The Constitutional Basis for Legislative Budgeting

The formal budgetary powers of a legislature are often spelled out in a country’s written constitution, but they can also be based on convention, determined by ordinary legislation, or spelled out in legislative rules. These powers can vary in several aspects.

Some legislatures face constitutional restrictions on their right to introduce financial legislation. Where parliamentarians cannot introduce financial legislatures, only the executive can initiate spending and revenue measures. Another important factor affecting the potential scope for legislative influence is the legislature’s legal powers to amend financial legislation. The more permissive these amendment powers are the greater is the potential scope for legislative activity. Moreover, some constitutions provide for executive veto authority of the kind that requires extraordinary majorities to be overridden by parliament. By exercising a veto, the president can challenge legislative choices.

Source: Inter-Parliamentary Union (1986: Table 38A).

There are various traditions of amendment powers. It appears that the largest category of legislatures has unfettered powers to amend the budget. The classical example is provided by the United States whose constitution establishes no legal limits on the budgetary powers of Congress, although the latter has self-imposed limits from time to time. Unfettered powers allow the legislature, in theory, to introduce its own budget and to rewrite the entire budget proposed by the executive

Other countries constrain the powers of the legislature so as to protect the balance between revenues and expenditures suggested by the executive. This requires that an increase of expenditures has to be counterbalanced with a corresponding cut elsewhere to maintain the aggregate total. A variant of amendment powers that safeguard the deficit allows the legislature to reduce expenditures, but to increase them only with permission of the executive. In effect, this gives the government a veto over legislative amendments that increase the deficit. Versions of this configuration are popular in francophone and Latin American countries.

In the Westminster tradition parliament cannot initiate financial bills and it has strictly limited powers to amend the government’s financial proposals. Parliament may only reduce existing items proposed by the government, but it may not include new items or increase existing ones, nor can cut funds cannot be shifted to increase spending on a different item elsewhere in the budget. This configuration evolved during the early days of the House of Commons, when it met to consider demands for subsidies made by the Crown. Its task was to decide whether and to what extent it would comply with the demand, rather than to initiate its own spending plans for the monarch. Many countries in the Commonwealth have adopted this configuration.

Legislative powers over the budget are sometimes counterbalanced with executive veto powers. Such veto powers are more commonly found in presidential systems of government, although there are also a few parliamentary systems that incorporate executive veto powers over financial legislation, for example New Zealand. Executive vetoes can take two forms. A package veto allows a president to veto a piece of legislation in its entirety. In the United States, for example, presidents have used their package veto power to block appropriations passed by Congress (Williams and Jubb 1996). A line item veto or partial veto on the other hand allows a president to delete individual items in a financial bill. This allows for greater selectivity. The Chilean President has such a line item veto, for example. In this way, legislative decisions can be significantly altered by striking down particular items in the budget that might be of high priority for legislators.