FEBRUARY 11, 2010 (STAR) By Paolo Romero and Jess Diaz - President Arroyo signed on Monday this year’s P1.541-trillion national budget, which she hailed as her administration’s “commitment to reform and responsible development” as well as to fiscal discipline.

Mrs. Arroyo told Palace reporters of her signing of the General Appropriations Act (GAA) yesterday on the bus after a visit to a pre-school in Calamba, Laguna.

Budget Secretary Rolando Andaya Jr. told The STAR that Mrs. Arroyo, in signing Republic Act 9970, made a “conditional veto” of the P65-billion cut senators and congressmen had made in her proposed P340.8-billion appropriation for interest payments on the country’s debt.

The lawmakers have reduced the amount to P276.2 billion, diverting P64.6 billion in debt service allocation to their pork barrel.

A conditional veto means the projects to be financed out of the diverted appropriation would be funded based on the availability of revenues.

Had the President made an absolute veto, those projects would have been effectively deleted from the national budget, together with the funds allotted for them.

However, a source said there is no way that these “congressional insertions” could be funded since the government is short on tax collections and has resorted to borrowing.

“This is the reason why we have the budget deficit, which was about P300 billion in 2009. The deficit represents borrowings,” he said.

“The primary and overriding consideration is fiscal discipline,” Andaya said of the new budget program.

“Under the current budget, our projected deficit this year would be anywhere from 2.8 percent to 3.5 percent of GDP (Gross Domestic Product). With that P64 billion, it would go up to as much as 4.5 percent of GDP and that’s untenable and could trigger credit rating downgrades,” he said.

Andaya said that was a position the President has conveyed to leaders of Congress in a letter notifying them of her signing of the budget and the “vetoes, comments and observations she had made therein.”

He said the P64.6-billion would only be released if lawmakers can pass revenue-raising measures to fund the projects. “The budget is a mere scrap of paper if there are no revenues to match the allocations,” he said.

“This fear of a surging deficit is the reason why congressional earmarks worth P64.6 billion will only be released if Congress can identify new revenue measures that can support such spending,” he said.

In her signing message, Mrs. Arroyo described the 2010 national budget as “the end of years of hard work and fiscal reforms” but also “the beginning from which the next president can build on the accomplishments of this administration.”

The budget “seeks to balance social responsibility with fiscal responsibility,” Andaya said in a statement.

“In this budget, we are saying that we will not break our vow to ramp up social spending, but in doing so we will not be breaking the bank,” he said.

Andaya said any spending in the election season will be made with utmost prudence and caution.

“We will be keeping an eye on the expenditure odometer because we would like to leave some good fiscal numbers behind,” he said.

He said this year’s outlay of P1.541 trillion is eight percent or P115 billion higher than last year’s P1.426 trillion.

Andaya warned that any move to pare down the revenue goal of P1.335 trillion this year to P1.284 trillion, as one unofficial outlook has presented, will push the deficit to P293 billion, or 3.5 percent of GDP.

He added that financing the P64.6-billion worth of “earmarks and insertions” through borrowings will raise the deficit to P358 billion or equivalent to 4.3 percent of the GDP.

“At this ratio, the next administration will find it hard to balance the budget. It is also out of courtesy to the next president that we are doing this. We don’t want him to be saddled with a heavy load of unsupportable expenses right at the starting line,” Andaya said.

DepEd, DPWH, DILG top recipients

By agency, the biggest recipient of this year’s budget is the Department of Education, at P174.9 billion.

Next is the Department of Public Works and Highways with P135.6 billion, followed by the Department of Interior and Local Government with P66.45 billion, and the Department of National Defense, P57.84 billion.

“To sustain food security programs, the Department of Agriculture is fifth in the list of top recipients, with a budget of P41.17 billion,” Andaya said.

Also among the top 10 agencies with the biggest budget allocation are Department of Health (P29.28 billion); State Colleges and Universities (P23.84 billion); Department of Agrarian Reform (P21.06 billion); Department of Transportation and Communications (P17.16 billion); and the Department of Social Welfare and Development (P15.37 billion).

He said the 2010 GAA will fund “a broad spectrum of activities, from the repair of ‘Ondoy’ and ‘Pepeng’-damaged areas, for which P50 billion is authorized, to the holding of the first automated elections in history, through the P10.6-billion allocation for the Commission on Elections.”

GMA should have cut P65-billion 'pork' in 2010 budget - Recto By Jess Diaz (The Philippine Star) Updated February 11, 2010 12:00 AM

MANILA, Philippines - President Arroyo should have scrapped the P65 billion in pork barrel funds that senators and congressmen inserted in the 2010 national budget, a former member of her Cabinet said yesterday.

