Right buttons for TRAIN-2

Department of Budget and Management (DBM) Secretary Benjamin Diokno was in his best elements when he presented with gusto the new budgetary system in government spending that will be implemented starting next year.

Diokno virtually took over my moderator job during our joint news forum last Wednesday. The Secretary who conducts his regular “Breakfast with Ben” at his DBM office joined us in our own weekly Kapihan sa Manila Bay at Cafe Adriatico in Remedios Circle, Manila. Anyway, I enjoyed the respite.

The DBM Secretary took the opportunity to discuss and present to us in detail the proposed 2019 cash budget that President Rodrigo Duterte submitted last Monday after his third state of the nation address (SONA) before the joint sessions of the 17th Congress.

The DBM-prepared 2019 General Appropriations Act (GAA) bill was also a casualty of the tumultuous leadership struggle at the House of Representatives that marred the SONA day of President Duterte. Like the Bangsamoro Organic Law (BOL) – which the Lower House failed to ratify that day due to the obviously spur-of-the moment Speakership grab – the 2019 GAA bill got also waylaid by this sideshow.

Alvarez was removed as Speaker a few hours before the President was slated to render his SONA. The so-called “super majority” at the House of Representatives could have waited a few more hours in deference to the President. But they went ahead and installed former president and now Pampanga Congresswoman Gloria Macapagal-Arroyo (GMA) as the new Speaker.

Naturally, the Chief Executive was reportedly pissed off when his moment to deliver his SONA was upstaged by the ouster plot against Speaker Pantaleon Alvarez. It was the once-a-year SONA report that President Duterte should have been the main actor on the stage. As confirmed earlier by Senate president Vicente Sotto III, the feisty President nearly walked out of his SONA.

For the third time, the President would have distinguished also his administration for having submitted the GAA bill on SONA day itself. Unfortunately, the President missed to mention he has already signed and submitted the voluminous books of the 2019 GAA bill, including his 40-page budget message.

In his budget message, the President, now into his third year in office, introduced the fiscal year 2019 as marking the shift of the government’s budgetary system to its first annual cash-based budget. Under this so-called cash budget system, the President explained, all government programs and projects budgeted for the fiscal year should be implemented and delivered, inspected, and accepted until the end of the fiscal year will be settled within the same year.

During our news forum, Diokno assured, however, all national government agencies that the DBM would allow them a three-month period – following the end of the fiscal year – as Extended Payment Period. More importantly, the DBM Secretary underscored, the new cash-budget system will prevent under-spending that hobbled delivery of public services during the past administration. Diokno said such under-spending marked “incompetence” that caused inefficiency and, worse, became source of corruption during the past administration.

In the same budget message, the President cited the new cash-budget system will modernize the Philippine government budgeting process and procedures and make it at par with international standards. “We also need to strengthen the Congress’ power of the purse by reiterating its power to appropriate and hold Executive agencies accountable, especially in the light of the landmark decisions of the Supreme Court,” the Chief Executive pointed out.

This is an apparent reference to, among other decisions of the High Court, the ruling that declared illegal and unconstitutional the provisions on “pork-barrel” funds in the annual budget.

As submitted by President Duterte, the proposed 2019 cash-based budget is P433.3 billion more than this year’s level, or 13% bigger. In the case of the 1998 GAA, the DBM Secretary reported a seeming “over-spending” during the first six months of this year. This is not “over-spending” in the strict sense of going beyond the amount of budget. But it simply shows, Diokno clarified, the Duterte administration have front-loaded and released already the needed budget and funds provided for in this year’s expenditure program.

However, another SC decision increasing the internal revenue allotment (IRA) of local government units (LGUs) that was handed down only last week came after the 2019 GAA bill was done and due for submission to Congress already. Fortunately, Diokno disclosed, SC associate justice Lucas Bersamin, who wrote the decision, informed him the IRA ruling is prospective in application.

Likewise, Diokno admitted, the P100 billion block grant that Congress provided for under the BOL was not included in the proposed 2019 GAA bill. Nonetheless, this did not stop President Duterte to finally sign BOL into law. Dispensing anew signing ceremonies, the President announced yesterday he did as he promised in his SONA last Monday to sign BOL “in 48 hours” as soon as it gets to his table.

Despite getting distracted by the House leadership squabble, the President got to ask lawmakers to support the passage into law of the next package of his Tax Reform Acceleration and Inclusion (TRAIN) law, the first package of which bolsters funding for the 2019 GAA.

The proposed P1.377-trillion budget for next year coincides with the holding of the May 2019 mid-term elections in our country.

This fact, Diokno conceded, would doubly make it difficult for the Duterte administration to push the passage into law of TRAIN-2. Except for 12 sitting Senators, most of the lawmakers of the 17th Congress are up for election.

Thus nobody would dare want to be associated with unpopular tax bills. Diokno is pragmatic enough to realize Congress can turn the 2019 GAA bill into source of election promises to win votes. So TRAIN-2 is not exactly stalled at its track if the right buttons are pushed.