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Supervise the National Budget

The Proceedings of the Budget Proposal in the National Congress

In accordance with the article 166, paragraph 1, of the Federal Constitution, it is incumbent upon the Mixed Committee of Plans, Public Budget and Control (CMO) of the National Congress to examine and issue its opinion on the bills regarding the pluriannual plan (PPA), the budgetary directives (LDO), the annual budget (LOA) and the additional credits. It is also incumbent to the CMO to examine and issue its opinion on the accounts submitted annually by the President of the Republic, on the national, regional and sectorial plans and programmes, and exercise budgetary monitoring  and supervision. Since 1988, the structure, composition and direction of CMO and the procedures of budgetary examination are regulated by several National Congress resolutions (with the force of law). Currently, Resolution No. 1, of 2006-CN is in force and establishes that CMO is formed by 40 regular members, being 30 deputies and 10 senators (with equal number of substitutes), represented proportionally, according to parties our parliamentary groups. Each year, senators, deputies and parties with greater representation in Congress take turns in exercising the most important duties.

CMO is divided into four permanent committees, each composed of five to ten members. These parliamentary committees have the purpose of specializing and deepening subjects of their competence: supervision and control of budget execution, revenue assessment, public works with signs of irregularity and admissibility of amendments. The process of examination of propositions in CMO observes defined periods of times, as well as special rules and restrictions regarding the presentation and approval of amendments. In order to facilitate the analysis, LOA bills are divided into ten subject areas, being incumbent upon the sectorial rapporteurs to present a report on their respective areas, which must be voted by the CMO’s Plenary. As well as other matters that are processed in CMO, the voting of sectorial reports happens, firstly, among deputies, and afterwards, among senators, and the matter is considered rejected if not approved by representatives of any of the Houses.

CMO holds public audiences with authorities of the Executive Power in order to present the premises and parameters used in the preparation of the LOA bill. Besides having all its processes open to society scrutiny, CMO also promotes public hearings with representatives of entities of civil society or authorities of other powers. Regional public hearings are also held in States when members of CMO present its budget proposal to political leaderships and representatives of local society, so that they can comment on the need for federal expenditure in their states.

In an innovation of Resolution No. 1/06-CN, CMO began to vote a revenue report (prepared by a revenue rapporteur aided by the Revenue Assessment Committee) before they start assessing budget expenditure. This change aimed at disclosing the resource availability with which the National Congress will work in observance of the parliamentary amendments. However, Resolution No. 1/06-CN itself allows a second reassessment of revenues within ten days after the voting of sectorial reports is finished, in case an alteration in the macroeconomic parameters or in tax legislation has occurred since the reception of the LOA bill.

After the revenue report is approved and before amendments to the LOA bill can be suggested, the CMO Plenary must vote a proposal of Preliminary Opinion, presented by a general-rapporteur (subject to amendment from parliamentarians). The Preliminary Opinion is a document which self-limits the performance of the National Congress in assessing the LOA bill, widening the restrictions concerning the cancelation of the allocations imposed by article 166 of the Constitution, by LDOs and by the Resolution No. 1/06-CN. It also defines the value of the finance quota for the individual parliamentary amendments and the criteria for allocation cancellation, which must be observed by general and sectorial rapporteurs aiming at forming a “source database” for the amendments.

The “source database” comes from the reassessment of budget revenue, from specific contingency reserve or from cuts in the proposal programming. In order to prevent sectorial rapporteurs from elevating the investment programming at the expense of funding expenditure, since 1995 the preliminary opinions have determined that it is incumbent upon the sectorial rapporteurs to cancel only investment allocations and financial inversions, and the cancelation of funding allocations is incumbent upon the general-rapporteur (whose resources, normally, are shared with sectorial rapporteurs).

Once the preliminary opinion is voted, the period for presentation of amendments to LOA bill - which can be individual or collective - is open. Before being analyzed by sectorial rapporteurs, the presented amendments can be unadmitted by CMO’s Admissibility Amendment Committee. The amendments must meet constitutional, legal and regimental admissibility requirements, which includes the examination of adequacy to PPA and LDO, and the observance of rules contained in Resolution No. 1/06-CN and in the preliminary opinion.