“Congressional earmarks (euphemism for insertions) should have been deleted since their fund source, which was the reduction in debt service, has been restored by the President through a veto message,” former Sen. Ralph Recto, who served as economic planning secretary, said.

Recto said the consequence of Mrs. Arroyo’s restoration of the cut in debt service should have been the deletion of all projects proposed by lawmakers to be funded out of such reduction.

But the President kept those projects in the budget, stipulating only in her veto message that funds for them would be released if lawmakers approve measures that would generate revenues to be used for their projects.

Recto explained that in budgeting, “when cuts are restored, then the items to which the funds have been initially transferred cease to exist, because not canceling them would create unsupportable expenditures.

“It will also effectively raise the budget ceiling, contravening the constitutional rule that no budget exceeding the amount that the executive had proposed shall be enacted,” he said.

Of the P65 billion that senators and congressmen cut from debt payment funds, P30.3 billion was added to the budget of the Department of Public Works and Highways, the agency where most pork barrel funds are hidden.

Other agencies that shared the amount taken from debt service included the Department of Education, which received an additional P2.1 billion; Department of Agriculture, P3.3 billion; Department of Transportation and Communications, P2.1 billion; Department of Agrarian Reform, P1.3 billion; Department of Environment and Natural Resources, P1.5 billion; and Department of the Interior and Local Government, P1.1 billion.

The Department of Social Welfare and Development got an additional P915 million, while the Department of Health got P566 million more.

Subsidies for government corporations were increased by P3.3 billion to P24.3 billion.

Among the recipients was the two-year-old Aurora Special Economic Zone Authority (ASEZA), whose 2010 budget jumped five times to P800 million from only P145 million as proposed by Mrs. Arroyo.

ASEZA, a brainchild of Senate finance committee chairman Edgardo Angara, has barely taken off. It is even in a dispute with scores of farmers, who are claiming part of its territory.

Senators and congressmen also augmented their own budget, increasing it by P1.8 billion to P8.8 billion.

With Mrs. Arroyo’s “conditional veto” of these insertions, the augmentations are now “on hold and contingent upon the availability of revenues,” a source in the House of Representatives said.

The budget Mrs. Arroyo signed last Monday is P400 million lower than her original proposal.

The P400 million represents the combined 2010 pork barrel funds of Senators Panfilo Lacson and Jamby Madrigal, the only two lawmakers who give up their annual allocations. The two deducted their funds from the budget.

More than meets the eye

Meanwhile, Makati Mayor Jejomar Binay lambasted President Arroyo’s decision not to veto the P64.4-billion congressional earmarks in the 2010 national budget.

Binay, running mate of former President Joseph Estrada, said Mrs. Arroyo simply set the P64.4 billion aside so they can later be ransomed by legislators through new taxes, which she can shepherd through Congress once she succeeds in becoming Speaker of the House of Representatives in July.

He said Mrs. Arroyo could have “annihilated the pork” with a simple veto.

“Instead, she put the pig in coma, to be resuscitated once new taxes which could breath life into it are found. She could have directly vetoed the insertions, pulled them out and threw them away, but it appears that she left them intact. That’s the import of her budget message. She’s saying that pork can only be had if new taxes are passed. It’s an indecent proposition, to say the least,” Binay said.

The opposition leader said Arroyo’s move was a “conditional implementation” of budget items, in which conditions were attached to the release and use of appropriations.

“In the case of the P64.6-billion earmarks by congressmen and senators, the condition is that the release of funds will be subject to new revenue measures passed by Congress,” Binay explained.

“In effect, she is tempting Congress to inflict new taxes on the people.”

Binay said the job of finding new revenues to take out the frozen pork might fall on the shoulders of Mrs. Arroyo, if the latter succeeds in becoming House speaker.

He said since Congress has effectively shutdown during the campaign period and will only reconvene in late May to canvass presidential vote returns, followed by a short lame duck session, “it would be up to the incoming Congress to redeem the impounded pork through new tax measures.”

“By that time the Speaker of the House could be the congresswoman from Pampanga. And because money is flowing like lahar in her district in Pampanga, it seems that she’s going to make it to the House, from where she will gun for the speakership,” Binay said.

“Speaker Gloria” will have the motive to pass new tax measures to comply with the requirement of funding the pork “which she can then use as the glue to hold together the congressional coalition that she may build.” – With Jose Rodel Clapano

Chief News Editor: Sol Jose Vanzi

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