The General Appropriations Act (GAA)

It was used sometime in the distant past and the moniker stuck. Nowadays, government people simply used the term
GAA when referring to the national budget of the Philippines. It is one of the laws passed by Congress; I think the
only one the legislature does regularly on an annual basis. For 2013, it is Republic Act (RA) No. 10352, and its title
is "An Act appropriating funds for the operation of the Government of the Republic of the Philippines from January
1 to December 31, 2013, and for other purposes.

Apart from being the general annual budget of the Philippines, the GAA contains almost everything one needs to
know about the financial operations of the country - how taxes, fees, and levies are collected, where it is deposited,
how funds are allocated and released, etc. But as a development tool, the real value of the GAA rests on how the
money of the taxpayers is allocated across the thousand and one needs of the people. Money is never enough. I'm
not sure if there is a country in the world who says it doesn't lack funds, not even those who "donate" funds for
Official Development Assistance (ODA). "Lack of funds" is universal.

And in developing countries like the Philippines, this is a "major, major" problem. The nature of economics, which
deals with "how to effectively use scarce resources," is highly divergent, like fire, which can rapidly escalate into a
volatile conflagration, or easily extinguish into embers, rarely controlled into a constant even flame (only in cooking
ranges). Government spending feeds into itself - it is supposed to improve the economy so that you can have more
taxes, and thus have more money to spend next year. Or the other way around.

In general, government spending maybe classified into three - personnel services (PS), maintenance and other
operating expenses (MOOE), and capital outlay (CO). The first two are what we call the recurrent expenses - year
in and year out, the government, both national and local, spends for PS which represents the salaries and wages of
government employees and MOOE - expenses of operations. The CO portion is what particularly matters for
development, for it represents capital spending - investment for the future and inducing the Gross Domestic Product
(GDP) to expand and for the country to progress.

Maybe it's best to reiterate the difference, connection, and synergy between the national budget and GAA to the
GDP of a country, because these two are often mixed up. GDP is the total production output (or income) of a
country, produced by all its citizens and economic activities. That "income" is taxed, which is converted into
spending, through the GAA. The relevant questions are: what are the country's tax rates, and what is the tax
collection efficiency. For example, if the average tax rate is 30% and the collection efficiency is also 30%, then the
real tax collection is only 9%. And if this is directly converted to the national budget, then the government spending
as a percentage of GDP is 9%. For the Philippines, this is around 17%. It is interesting to note that the U.S.
government spends 39% of its GDP, while Japan spends 37%. The rich countries are even spending more.

And, if we take away the PS and MOOE portion of the GAA, we are left with the CO component. The real
infrastructure spending of the government, which refers to gross fixed capital formation, is even lesser. For decades,
this infrastructure spending of the country hovers between 2 to 3% of GDP. That figure is also a gross figure and
has to be corrected by deducting the waste lost to graft and corruption. The way to move forward is to plug the
leaks by cutting down on corruption, and decisively expand infrastructure spending.

The GAA is a boring document which nobody wants to read. But for most of us in government, we are forced to
refer to it or at least portions of it from time to time, for official guidance and to check budgetary balances. But it is
really a very important document, if not the most important, for the growth of our nation. As we have stated earlier
this month, government projects are either funded out of the GAA, ODA, or PPP. Infrastructure spending in all
three has to be judiciously improved and strengthened.

The country's economic outlook is very positive. GDP growth is the most robust in decades, investment grades are
up, and private sector is mobilizing capital. Now is the best time to jack up capital spending. And this is what this
current administration is doing.
Section 1. Section 13 of P.D. 1177 is hereby amended to read as follows:chan robles virtual law library

"Sec. 13. Submission of the Budget. The President shall, in accordance with Section 22, Article VII of the
Constitution, submit to the Congress within thirty (30) days from the opening of every regular session, as the
basis of the General Appropriations Bill, a budget of expenditures and sources of financing, including receipts
from existing and proposed revenue measures. Additional appropriations proposals may be submitted which
correspond to part of the expenditure estimates submitted as part of the budget proposal: Provided, That
continuing appropriations may be enacted for public works, highways and other infrastructure projects which
require more than one year for construction. In such cases, revenue estimates for the future years shall be used
in the evaluation of funding availability. chan robles virtual law library
"The President may transmit to Congress, from time to time, such proposed supplemental or deficiency
appropriations as are, in his judgment, (a) necessary on account of laws enacted after the transmission of the
Budget, or (b) otherwise needed in the public interest."

Sec. 2. Section 24 of the same decree is hereby amended to read as follows:

"Sec. 24. Appropriations for Personal Services. Appropriations for personal services shall be considered as
included in the amount specified for each budgetary program and project of each department, bureau, office
or agency, and shall be itemized. The itemization of personal services shall be prepared by the Secretary for
consideration and approval of the President as provided in Section 30 hereof: Provided, that the itemization of
personal services shall be prepared for all agencies of the Legislative, Executive and Judicial Branches and the
Constitutional bodies down to the division chief level and in the case of the Armed Forces of the Philippines
and the Integrated National Police down to the rank of second lieutenant, except as may be otherwise approved
by the President for positions concerned with national security matters: Provided, further, That appropriations
for casual and/ or temporary employees shall be in lump-sum based on the number of man-hours to be
rendered."

Sec. 3. Section 26 of the same decree is hereby repealed.chanrobles virtual law library

Sec. 4. Section 27 of the same decree is hereby amended to read as follows:chanroblesvirtualawlibrary

"Sec. 27. Infrastructure and Other Bills. The public works, highways and other bills requiring
appropriations may be filed at any time during the sessions of the Congress and shall be considered by the
Congress upon their being reported out by the corresponding Committees."

Sec. 5. Sections 28 and 29 of the same decree are hereby repealed. chan robles virtual law library

Sec. 6. Section 30 of the same decree is hereby amended to read as follows:chanroblesvirtualawlibrary

"Sec. 30. Content of the General Appropriations Act. The General Appropriations Act shall be presented in
the form of budgetary programs and projects for each agency of the government, with the corresponding
appropriations for each program and project, including statutory provisions of specific agency or general
applicability. The General Appropriations Act shall contain an itemization of personal services which shall be
prepared by the Secretary before enactment of the General Appropriations Act."
Sec. 7. The following words, phrases or terms wherever they appear in Presidential Decree No. 1177, as
amended, are hereby amended to read: chan robles virtual law library

(a) "Ministry of the Budget" shall read "Department of the Budget and Management";
(b) "Minister of Budget" shall read "Secretary of the Department of Budget and Management";
(c) "National Assembly" and "Batasan" shall read "Congress"; chan robles virtual law library
(d) "Ministry" and "Ministries" shall read "Department" and "Departments," respectively; and
(e) "Minister" shall read "Secretary."chan robles virtual law library

Sec. 8. All laws, decrees, executive orders, and letters of instruction inconsistent with the provisions of this Act
and the Constitution are hereby repealed, superseded and/or modified.

Sec. 9. This Act shall take effect upon its approval. chan robles virtual law lib