# The Government’s Consultation with the Federal Court of Accounts on Budget Allocations for Health and Education in 2023
The government of President Luiz Inácio Lula da Silva (PT) recently sought clarification from the Federal Court of Accounts (TCU) on whether it is possible to deviate from the constitutional minimum rule for budget resources allocated to Health and Education in 2023. The government’s economic team argues that adhering to this rule, which was reinstated with the end of the spending limit, could lead to spending constraints in certain areas and necessitate a significant reallocation of resources just three months before the end of the year.
## The Context and Recent Developments
This consultation comes a month after President Lula sanctioned the new fiscal framework, which included vetoes. This new framework replaced the spending ceiling that had previously limited the growth of expenses in a year to the inflation accumulated in the previous year.
With the revocation of the spending ceiling, the rules determining the minimum transfers for Health and Education have come back into effect. For Health, the floor is set at 15% of net current income, while for Education, it is 18% of tax revenues, net of transfers.
However, while resources are available to meet the demand for Education in 2023, estimates indicate a potential supplementation need of up to R$ 20 billion for Health. It is important to note that a block of R$ 3.8 billion of the expenses programmed in the 2023 Budget is already being executed.
## The Ministry of Finance’s Query and its Implications
In its consultation, the Ministry of Finance questions whether the constitutional floors should be applied in 2023. A source from the economic team, interviewed by InfoMoney, invokes the principle of annuity to argue that the rule should not come into force until the next budget year.
However, there are risks that the TCU may not interpret it that way. Recently, the technical area of the TCU, which is linked to the Legislative Branch, refuted the government’s argument that resuming compliance with the constitutional floors could pose a risk of a “closure” of the public sector. Despite this, the Minister of Planning and Budget, Simone Tebet (MDB), has not yet made a final decision on providing resources for a potential reallocation, awaiting a clearer definition of the matter.
## Possible Scenarios and Proposed Solutions
Currently, four possible scenarios are being considered to address this situation. In the most favorable scenario for the government, the annuity thesis would be accepted, and compliance with the constitutional minimums would only be necessary in 2024. This would provide more time for resource reallocation and strategic planning.
On the other hand, in the worst situation for the economic team, the rule would already be necessary in 2023. In this case, the government members are requesting that a proportionality mechanism be applied, making the rule valid only from September, coinciding with the revocation of the spending ceiling. This would help mitigate the impact of a potential sudden reallocation of resources.
Another proposal on the table, put forth by the Chamber of Deputies, is based on an amendment by the leader of the PT in the Legislative Chamber, Deputy Zeca Dirceu (PT-PR), to a project that provided income compensation to states and municipalities. According to this provision, the budgeted income, rather than the income received in the year, would be considered as the basis for calculating the constitutional minimums. This proposal could benefit the government, as the projected income exceeds the level indicated in the Annual Budget Law approved by legislators.
However, this attempt raises legal questions, as critics argue that if the bill currently being processed in the Federal Senate is approved, it would modify a provision contained in the Federal Constitution, thereby undermining the hierarchy of laws.
## Potential Impacts and Further Considerations
This ongoing debate regarding the application of constitutional minimums for budget allocations to Health and Education in 2023 has far-reaching implications. The decision made by the TCU, in consultation with the Brazilian government and institutions, will shape the allocation and availability of resources in these critical sectors.
It is imperative to carefully evaluate the potential impacts of deviating from the constitutional minimums. While the economic team expresses concerns over spending constraints and the need for resource reallocation, it is crucial to prioritize the well-being and development of the citizens, especially in sectors as vital as Health and Education.
Additionally, all proposed solutions must undergo rigorous legal scrutiny to ensure adherence to the Constitutional framework. Modifying provisions contained in the Federal Constitution is a delicate matter that requires careful consideration of the potential consequences.
## Conclusion
The Brazilian government’s consultation with the Federal Court of Accounts on the possibility of deviating from the constitutional minimum rule for budget resources allocated to Health and Education in 2023 highlights the complexity and challenges of fiscal planning and allocation of resources. Balancing the need for flexibility in spending while ensuring adequate funding for critical sectors is a delicate task.
