MANILA, Philippines - The House committee on appropriations is set to deliberate on a bill allowing local government units (LGUs), departments and other national agencies to retain their savings and use them for unprogrammed capital outlay projects, clipping the powers of the Department of Budget and Management (DBM) to unilaterally impound funds.
To be tackled by the panel is House Bill 4787 or the proposed “Expenditure and Savings Incentives Act” authored by Deputy Majority Leader and Valenzuela City Rep. Magtanggol Gunigundo that seeks to authorize LGUs, agencies, departments, bureaus and commissions of the national government to retain their savings from maintenance and other operating expenses (MOOE), personnel services (PS) and capital outlay (CO).
He said the measure encourages austerity and provides budget flexibility, thereby cutting red tape and minimizing corruption in the procurement process.
“Currently, there is no incentive for LGUs, departments and other agencies to be prudent with their funds and save because any savings will go back to the national treasury,” Gunigundo said in a telephone interview. “Why will you save if you won’t reap the fruits of prudent fund management?
“This is an effective measure to reduce the budget deficit of the national government and likewise a good alternative for the national government to accelerate the disbursements for its intended programs,” he said.
Gunigundo said the measure was a much better option for LGUs and agencies to take as they are actually penalized by the DBM by giving them a lower budget in the following fiscal year if they fail to fully spend their respective allocations in the current year.
Gunigundo said it is better if the concerned agencies and LGUs themselves decide and use their savings instead of the DBM unilaterally impounding funds and diverting it to projects unauthorized by Congress, as in the case of the controversial Disbursement Acceleration Program (DAP) that the Supreme Court had declared as unconstitutional.
He cited numerous reports of agencies complaining that their programs were discontinued by the DBM to justify the declaration of “savings” in implementing the DAP, which laid the basis for the filing of impeachment complaints against President Aquino in the chamber.
Gunigundo stressed that the authorization for LGUs and other national agencies to declare savings at the end of the year will entail their use on the following fiscal year only.
He said proper post-audit should be conducted to prevent abuse of this authority to retain and use government savings for unprogrammed capital outlay projects, adding such unused funds are normally not large and thus should be left to the concerned LGUs and agencies to use.
Gunigundo said among the common reasons agencies and LGUs fail to fully use their funds for the fiscal year are delays in the processing of appointments in case of hiring, delays in bidding of projects or purchases, and problems on publication of specifications of projects.
The bill defines savings as the excess amount in the financial account of an agency for the appropriation year after spending for the intended and programmed projects.
The measure would limit the authority of the DBM to declare savings in agencies under the Office of the President and government-owned and controlled corporations to curb abuses, he said.