DECISION № 4 OF 31 MARCH 2010 ON CONSTITUTIONAL CASE No 1/2010
The Constitution precludes that the State Budget Act may become the tool by which the National Assembly delegates to the Council of Ministers the power to change, at its own discretion, the key budget parameters by the reduction of non-interest expenditure and transfers approved or by the aggravation of the budget balances.
Fifty-nine MPs claimed that Art. 2, para 5 and Art. 17 of the State Budget Act of the Republic of Bulgaria for 2010 (2010 SBA) and § 26 and § 27, para 2 of the SBA Transitional and Concluding Provisions were discordant with Art. 1, Art. 4, para 2, Art. 5, para 1, Art. 8, Art. 62, para 1 and Art. 84, item 2 of the Constitution of the Republic of Bulgaria (the Constitution). The MPs challenged the constitutionality of the provisions referred to as they give a right to the Council of Ministers to change key State Budget parameters, the balances included, that otherwise is a prerogative of the National Assembly.
I. Art. 17 of the 2010 SBA reads thus: ,, In the event of economic and financial parameters and indicators, leading to assessments and forecasts for a development of the economy, which is more unfavorable than expected, the Council of Ministers may reduce the non-interest expenditure and transfers granted in accordance with Art. 1, para 2 below the amounts approved.”
I.1. The legislating powers of the National Assembly comprise the passage, amendment and rescission of the laws (Art. 84, item 1 of the Constitution). By virtue of Art. 84, item 2 of the Constitution the National Assembly ,, shall pass the State Budget Bill and the Budget Report”. The National Assembly passes the Budget Act which is the annual financial plan of the State.
Art. 106 of the Constitution reads that the Council of Ministers shall manage the implementation of the State Budget. The Constitutional Court Decision № 6/2001 on Constitutional Case № 17/2000 postulated that the State Budget implementation is a government function that the Constitution assigns to the Council of Ministers. The annual budget acts' ,, expenditure component contains provisions that empower the institutions of the State to spend as needed and sets the ceiling to the spending” (Decision № 17/1995 on Constitutional Case № 13/1995).
The Council of Ministers has to act in compliance with the SBA and is not free to make changes in the SBA. The reduction of non-interest expenditure and of transfers below the amounts approved by Art. 1, para 2 of the 2010 SBA even ,, in the event of economic and financial parameters and indicators, leading to assessments and forecasts for a development of the economy, which is more unfavorable than expected”, constitutes an inadmissible change in the 2010 SBA as this may lead to an essential readjustment of key budget parameters and even leave the institutions of constitutional rule without the minimum that they need if they are to function. Such a move is to be taken by the National Assembly in observation of Art. 84, item 2 of the Constitution.
I. 2. The National Assembly is Bulgaria's sole legislating authority. Its prerogatives shall not be delegated nor shall they be transferred. Delegation of legislation is absolutely inadmissible when the National Assembly's budgeting function is concerned.
Parliamentary control on the SBA implementation is on-going. It is political control whose aim is to see and make sure that the Council of Ministers acts in conformity with the financial policy as formulated by the National Assembly. This control protects the citizens' interests by seeing that the Executive spends cost-effectively, thriftily and prudently. The Government's accountability to the National Assembly and dependence on the MPs' confidence reflect the rights and obligations of these two Constitution-enshrined authorities that maintain special constitutional relations within the framework of the parliamentary system of rule. In the event the National Assembly delegates to the Council of Ministers the authority to change the parameters of the original 2010 SBA, as a matter of fact the Assembly sheds off the political responsibility that it must bear. Therefore the Constitutional Court found Art. 17 of the 2010 SBA to be discordant with Art. 62, para 1 of the Constitution.
I. 3. Cooperation and mutual deterrence of the branches of power will discourage institutions which may aspire to take over and exercise competences that the Constitution exclusively assigns to other institutions of the State. The Constitution divides the budgeting competences between the National Assembly which passes the State Budget and the Budget Report (Art. 84, item 2), and the Council of Ministers which draws up and presents the State Budget Bill to Parliament (Art. 87, para 2) and manages the implementation of the State Budget (Art. 106). Art. 17 of the 2010 SBA authorizes the Council of Ministers to change key budget parameters and in this way infringes on the constitutional competence of the Parliament. Therefore, Art. 17 violates the principle of the separation of powers that Art. 8 of the Constitution proclaims.
I. 4. The Constitution is the supreme law and it is to deduce that it is on the top rung of the ladder of law. The Legislature and the Executive are bound by the Constitution to conform to its texts. Clearly, when the National Assembly delegates to the Council of Ministers the exclusive prerogatives that the Constitution has endowed it with, it violates its Art. 5, para 1.
I. 5. The Constitutional Court found Art. 17 of the 2010 SBA to be non-compliant with the principle of the state committed to the rule of law that Art. 4, para 1 of the Constitution proclaims. The exercise of parliamentary control on the Executive in conditions of openness and transparency guarantees predictability and expectedness of the actions of the Executive. The challenged text is unconstitutional as by delegating to the Council of Ministers the authority to change, at its discretion, key parameters of the annual budget, it precludes public debate that must be held in the National Assembly whenever it is needed to amend the Budget Act.
