Winners and losers under Duterte's 2019 budget

AT A GLANCE

Part 1 of 2

MANILA, Philippines – This year's fiscal plan is the most controversial yet, with both chambers of Congress accusing one another of manipulating items in the budget bill to suit their interests.

It caused a months-long delay before its enactment, pushing the government to operate on a reenacted budget until the appropriations bill was signed on April 15. It meant that new projects were stalled, as the same amount of funds allocated in 2018 were used for the first quarter of 2019. (READ: Budget deadlock: Who's to blame?)

There were several issues hounding the P3.757-trillion ($72.24 billion) budget bill, with President Rodrigo Duterte exercising his line-item veto power to remove the appropriation of some P95.37-billion ($1.83 billion) worth of projects under the Department of Public Works and Highways (DPWH).

Apart from that, Duterte also ordered the implementation of a cash-based budgeting system for 2019 despite Congress' rejection of the policy. Previously, the Philippine government was running under an obligation-based system, which allowed disbursing payments for programs and projects that may not be delivered in the same year. (READ: What is cash-based budgeting?)

This meant that the 2019 national budget stood at P3.662 trillion ($70.43 billion) only, but still higher by 10% than the cash-based equivalent of the 2018 budget at P3.324 trillion ($63.93 billion).

Similar to previous years, the Duterte administration prioritizes the education, infrastructure, and interior affairs sectors. What's the most controversial yet in the budget under the Duterte administration?

The spreadsheet below compares the 2019 budget with the cash-based equivalent of the 2018 budget:

Richest government agencies

Education

Under the 2019 General Appropriations Act (GAA), the education sector received the lion's share of funds for a combined allocation of P501.232 billion ($9.639 billion) under the Department of Education, State Universities and Colleges (SUCs), and the Commission on Higher Education (CHED).

DepEd received the highest allocation at P501.12 billion ($9.637 billion), higher than the previous year's budget of P470.06 billion ($9.04 billion). SUCs received P64.71 billion ($1.24 billion), or a 1.43% increase from last year's P63.8 billion ($1.23 billion), while CHED got P51.49 billion ($990 million) this year.

DepEd's allocation will mostly be used for repair and construction of school buildings, the hiring of teaching and non-teaching personnel, as well as developing and providing learning materials to students. (READ: FAST FACTS: What you need to know about the PH education system)

Despite having the largest budget, DepEd was not free from cuts in its programs. 

In the 2019 National Expenditure Program or the proposed budget, the Department of Budget and Management (DBM) slashed P69.4 billion ($1.33 billion) from DepEd's Basic Education Facilities Fund (BEFF) due to underspending, citing the education and public works departments' absorptive capacity.

This brought down the BEFF to P34.74 billion ($668.06 million) in the NEP. But after congressional deliberations, lawmakers further slashed funds from the project. In the 2019 GAA, it only has P30.97 billion ($595.56 million).

Public works

The next richest agency is the DPWH, with a total new appropriation of P454.02 billion ($8.73 million). This amount is higher than last year's P441.83 billion ($8.496 million).

Under the budget bill, the DPWH should have at least P549.39 billion ($10.57 billion) in its coffers – and should be the highest allocation among agencies. But the contested P95.37-billion ($1.83-billion) item was vetoed by Duterte, making its budget only the second biggest this year.

DPWH's funds will be used for the government's infrastructure program "Build, Build, Build," as well as maintenance and construction of roads and bridges, payment for right-of-way for new projects, and improving flood control systems.

Interior affairs

The appropriation for the Department of the Interior and Local Government (DILG) is the 3rd highest at P228.71 billion ($4.398 billion), or a 32.7% increase from last year's P172.35 billion ($3.31 billion).

The bulk of the DILG funds will go to the Philippine National Police (PNP), which has a total budget of P173.24 billion ($3.33 billion). PNP funds are 30.67% or P40.66 billion ($781.9 million) higher than the 2018 budget of P132.58 billion ($2.55 billion).

The PNP will be using P152.31 billion ($2.93 billion) for crime prevention – some P135.27 billion ($2.60 billion) of which will be used for the conduct of police patrol operations "against dissidents, subversives, lawless elements," as well as the campaign against illegal drugs.

The biggest spend for the conduct of police patrol operations is personnel services, which amounts to P131.61 billion ($2.53 billion). Meanwhile, the budget for intelligence activities is only at P61.05 million ($1.17 billion).

