In a bid to encourage budget austerity and flexibility, Valenzuela City Representative Magtanggol Gunigundo is pushing for the passage of a law that would allow local government units (LGUs) and national government agencies to make use of their savings for unprogrammed capital outlay projects.

His proposal, in effect, clips the powers of the Department of Budget and Management (DBM) to impound funds under the General Appropriations Act.

Gunigundo, a Deputy Majority Leader and member of the National Unity Party (NUP), said the primary objectives of his measure--House Bill 4787--is to help reduce the budget deficit, cut red tape and corruption, and accelerate fund disbursements for development programs.

The NUP lawmaker’s proposed Expenditure and Savings Incentive Act authorizes heads of LGUs and government agencies to retain savings from their Maintenance and Other Operating Expenses (MOOE) and Capital Outlay (CO) for purposes of providing services and equipment beyond the fiscal year.

 Gunigundo said these savings could be used for other unprogrammed capital outlay projects, such as acquisition at bargain prices of equipment that would not be available all year round.

Savings are defined under HB 4787 as the excess amount in the financial account of an agency for the appropriation year after spending for the intended and programmed projects.

Under existing laws, LGUs and government agencies have to return their savings to the National Treasury or the local treasury at the end of the fiscal year, leaving them with no incentive to carry out austerity measures. “Why will you save if you won’t reap the fruits of prudent fund management?” said Gunigundo.

"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," Gunigundo added.

To prevent abuse and ensure accountability, Gunigundo’s measure  mandates a 
post-audit of the projects or purchases funded by savings.

Gunigundo said his proposal does away with the unfair situation in which  LGUs and agencies are given lower budgetary allocations in the following fiscal year if they fail to fully spend their respective allocations in the current year.

The NUP congressman said it would be better if the concerned agencies and LGUs themselves decide where and how to use their savings instead of the DBM unilaterally impounding funds and diverting it to projects unauthorized by Congress, as in the case of what happened under the controversial Disbursement Acceleration Program (DAP). 

In a bid to encourage budget austerity and flexibility, Valenzuela City Representative Magtanggol Gunigundo is pushing for the passage of a law that would allow local government units (LGUs) and national government agencies to make use of their savings for unprogrammed capital outlay projects.

His proposal, in effect, clips the powers of the Department of Budget and Management (DBM) to impound funds under the General Appropriations Act.

Gunigundo, a Deputy Majority Leader and member of the National Unity Party (NUP), said the primary objectives of his measure--House Bill 4787--is to help reduce the budget deficit, cut red tape and corruption, and accelerate fund disbursements for development programs.

The NUP lawmaker’s proposed Expenditure and Savings Incentive Act authorizes heads of LGUs and government agencies to retain savings from their Maintenance and Other Operating Expenses (MOOE) and Capital Outlay (CO) for purposes of providing services and equipment beyond the fiscal year.

 Gunigundo said these savings could be used for other unprogrammed capital outlay projects, such as acquisition at bargain prices of equipment that would not be available all year round.

Savings are defined under HB 4787 as the excess amount in the financial account of an agency for the appropriation year after spending for the intended and programmed projects.

Under existing laws, LGUs and government agencies have to return their savings to the National Treasury or the local treasury at the end of the fiscal year, leaving them with no incentive to carry out austerity measures. “Why will you save if you won’t reap the fruits of prudent fund management?” said Gunigundo.

"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," Gunigundo added.

To prevent abuse and ensure accountability, Gunigundo’s measure  mandates a 
post-audit of the projects or purchases funded by savings.

Gunigundo said his proposal does away with the unfair situation in which  LGUs and agencies are given lower budgetary allocations in the following fiscal year if they fail to fully spend their respective allocations in the current year.

The NUP congressman said it would be better if the concerned agencies and LGUs themselves decide where and how to use their savings instead of the DBM unilaterally impounding funds and diverting it to projects unauthorized by Congress, as in the case of what happened under the controversial Disbursement Acceleration Program (DAP).