State Budgets (PGE): Income, Expenditure & Legal Framework

PGE: Income and Expenditure of the Public Sector

PGE: income and measures with regard to public expenditure and the administration, based on economic objectives of public policy and the political budget.

8.2 - PGE Concept

The PGE can define the budget through the legislative act that authorizes the maximum amount of expenditure to ensure sound economic management during the PGE. The State general budgets are an annual instrument adopted by means of a law voted in the Cortes (parliament). They establish obligations that must be recognized by the State and its autonomous bodies.

8.3 - Characteristics of the PGE

• Financial: the PGE represents the income and expenditure of the public sector.
• Authorization and control: act of authorization and control by the legislature over the executive; legal authorization of obligations or expenditures.
• Two dimensions:
  • Politico-juridical
  • Juridico-financial

8.4 - Laws Governing the PGE

The main laws governing the PGE are the Budget Law and the Budgetary Stability Law. The Budgetary Stability Law prohibits the State from authorizing costs that exceed income; if that situation occurs, the budget must include appropriate measures. The necessary rules provide that the ministry responsible prepares the budget project every year.

8.4a - Basic Content and Titles Included in the PGE Law

The PGE include the budgets and accounts for many State entities and areas, such as:

• a) The State budget;
• b) The budgets of the autonomous bodies of the administration of the State;
• c) Social Security;
• d) Public agencies and councils: Nuclear Safety Council, Economic and Social Council, State Tax Administration Agency, Instituto Cervantes, Data Protection Agency, Spanish Institute for Foreign Trade, National Intelligence Center;
• e) Budgets for public broadcasting and other state trading companies;
• f) Budgets for state-owned corporations;
• g) Budgets of foundations;
• h) Budgets of business-related entities.

The budgets include the following qualifications:

1. Approval of budgets and their modifications
2. Budget management and expenditure
3. Personnel and pensions
4. Grants and transfers
5. Financial operations
6. Tax rules
7. Territorial issues
8. Social contributions

8.4b - Accompanying Law

The General Budget Law is normally accompanied by an accompanying law on fiscal, administrative and social measures. This accompanying law establishes certain tax reforms, partly amends the legal regime of social security, and introduces legislative changes to public administration regulations and personnel matters.

8.5 - Budget Cycle

The budget cycle is organized in four phases: preparation, approval, execution and control.

Preparation

Preparation: the executive (the government) is attributed the final responsibility for drafting the budget bill. The bill is prepared by the ministry responsible for budgets and then referred to the Cortes in accordance with Article 134.1 of the Constitution. The preparation corresponds to the government; the Cortes examine, amend and approve the general budgets.

8.6 - Institutional and Temporal Scope

The PGE annually includes the entire expenditures and incomes of the State public sector and records the amount of fiscal benefits affecting State taxes.

8.7 - Elaboration, Discussion and Approval