73% was released to other national government agencies for various purposes other than exploration, development and exploittion of energy resources. Further, huge increasing balances of the fund with year end balance amounting to P77.187 Billion, for Malampaya alone, remained continuously idle for the past 8 years.

Pres. Arroyo spent at least P 19 Billion of the Malampaya fund, such as in the:

(1) DPWH

Pres. Arroyo handed out projects to various districts of her allies totaling about P 7.094 Billion through the DPWH, all in 2009 just before the 2010 elections. Where these went and how they were spent, or whether the projects were ghost projects remain unclear until now.

This abuse of presidential pork is highlighted by the fact that in one year alone (2009) 138 Statements of Allocation and Release Order (SARO) were released to the DPWH for non- energy related expenses amounting to a total of P 7,094,806,659.00 Billion. This will swell up to 8.003 Billion if we include the DPWH SAROS amounting to P909 Million released for the first and second districts of Palawan in 2006-2008. While many of the DPWH SAROs, possibly released to certain lucky districts, ranged from 15 to 50 Million pesos, there were highly questionable DPWH SAROs released in 2009 that were for inordinately large amounts, the purpose and location of which where not specified:

SARO NO. AMOUNT PURPOSE AND LOCATION

DPWH SARO A-09-07817 216,250,000.00 unknown/unreported
DPWH SARO A-09-08779 207,800,000.00 unknown/unreported
DPWH SARO A-09-08841 95,000,000.00
DPWH SARO A-09-09676 551,000,000.00
DPWH SARO A-09-09492 500,000,000.00
DPWH SARO A-09-09534 P 2,273,594,659.00
———————————-
Total P 3,843,644,659.00 Billion

Many of the SAROs worth Billions were released without stating the purpose, namely, the following DPWH regional offices:

* Region XIII (Butuan City, Agusan del Norte, Surigao del Sur)
* Region IV-A (Cavite, Rizal II, Batangas, Quezon II, Laguna)
* Region VIII (Samar, Leyte)
* Region I (Pangasinan)
* Region VI (Iloilo, Antique)
* Region VII (Cebu II)
* Region IX (Zamboanga del Norte II)
* Region X (Misamis Occidental, Misamis Oriental, Bukidnon I)
* Region XI (Compostela)
* Region XII (Sarangani, Sultan Kudarat, N. Cotabato)
* Region IV-B (Romblon)
* Region V (Albay, Camarines Sur I)
* Region RO X (Bukidnon)
* Region of Metro Manila

Meanwhile, a huge amount of the funds have been released for Palawan as early as 2006 through the provincial government, the city government, DPWH and DOTC in the total amount of P3.961 Billion broken down as follows:

PDAF-Provincial Government (No SARO reported) ​P300,000,000.00 Million
PDAF- Provincial Government (No SARO reported) ​P300,000,000.00
DPWH 1st District (SARO a-06-02777) ​ 60,000,000.00
DPWH 1st District (SARO A-06-05770) ​P100,000,000.00
DPWH 2ND District (SARO A-0605771) ​P100,000,000.00
DPWH 2ND District (SARO A-07-01739) ​P100,000,000.00
DPWH (SARO A-08-01326) ​P420,000,000.00
DPWH (SARO A-08-01868) ​P124,000,000.00
DPWH SARO A-08-07154 ​P 5,000,000.00
DOTC PROJECTS (Districts and Puerto Princesa Airport) ​P300,000,000.00
Palawan Provincial Government (No SARO) P 1,782,000,000.00 Billion
Palawan Provincial Government (SARO A-07-02074) ​P100,000,000.00
City Government of Palawan ​P270,000,000.00
​———————
Total Palawan Funds taken from Malampaya P 3,961,000,000.00 Billion

(2) PNP-DILG

Pres. Arroyo gave the PNP one SARO for P 1.6 Billion and another for P 540 Million, a lump sum amount of P 2.14 Billion for the vague and generalized purpose of enabling “the PNP to respond immediately to emergencies in times of natural calamities.”

The DILG-PNP was given 2.14 Billion pesos for “disaster preparedness” which according to reports were spent on rubberized boats and other overpriced projects in 2009. This was exposed during the budget deliberation of the DILG 2012 budget upon the interpellation of Bayan Muna. Sec. Jesse Robredo promised an immediate investigation during the plenary when he cannot explain how or where these funds were spent. There has been no information on this investigation as of the time of the writing of this study.

(3) Department of Agriculture and DAR

The DA was given a lump sum amount of P5.82 Billion for again, a vague purpose called the “Agricultural Guarantee Fund” and to “rehabilitate areas affected by typhoon Ondoy and Pepeng”.

DAR was given a lump sum amount of P 900 Million, which was reportedly siphoned to the fake NGOs of Janet Napoles, again for vague purpose of giving “support services to Agrarian Reform Communities (ARC) as assistance in the recovery of losses/damages brought about by typhoons Ondoy & Pepeng”.

(4) AFP-DND (P1.198 Billion)

The DND also managed to get P 1 Billion for its modernization fund in 2009, again, just before the election. Strangely, there is no SARO number for this account because according to the DOE, no SARO was found on the records.