Resolution No. 1/06-CN, which has eliminated the former regional bench amendments, has introduced a new form of amendment called “relocation amendment”. Unlike the “appropriation amendment”, the relocation one can only be attended with the annulment of allocations contained in the LOA bill and indicated in the amendment itself, being forbidden the indication of specific allocation from the contingency reserve.

Resolution No. 1/06-CN increased from twenty to twenty-five the number of individual amendments to the LOA bill which can be presented per parliamentary office. The individual amendments are always classified as “appropriation” amendments, which means they propose additions to the programming existing in the LOA bill or the inclusion of new expenditures, using resources derived from the reassessment of the budget revenues performed by CMO or from the cancelation of an specific allocation contained in a contingency reservation to be allocated by the Legislative Power. In order to overcome operational difficulties with the superposition of cancelations indicated in appropriation amendments, these are merely formal, and are replaced by resources which form the rapporteur’s “resource database”, once the amendment is approved.

Collective amendments can be state bench amendments or committee amendments. State bench amendments must be subscribed by at least 3/4 of deputies and 2/3 of senators belonging to a certain state or the Federal District.  Resolution No. 1/06-CN started to demand those amendments to be structuring, or that they refer to large-scale, collective interest projects, being forbidden the approval of amendments with generic designation or that can result, during the budget execution, in transferences to more than one federative entity or private entity.

The committee amendments, approved by their respective plenaries, are acts of permanent sectorial thematic committees of the Chamber of Deputies or Federal Senate, and must include actions that are of national or institutional interest, and within their respective assignment areas. Resolution No. 1/06-CN determines that the number of amendments per committee is dependent on the regimental competence and the number of thematic subfields of each committee. Larger committees shall have up to eight amendments, being five appropriation amendments and three relocation amendments. Resolution No. 1/06-CN extended to committee amendments the same restrictions imposed on collective amendments regarding the need to specify the federal entity or recipient entity.

The appreciation of amendments starts with the sectorial rapporteurs of the ten thematic areas in which the LOA bill is divided in order to be analyzed. Sectorial rapporteurs evaluate the expenditure programming of budget units which form the areas attributed to them, with respect to the rules established by the Preliminary Opinion. Amendments are met with the resources released by the cancelation of part of the proposed programming, together with resources transferred by the general rapporteur, according to authorization approved by the Preliminary Opinion. Individual amendments, fully met in the sectorial phase, follow a summary appreciation proceeding in which technical corrections are eventually made. At the end, the CMO Plenary votes each one of the sectorial reports, approving individual amendments.

Once the sectorial opinions are voted, it is incumbent upon the General Rapporteur to consolidate and systematize the sectorial reports and examine the pending demands. It is also incumbent upon the General Rapporteur to appreciate the mandatory expenditures, the contingency reservation and the bill of law. The General Rapporteur may increase or reduce by up to ten percent the values approved for each amendment, but cannot approve an amendment rejected during the sectorial phase. Usually, the General Rapporteur uses part of the resources that the Preliminary Opinion makes available in order to harmonize the assistance to states (and committees), given the great parliamentary sensitivity to the matter of regionalization of federal investments. The final opinion of the General Rapporteur, together with the Clean Bill to the LOA bill containing the alterations made by the approved amendments, is submitted to discussion and voting on the CMO Plenary.

After approved by CMO, the Clean Bill is reported by the General Rapporteur himself to be appreciated by the National Congress Plenary. Although the presentation of amendments is forbidden in this phase, parliamentarians can, again, discuss the budget proposal and require a separate vote. However, the fact that the Clean Bill has been approved by CMO normally means that political deadlocks have been overcome, so that the voting on the Plenary of the Congress tends to run smoothly. After processing eventual changes occurred in Plenary, the consolidated boards provided for by the law are prepared and the Autograph, a document with the final form of the budget law, is created and sent to the President of the Republic for sanction.