I. 6. Art. 17 of the SBA infringes on the parliamentary form of government (Art. 1, para 1 of the Constitution), which means that the Executive power derives from the confidence of the Members of Parliament. The Constitution-established procedure of the annual budget approval ensures the supremacy of the National Assembly over the Government. That the Government is to annually ask for an approval of the financial resources that enable its programs to be implemented, makes it dependent on the representational body, the National Assembly. Legislating monopoly within the framework of the Constitution guarantees the primacy of the National Assembly within the legal system for the Government acts on the basis of and in observation of the law.
II. Art. 2, para 5 of the 2010 SBA reads thus: ,, Any non-implementation of the revenue from the activities of judicial system authorities shall be covered by funds available in prior-year accounts. In the event of shortage of funds available, the non-implementation shall be offset by an additional subsidy from the central budget, which shall also be granted in the cases where it can result in aggravation of the budget balance specified in Art. 1, para 3.”
The text in question does not name the National Assembly as a body that is free to pass an amending act to change the budget balance that Art. 1, para 3 of the 2010 SBA approves, respectively to change, inter alia, the amount of the state subsidy from the central budget for the Judiciary. To accept that the text of Art. 2, para 5 of the 2010 SBA refers to Parliament would be tantamount for the Legislature to reiterate a prerogative that it enjoys under Art. 84, para 2 of the Constitution in an ordinary law and this would be illogical. In fact, the logical answer is that the Council of Ministers is the authority that shall do what the challenged text provides for.
Once the Council of Ministers is free to disregard the approved 2010 SBA and to ignore the approved budget balance which is a key Budget Act parameter, it usurps an exclusive prerogative enjoyed by the National Assembly, viz. to amend a law in an established procedure. With this argumentation Art. 2, para 5 of the 2010 SBA, in the part that assigns to the Council of Ministers to grant an additional subsidy from the central budget ,, even in the cases where this can result in aggravation of the budget balance specified in Art. 1, para 3” is unconstitutional as discordant with Art. 84, para 2 of the Constitution.
III. § 26 of the 2010 SBA Transitional and Concluding Provisions reads thus: ,, In the event of non-execution of the revenue in the budget of the National Health Insurance Fund for 2010, the payments of the National Health Insurance Fund shall be made at the expense of amending the funds by accounts.”
The orders that the challenged text refers to are given by the NHIF Board and not by the implementing actor, i.e. the Council of Ministers, of the State Budget. Moreover, ,, payments that may be made at the expense of amending the funds by accounts” change in no way the 2010 SBA parameters. Therefore the Constitutional Court found that § 26 of the 2010 SBA Transitional and Concluding Provisions was not unconstitutional and that the challenge of the group of MPs should be dismissed.
IV. § 27, para 2 of the 2010 SBA Transitional and Concluding Provisions reads thus: „The Council of Ministers may approve an additional transfer to the budget of the public social security under the procedure set out in para 1, including in the cases where this additional transfer may result in an aggravation of the budget balance specified in Art. 1, para 3.”
The challenged text is similar in terms of content to the text of Art. 2, para 5 of the 2010 SBA. The first part of § 27, para 2 of the 2010 SBA Transitional and Concluding Provisions gives a prerogative to the Council of Ministers ,, to approve an additional transfer to the budget of the public social security under the procedure set out in para 1” (which is not challenged). The Constitutional Court found that this part of the provision was not unconstitutional, as the Council of Ministers, acting within the scope of its budget competence, is free to approve an additional transfer from the State Budget if this approval will not change the key budget parameters of the 2010 SBA.
The second part of § 27, para 2 of the 2010 SBA Transitional and Concluding Provisions permits the Council of Ministers to approve an additional transfer to the budget of the public social security ,, including in the cases where this additional transfer may result in an aggravation of the budget balance specified in Art. 1, para 3”.
As already mentioned, the balance is one of the key Budget Act parameters and therefore, the Council of Ministers shall not directly change these parameters when it implements the annual budget as part of the financial management functions of the Executive. Whenever financial indicators change in the course of the annual budget implementation, (non-performing revenue or overspending in the social sector) and a need arises to change the State Budget parameters – ,, aggravation of the budget balance as specified in Art. 1, para 3”, it is conformant to the Constitution to amend the Budget Act by the Constitution-established procedure – upon an initiation from the Government and by an approval by the National Assembly. It was in this sense that the Constitutional Court pronounced its Decision № 2/2009 on Constitutional Case № 1/2009. The Constitutional Court agreed that Art. 84, item 2 of the Constitution was violated when the National Assembly resorted to the 2010 SBA to permit the Council of Ministers alone and at its own discretion to change Parliament-approved SBA parameters that may result in an aggravation of the budget balance.
Председател: Евгени Танчев