It remains to be seen how the TCU will interpret and respond to the government’s query. The decision made will have significant implications for resource allocation, public sector functioning, and ultimately, the well-being of the Brazilian population.
As stakeholders continue to debate and seek solutions, it is essential to prioritize transparency, accountability, and effective governance to ensure the efficient use of public funds. The ultimate goal should be to provide quality healthcare and education services to all citizens, thereby promoting social development and progress in the country.
## Summary:
The government of President Luiz Inácio Lula da Silva (PT) has consulted the Federal Court of Accounts (TCU) regarding the possibility of not applying the constitutional minimum rule for budget resources allocated to Health and Education in 2023. The government’s economic team argues that adhering to this rule could compress spending and necessitate a significant reallocation of resources. This consultation comes after President Lula sanctioned the new fiscal framework, which replaced the spending ceiling. For Health, the minimum allocation is 15% of net current income, while for Education, it is 18% of tax revenues. The Ministry of Finance questions whether these constitutional floors should be applied in 2023. Several scenarios and proposed solutions are being considered, including accepting the annuity thesis or applying a proportionality mechanism. A proposal by the Chamber of Deputies raises legal questions. The ongoing debate highlights the importance of resource allocation in critical sectors and the need for careful consideration of potential impacts. Ultimately, transparency, accountability, and effective governance should guide decision-making to ensure the efficient use of public funds and the provision of quality healthcare and education services for all citizens.
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The government of President Luiz Inácio Lula da Silva (PT) sent a query to the Federal Court of Accounts (TCU) to verify the possibility of not applying the constitutional minimum rule for budget resources allocated to Health and Education in 2023.
The economic team alleges that compliance with the rule, which came back into force with the end of the spending limit, could compress spending in certain areas and force a significant reallocation of resources three months before the end of the year.
The consultation occurs a month after President Lula sanctioned the new fiscal framework with vetoes – a rule that replaced the spending ceiling, which limited the evolution of expenses in a year to the inflation accumulated in the previous year.
With the revocation of the spending ceiling, the rules that determine the minimum transfers for Health and Education came back into force. In the case of the first, the floor is equivalent to 15% of net current income. In the second case, 18% of tax revenues, net of transfers.
For this year, there are resources to meet the demand for Education, but for Health, estimates point to a supplementation need of up to R$ 20 billion. It is worth remembering that a block of R$ 3.8 billion of the expenses programmed in the 2023 Budget is already being executed.
In the consultation, the Ministry of Finance questions whether the constitutional floors should be applied already in 2023. A source from the economic team heard by the InfoMoney invokes the principle of annuity to argue that the rule will not come into force until the next budget year.
However, there are risks that the TCU does not understand it that way. This week, the technical area of the body linked to the Legislative Branch refuted the government’s argument that the resumption of constitutional floors could entail the risk of a “closure” of the public sector. Even so, the Minister of Planning and Budget, Simone Tebet (MDB), has not yet decided not to provide resources for a possible relocation, pending a clearer definition of the matter.
At the moment there are four possible paths for the situation. In the most favorable scenario for the government, the annuity thesis would be accepted and compliance with the constitutional minimums would only be necessary in 2024.
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In the worst situation for the economic team, the rule would already be necessary in 2023. In this case, the members of the Government ask at least that a proportionality mechanism be applied, making the rule valid only from September, with the revocation of the spending ceiling, thus avoiding retroactivity. This would reduce the impact of a possible reallocation of resources.
There is also a path on the table designed by the Chamber of Deputies, based on an amendment by the leader of the PT in the Legislative Chamber, deputy Zeca Dirceu (PT-PR), to a project that provided compensation of income to the states. and municipalities.
The provision provided that the budgeted income, and not those received in the year, would be considered as the calculation basis to define the constitutional minimums, which, based on the 2023 figures, would benefit the government, since the income exceeded the indicated level. in the Annual Budget Law approved by legislators.
The attempt, however, raises legal questions. Critics allege that, if the bill currently being processed in the Federal Senate is approved, it would modify a provision contained in the Federal Constitution, which would harm the hierarchy of laws.
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