The rest of the PNP funds or P681.3 million ($13.1 million) will be used for criminal investigation and other related confidential activities.

Health

The Department of Health (DOH) ranked 6th among government offices with the largest budgets this year at P98.57 billion ($1.99 billion).

But this amount only covers the budgets of the Office of the Secretary at P97.65 billion ($1.88 billion), as well as the attached agencies of the Commission on Population at P471.81 million ($9.07 million), and the National Nutrition Council at P440.35 million ($8.47 billion).

Where's the budget for the Philippine Health Insurance Corporation? It's lodged under the budgetary support for government corporations. This amounts to P67.35 billion ($1.3 billion).

That would mean a budget of about P165 billion ($3.17 billion) for the health sector then, if the DOH and Philhealth funds were combined.

A third of DOH funds or P32.5 billion ($624.92 million) will go to health facilities operations, such as hospitals and drug rehabilitation centers.

The next biggest spend is the health systems strengthening program at P25.89 billion ($497.82 million), which included a restored P15.92-billion allocation ($306.12-million) for the controversial health facilities enhancement program (HFEP). The money should be used for investments in infrastructure and medical equipment.

Under the 2019 NEP, the DBM clipped the DOH's funds to P74.06 billion ($1.42 billion), for a decrease of about P25 billion ($480.74 million) from its 2018 allocation of P99.6 billion ($1.92 billion).

The whopping slash was due to the P50-million allocation ($961,469) that the DBM gave to HFEP, down from its 2018 funds of P30.27 billion ($582.07 million). The DBM called out the DOH for its "dismal" spending of HFEP funds, which amount to roughly P15.5 billion ($298.06 million), or 11% of the total disbursed P138 billion ($2.65 billion) since 2008.

But the DOH won over the budget department in this situation as lawmakers restored the funds under the 2019 GAA because they "recognize" the value of the program. Still, lawmakers urged the health officials to ensure efficient use of funds.

Top gainers

Of the government offices, the DILG received the highest increase in funds this year at P56.36 billion ($1.08 billion). The big jump was primarily due to the hike in PNP funds at P40.66 billion ($781.92 million).

The DILG is followed by the Department of National Defense with a P49.74-billion ($956.54 million) increase, bringing its budget to P186.22 billion ($3.58 billion) this year.

The top gainer among its attached government offices is the Armed Forces of the Philippines (AFP), which got an P80-billion hike ($1.54 billion) or around 81% from its 2018 allocation of P99.56 billion ($1.91 billion).

This year, the AFP's budget is at P180.4 billion ($3.47 billion), with the Philippine Army receiving about half of the total funds at P91.41 billion ($1.76 billion). The army got a generous allocation for its land defense program at P84.377 billion ($1.62 billion) – around P68.5 billion ($1.32 billion) of which will go to personnel services.

The hike in personnel services fund for cops and soldiers was due to the salary increases for military and other uniformed personnel, with about P70 billion earmarked in the 2019 budget.

In January 2018, Congress signed a joint resolution authorizing the compensation adjustment. But this was not reflected in the agency budgets in 2018, as it was sourced from the Miscellaneous Personnel Benefits Fund. Hence the apparent big jump in this year's budgets.

DepEd also received a considerable increase in funds by around P31.06 billion ($597.24 million), apart from getting the highest budget. The increase went mostly to the operation of schools and salary adjustments for personnel.

The Department of Transportation (DOTr) ranked as the 4th top gainer, with a total of P27.49-billion hike ($528.6 million) in funds. Most of it went to the rail infrastructure program of the department, or around P16.99 billion ($326.7 million).

The following Japan-assisted projects will be funded by the program:

Top losers

Only 11 government agencies had their budgets for this year slashed.

The top loser in 2019 is the Commission on Elections (Comelec), despite being an election year, with a P5.97-billion ($114.83 million) cut from its funds. 

The DBM earlier explained that the funds to be used to prepare for the 2019 midterm elections had already been "front-loaded" in the 2018 budget. Last year, the Comelec had a total of P16.15-billion ($310.59-million) worth of funds.

Agriculture

The Department of Agriculture's budget contracted by P3.37 billion ($64.81 million) this year, bringing it down to a mere P47.29 billion ($909.46 million) in total. This is in contrast to the 17.94% increase in the DA's budget the year before.

