Ever-growing BuB funds for patronage—Diokno

By Luis Leoncio 

Budget Secretary Florencio “Butch” Abad’s Bottom-Up Budgeting (BuB), which is being described by the Aquino administration as a budget-reform package, has been “exposed” as a “brazen tool” of political patronage in a study by University of the Philippines (UP) School of Economics Prof. Benjamin Diokno.

In his dissertation, Diokno—a former budget secretary himself—compared the BuB and the Internal Revenue Allotment (IRA), which is provided and required under the law to be distributed to local government units.

The Department of Budget and Management (DBM) under Abad “created” the BuB as a “reform in the budget process,” which supposedly harnesses people participation in the budget-making process.

The IRA, on the other hand, is a mandated allocation provided under the Local Government Code.

In January, Abad, who, incidentally, is also a political strategist of the Liberal Party (LP), said that starting next year, the DBM will devolve the BuB to the barangays through a P42-billion Barangay BuB, in which each of the country’s 42,036 barangays would be entitled to P1 million each.

Under that expanded BuB, the first 12,000 barangays will receive funding from the national government, which would be released through the Department of the Interior and Local Government (DILG) that LP standard-bearer Mar Roxas used to head.

It is now headed by Secretary Mel Senen Sarmiento, LP secretary general.

In one of his recent campaign speeches, Roxas said that, if he is elected president, he would allot an additional P100 billion, or the equivalent of P1,000 for each of the 100 million residents in local government units (LGUs), including barangays—in plain language, all Filipinos—under an expanded BUB which he called “BuB Pa More” program.

“If the question is, ‘do we have the money or is this just an empty promise?’, the answer is no, because we have P800 outlay in 2016], and if we will continue the ‘daang matuwid,’ we will get the P100 billion out of the P800 billion and directly download it to our communities and our barangays,” Roxas said.He also said that under his proposed “BUB Pa More” program, each of the country’s 1,490 towns and 144 cities would receive a project allocation equivalent to P1,000 for every resident.

Diokno said while the IRA Fund is formula-based, mandatory, and automatically released, local officials would have to make a request or lobby with officials of Malacanang or the Department of Interior and Local Governments (DILG) or the Department of Budget and Management (DBM) for the BuB. Diokno said IRA shares are deposited in the respective bank accounts of their LGUs (provinces, cities, municipalities and barangays).

Diokno said that some P7.7 billion in (BuB) lump sums of different forms are found in the 2016 budget of the DILG alone.

The BUB for potable water supplies was worth P4.08 billion, the Pamana (Payapa at Masaganang Pamayanan) program, P1.8 billion; the Kalsada (Konkreto at Ayos na Lansangan and Daan Tungo sa Pangkalahatang Kaunlaran) Project, P74 million; Salintubig (Provision of Potable Water Supply), P1.8 billion.

The appropriations in the 2016 budget for the four DILG programs are discretionary.The release of these funds is subject to the discretion of the President, the DILG secretary or the DBM secretary, Diokno said.

Diokno also said the use of the BuB goes against the legacy of former President Cory Aquino, who believed that local elective officials should learn to operate within a hard budget constraint and live within their means.

“That is the legacy of the late President Corazon Aquino—when she caused the passage of the Local Government Code of 1991, the most sweeping reform in local fiscal administration since the Republic was established,” Diokno said.

He said her son and his budget advisers who created the BuB have undone what Mrs. Aquino had painstakingly done to promote local autonomy.

“BuB is not real reform. It has promoted fiscal dependency rather than fiscal discipline; it has weakened, rather than strengthened local authorities,” Diokno added.

Rather than being a tool for local government empowerment, the BuB makes LGUs more heavily dependent on the central government.

Fiscal autonomy is envisioned through the IRA, which has grown from a measly P2.6 billion in 1983 to P32.7 billion in 1991 (the year before the passage of the Local Government Code) to a staggering P465 billion in 2016.

“Before the Local Government Code of 1991, the IRA was discretionary; local government authorities had to grovel and beg from Malacanang for their IRA shares, which they almost always did not get in full,” Diokno said.

With the passage of the Mrs. Aquino’s Local Government Code of 1991, the IRA became mandatory (no withholding) and automatically released.

“With a much bigger amount and its certainty, there is no reason for local authorities to complain. In addition, local authorities were given greater taxing powers,” Diokno said.

BuB is a post-DAP (Disbursement Acceleration Program) scheme. The DAP was ruled unconstitutional by the Supreme Court in 2014.

Diokno noted BuB has grown in size and coverage since 2013. It started with an appropriation of P8.0 billion to cover 595 poor cities and municipalities. This year, the appropriation for BuB has ballooned to P24.7 billion, with a reach much wider: 1,514 cities and municipalities.

Now with the Barangay BuB, its funding further ballooned to P42 billion to cover all barangays in the country.

“That’s what I call perfect foresight. Even as the IRA expands (now P465 billion compared to P300 billion in 2011, or a 55-percent increase over a period of 5 years), the BuB has expanded from P8.0 to P24 billion, or a hefty expansion of 200 percent. Only a fool won’t see that this discretionary fund is a brazen tool for the political perpetuation of the ruling party,” Diokno said.

“The ruling party has seized the opportunity to turn a small incentive-based program into a potentially huge political tool for its perpetuation in power.”