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From the horse’s mouth

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The mid-term elections next year, after all, were the compelling reason for the House volte face on budget reforms that Majority Leader Rolando Andaya affirmed himself.

The House leadership’s excuse earlier was that the cash-based system will not work in a developing country like the Philippines and is applicable only among well-developed economies.

Andaya said the cash-based system would be impossible to execute, “especially in 2019 because of the election ban.”

It turned out that blackballing the cash-based budget for next year is all about arm-twisting the Executive to allow the obligation-based budget until next year.

The so-called compromise involving a “hybrid” budget was in reality a status quo on the obligation scheme for pork-rich agencies.

A supposed compromise was reached at a meeting between Speaker Gloria Macapagal-Arroyo and President Rodrigo Duterte that ended the House boycott of the budget.

Andaya, a former budget secretary, said select departments or projects will use the obligation-based system under the agreement with Mr. Duterte.

What Andaya termed as the need for restoring allocations for “much-needed projects, particularly in the health and education sector,” translates to the Palace being forced to return P300 billion in slashed funding to agencies that are usual repositories of legislators’ projects.

Under the cash-based scheme, project implementation was limited to within a budget year that in effect will force agencies to frontload government projects.

Andaya in citing the election ban as the motivation behind the House resistance to the budget merely confirmed the suspicion of Budget Secretary Ben Diokno that the mid-term polls affected legislators’ thinking process.

“During election year, I’m speculating, they want more projects in their districts. That’s natural, right? If you’re a congressman, you want to impress your constituents. Maybe with more projects,” he said.

The conflict between the old and the new scheme lies on the appropriation, obligation and disbursement steps in the budget.

Appropriation is when an item is authorized by Congress, obligation is when the DBM recognizes funding for the project which was done in the past through a special allotment release order (SARO) and disbursement is the actual release of funds.

The cash-based scheme did away with the obligation process.

Among the project subjected to huge cuts for next year included the Health Facilities Enhancement Program (HFEP) and the Basic Educational Facilities Fund (BFEF) that were the major source of protests from House members and lobbyists.

HFEP received the biggest cut since it will only get P50 million in next year’s budget compared to P30 billion in 2018 and P24 billion in 2017.

The DBM wanted the project reviewed since it has a “dismal spending performance.”
As of last 31 March, disbursements for HFEP reached P13.5 billion which was less than 10 percent of the total P138 billion appropriations provided for the program since 2008.

The Department of Health (DoH) which oversees the program agreed to a review that will take the whole of next year resulting in the budget slash to P50 million.

Based on DoH data, the project has unliquidated obligation of P57.5 billion and unobligated allotment of P27.4 billion or a total of P84.8 billion available.

Diokno noted the amount given to the project is even bigger than the DoH-proposed budget for next year.

He said the HFEP first became a budget line item in 2008 with an allocation of P1.66 billion.
The budget for BEFF, likewise, was reduced from P118.78 billion in 2017, P105.461 billion this year to P34.742 billion next year under the cash-based scheme.

The project is, however, a major source of underspending which magically transforms into legislators’ pork barrel.

The BEFF is an annual budget for the setting up of new schools jointly through the Department of Education and of the Department of Public Works and Highways. It also funds site inspection, the improvement and maintenance of existing school facilities and the acquisition of school supplies.

Of the P53.875 billion appropriated to BEFF in 2015, P39.296 billion was obligated and P6.684 billion disbursed.

In 2016, P82.262 billion was appropriated, P59.078 billion obligated and P16.375 billion disbursed. In 2017, an additional P36.52 billion or P118.782 billion was appropriated but only P113.647 billion was obligated and P7.393 billion disbursed.

Under the old scheme, Andaya’s “much-needed projects” scarcely move yet he and the current crop of the House leadership are moving heaven and earth to retain it.

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