Another P198 Million was spent to buy a “generator set” and repair the roofs and structures of the Philippine Military Academy.

(5) NEA

Pres. Arroyo also spent P250 Million for the “electrification of 211 Barangays”. How these “211 Barangays” were selected is not clear.

(6) Many other agencies received billions but the purpose of these disbursement of presidential pork could not be established by COA:
a. DOTC-Coast Guard P 50 Million (purpose not established)
b. DBM- P 60 Million (purpose not established)
c. DOH- P 745.9 Million (purpose not established)

Pres. Arroyo, suddenly spent a at least P 18.629 Billion in 2009, just before the 2010 elections. Because the Malampaya fund is a presidential pork barrel that is an off-budget lump sum amount, it was easily used in patronage politics with very little transparency.

. The Aquino Years

Pres. Aquino continued the practice in 2011 after he assumed the presidency. According to the records, so far, he disbursed the Malampaya fund in the following projects:

(1) P 2 Billion- given to the National Power Corp
(2) P 1.62 Billion-again given to the NPC
(3) P 3 Billion –again to the NPC but as a short term “loan facility”
(4) P 150 Million- Lump sum amount given to the DILG for the “pantawid pasada” program
(5) P 450 Million-USS Hamilton
(6) P 814 Million-given to NEA for electrification projects. Which municipalities or cities these were, and how they were chosen is not clear.
(7) P 1.1 Billion- given to NEA but the purpose was not stated in the DOE report.

The report as to the total amount of funds spent during the presidency of Pres. Aquino was requested from the DOE during their budget hearing but none have been given so far. From the data above, it seems that President Aquino has spent at least P10 Billion or an average of P 3.1 Billion per year in his first three years as president.

​Off-budget lump sums in 2012 under the control of the President

1) The Malampaya Fund (approximately by 2012)​P 126.466 Billion
2) The Road Users Tax​ (approximately)​P 10.0 Billion
3) Presidential Social Fund (from Pagcor, etc.)​P 2.4 B (at least)

. DBM Budget Circular 541

In the Budget Circular issued by the Department on July 18, 2012, the provision on Guidelines
states that allotted funds which remain unobligated by June 30 of the year may be withdrawn by Malacanang. These withdrawn allotments may be used “to realign or cover additional funding got other existing programs and projects of the agency”, and worse, used to:

5.7.1 xxxx to fund priority programs and projects not considered in the 2012 budget but expected to be started or implemented during the current year.

During the budget presentation, Malacanang said that the withdrawn amounts in 2012 was P75 Billion and another P 27 Billion in 2013. After congressional deliberations and approval of the specific projects of each agency, Malacanang merely centrallizes the funds allocated by congress and may even realign it to other projects. Worse, it may be even realigned to “projects not considered in the budget”itself meaning to say, this is an appropriation not approved by Congress. This centralization to the President not only takes away the power of the purse of Congress, but also violates the constitutional provision that public funds may only be spent on projects considered in the budget and approved by Congress.

CHALLENGE TO CONGRESS: TAKE BACK THE POWER OF THE PURSE

​We must remember this rule: Every lump sum item that Congress approves is actually a diminution of the congressional power over the purse. Every lump sum item that we disapprove unless it is itemized in the budget, is an assertion of our constitutional power over the purse.

Congress through tight scrutiny and deliberation of the budget, should regain the power to allocate the budget instead of relinquishing such power to the President. Otherwise, we will not only lose our constitutional mandate to appropriate funds but we allow ourselves to be dictated upon by the executive in the conduct of our legislative work.

Some colleagues may prefer granting the lump sum funds to the discretion of the President, with the hope that they can later discretely request the president to allocate certain amounts to their constituents. This is the reason why, when some well meaning colleagues propose during plenary deliberations, for the realignment of a lump sum amount like the E-Government fund to education or health, he will not get the support of his colleagues. But should we not support this action if only to assert our power to appropriate government resources? Should we not, for example, study and itemize in favor of our people that lump sum amount called “Allocation to Local Government Units” and assure that at least the process underwent collegial deliberation instead of unilateral decision of the President?

Other than a relinquishment of our constitutional power over the purse, the act of kneeling before the executive to ask for the crumbs of his Presidential Pork and beg for funds for our constituents is a humiliation we should not allow ourselves to suffer any longer. We should in fact support initiatives to realign these lump sum amounts or have these itemized if only to ensure the efficient allocation of resources to the needs of our people.

Bayan Muna believes that we should abolish congressional pork and channel these directly to social services. However, while the so-called Congressional Pork has been getting the flak lately, many do not yet understand that the Presidential Pork dwarfs Congressional Pork, not only in terms of amount but also in the extent of anomalies—either because it was a source of graft and corruption, or abused as patronage politics to dictate and control congress and local government units.

It is about time we abolish lump sum items in the budget that constitutes Presidential Pork, it is about time we regain the power of the purse.###

One thought on “A detailed look at the presidential pork

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