The House of Representatives and Budget Secretary Benjamin Diokno are headed to an impasse on the adoption of annual cash-based appropriations in the 2019 General Appropriations Act (GAA) in lieu of the traditional obligation-based budgeting.

The Members of the House are all against Diokno’s innovation that has resulted in serious budgetary cuts.

The looming deadlock makes a reenactment of the 2018 GAA imminent as the remaining budget hearings have been suspended and the preparation of the General Appropriations Bill (GAB) for first reading has been stopped pending the necessary amendments by Diokno and the Executive of the President’s budget proposal for the next fiscal year.

In cash-based budgeting, only projects and programs which are implementable for completion and payment within the fiscal year and during the three-month extension period after the yearend are included for funding in the GAA.

While obligation-based budgeting includes projects and programs in the GAA the implementation, completion and payment of which could be made beyond the yearend provided they are obligated within the fiscal year by contract or other modes of incurring obligation.

Appropriations which are duly obligated survive the end of the year in obligation-based budgeting, while in cash based-budgeting the appropriations for uncompleted projects become disauthorized after the year-end and three-month extended period.

In an All-Member Caucus last Wednesday, 08 August 2018, Representatives crossed party lines in unanimously opposing the cash-based budgeting being pushed by Diokno which has inordinately excised the appropriations of many agencies, particularly the Department of Public Works and Highways (DPWH) by P95.2-B, Department of Education (DepEd) by P51.8-B, and Department of Health (DOH) by P35.7-B.

The budgetary innovation is being introduced for 2019 without any legal basis because the budget reform bill authorizing the annual cash-based appropriations is still pending with the Senate, although passed by the House.

A resolution is being circulated and signed for filing today, 13 August 2018, requesting the Senate to return the budget reform bill (H.B. No. 7302) to the House so that perfecting amendments can be effected, including the opposition to cash-based budgeting.

The resolution is principally authored by Majority Leader Rolando Andaya, Jr., Appropriations Chairman Karlo Alexei B. Nograles, Rep. Edcel C. Lagman and Rep. Joey Sarte Salceda. Andaya, Lagman and Salceda were former Chairs of the appropriations committee, and Andaya and Lagman were Budget Secretary and Undersecretary respectively.

Diokno blames the agencies’ low absorptive capacity for the budget reductions by pointing to slow cash disbursements for payment of completed projects.

However, slow cash disbursements alone do not evince poor absorptive capacity because various variables affect absorptive capacity like belated release of appropriations subject to conditions, inclement weather, security situation in armed-conflict areas and right-of-way problems, among others.

These problems are, moreover, not insurmountable, and do not justify drastic budget cuts.

The appropriations ceiling in the President’s 2019 budget proposal crafted by Diokno’s department, which the Congress must not exceed by constitutional restriction, is low due to the new system and unduly constricts the congressional power over public expenditure.

Rep. Edcel C. Lagman
0917-1023737 / (02) 577-8847