But the decline in funds was not unprecedented, former budget chief and now central bank head Benjamin Diokno said. The slash in funds was due to its poor spending performance in the past years, which was at 55.1% in 2017 and 66.2% in 2018.

To make matters worse, the agriculture sector slumped to 0.8% from a growth rate of 4% last year.

DA Secretary Emmanuel Piñol complained about their smaller budget, saying that they needed a bigger one to improve agricultural productivity. But Diokno shrugged it off and pointed out that the DA instead needs to improve its policy strategy and implementation.

The DBM was somehow "generous" by slashing only P863 million ($16.6 million) in the proposed budget. But this was further decreased after congressional deliberations, bringing the total budget cut to P3.37 billion ($64.81 million).

Environment

Despite the Philippine government's effort to clean up tourism sites, the Department of Environment and Natural Resources (DENR) ranks as the 3rd top loser among government agencies in terms of budget cuts.

It lost P1.61 billion ($31 million) from the previous year's budget of P23.57 billion ($626.34 million). Now, it only has P21.96 billion ($422.3 million) for this year. All of its attached agencies received cuts too:

The DBM did not intend to slash its funds. In fact, under the NEP, DENR funds are supposed to be hiked by P1.51 billion ($29.04 million).

In the proposed budget, the DBM allotted P11.76 billion ($226.16 million) for the natural resources conservation and development program of the department. Lawmakers cut this to P9.36 billion ($180 million).

The bulk of the slash was taken from the capital outlays of the program, which originally had P5.05 billion ($97.12 million). The appropriated amount fell to about half of the proposed funds to P2.85 billion ($54.81 million).

The most hit was the capital outlays allocation for the forest and watershed management program, with a proposed P5.02 billion ($96.52 million). In the 2019 GAA, it's down to P2.69 billion ($51.72 million) only.

Some P80 million ($1.54 million) remains to be appropriated for the operational plan for the Manila Bay coastal management. In the proposed budget, the amount was shared between Metro Manila at P47 million ($903,728), Central Luzon at P18 million ($346,109), and Calabarzon at P15 million ($288,437). When the budget was passed, all of the funds were allocated to Metro Manila.

Winners and losers?

When the proposed budget was under the scrutiny of Congress, several issues already hounded the expenditure program.

The delay in the approval of the budget began when House members started opposing the cash-based system for 2019. The system was meant to dramatically reduce underspending and force government agencies to have fiscal discipline.

Congressmen were initially receptive to the idea of forcing government agencies to spend their budgets within the year. But the power shift in the House which resulted in the election of Speaker Gloria Macapagal Arroyo caused them to turn 180 degrees.

Despite the promise of reform, House deliberations on the proposed budget dragged on due to another issue brought up by House majority leader Rolando Andaya Jr – the P50-billion ($961.46-million) worth of "misplaced" public works funds.

Another impasse developed when Senator Panfilo Lacson alleged that pork-like funds were inserted in districts of lawmakers allied with Arroyo. This happened after the budget bill was transmitted to the Senate.

Andaya then hurled a slew of corruption accusations against Diokno, claiming he was reserving funds for Duterte administration allies or that his family members were benefitting from his government position. Diokno denied the claims, and refused to back down on cash-based budgeting.

By the end of 2018, no budget bill was signed. The Philippine government operated on a reenacted budget. Taxpayers who waited for improved funding on social services and civil servants who craved for their salary adjustments were only frustrated by this impasse that lasted for more than 3 months.

2016-2019 Philippine National Budget Infogram

In March, senators accused congressmen of realigning P95.37-billion ($1.83-billion) worth of DPWH projects post-bicameral conference committee, a move which they called "unconstitutional." Andaya retaliated at the senators, saying that "they did the same" anyway.

The deadlock ended when the Senate transmitted the budget bill to Duterte despite "strong reservations" late March, urging the President to veto the contested projects.

And the President did, making DPWH and the House the biggest losers. Moreover, Duterte ordered the implementation of a cash-based budgeting system – a win for the DBM. (To be concluded) – Rappler.com

All figures used for the 2018 budget are already in their cash-based equivalent.

*$1 = P52

Aika Rey

Aika Rey covers the Philippine Senate for Rappler. Before writing about politicians, she covered budget, labor, and transportation issues.

image