1. Once the National Budget is not approved before the year ends, expect a reenacted budget to happen.
The Constitution provides that in the event the Congress fails to pass the budget for next year, then, the budget for the previous year will be reenacted.
2. Under a reenacted budget, government agencies will simply have to operate on the basis of the previous year’s budget, subject to limitations.
3. No new projects can start until a new General Apppropriations Act (GAA) is approved.
This is because the previous year’s budget for capital outlay cannot be reenacted as this may have already been obligated or the projects may have been already completed.
4. The budget for Personnel Services (PS) is deemed reenacted.
The budget for salaries, wages, pension and retirement, clothing allowance, PERA, etc. will be based on the previous year’s budget level.
5. Just like the budget for PS, the budget for Maintenance and Other Operating Expenses is likewise reenacted.
6. The budget for the National Tax Allotment (NTA) (previously known as the Internal Revenue Allotment (IRA)) of local government units is not affected under a reenacted budget.
Under a reenacted budget, the IRA, which is usually the primary financing source of LGU budget, is not affected inasmuch as this is automatically appropriated; hence, budget allocations are based on the budget proposal of the executive.
7. Savings may be generated under a reenacted budget but cannot be used unless there’s a supplemental budget for the same.
The government might also be able to generate savings under a reenacted budget as a result of projects that were already done/completed in the previous year. Of course, these projects cannot be done again next year.
However, to tap these savings, the Executive Branch has to ask the Congress for the approval of a Supplemental Budget before it can spend the same.
Can we pass supplemental budget even if operating on a reenacted budget?