Flávio Dino authorizes pending committee funds but imposes conditions on future allocations, impacting federal spending dynamics
12/30/2024
Supreme Court Justice Flávio Dino authorized the payment of committee budget allocations committed by December 23, even without disclosing identity of the requester. However, he prohibited new authorized payments unless a lawmaker takes responsibility for the funding request. Despite stern criticism of Congress, Mr. Dino’s decision allows the federal government to commit funds to the healthcare sector without individualized accounts.
“In this case, by partially waiving the mentioned rules, the goal is to ensure legal stability for established institutional and contractual relations,” Mr. Dino said. He added that halting payments for ongoing projects and services could harm other government entities, businesses, and workers.
The new Supreme Court ruling prevents President Lula’s administration from committing R$4.4 billion of the R$15.5 billion in Congressional committee allocations without sponsorship of the funds. According to sources, R$3 billion may remain frozen unless new authorizations are issued. The deadline for committing these funds is December 31, and the unresolved execution could aid the government’s primary fiscal result in 2024.
The new conflict between Mr. and the parliamentarians arose due to the action by a group of Congresspersons, who questioned the sponsorship of committee amendments by parties rather than the thematic committees of the Lower House and the Senate. They argued that there was a deviation of purpose and a reproduction of the so-called “secret budget.”
Coordinated by House Speaker Arthur Lira, party leaders sent a directive to the Executive on December 12 to “ratify” the allocation of R$4.2 billion of these budget allocations, whether already previously authorized or not. Mr. Dino understood that this act contradicted his decision, as the 17 party leaders collectively signed all the allocations.
In the Senate’s case, 11 leaders sent a directive to the government on the 18th to sponsor R$2.5 billion and held committee meetings in the last week before the recess to record voting minutes. In this directive, each allocation is individually identified by a party leader, although they are not exactly the one who decided how the funds would be used.
The first name on the list, for example, is Senator Carlos Portinho from Rio de Janeiro. He sponsored a budget allocation of R$2.2 billion for a Ministry of Tourism project in Abadiânia, Goiás, the hometown of a political ally.
Mr. Portinho acknowledged to Valor that the allocation was authored by another senator and defended this as the correct process for ensuring transparency. “The party leader signs, but everyone knows whose earmark it is. This is transparent, it has an origin, it has a destination,” he argued, rejecting the term “sponsored.” “It is a duty imposed on the leader. I sign the directive. I do not participate in the choice, allocation, or execution.”
This loophole was authorized by Mr. Dino in a decision in November. On Sunday, he said he became aware of the Senate’s directive on Friday, after being informed by the Lower House, and gave the senators ten days to express their views—a period that will allow the government to commit all Senate committee resources.
Omar Aziz said that the Senate followed the rules established in the law approved by Congress. “I don’t think there will be [a freeze]. Making a budget allocation is not a crime. Define where it’s going, and that’s it. Expenditures must be monitored. Who doesn’t fight to bring money to their state? Everyone does. The Senate and House have every interest in ensuring transparency to avoid doubt,” he said.
Mr. Dino also sent “messages” to Congress and called for solutions that address the Supreme Court’s demands. “More than useless threats or carrying out ‘retaliations,’ sincere institutional dialogue and adherence to legal norms are the correct paths to be taken in favor of the Nation’s legitimate interests,” he said.
Justice Dino further said that the public budget does not accommodate the “invention” of allocation types without legal support, that the release was based on “false reasons,” and advocated for a Federal Police inquiry to investigate why lawmakers insist on keeping the author of the funds confidential.
“For a parliamentarian, securing funds for their constituents is commendable, so there is no legal basis or logical justification for such a noble act to be concealed by the opacity of what has come to be known as the secret budget,” he wrote.
Despite the criticisms, Mr. Dino allowed the federal government to authorize health sector allocations even without individualized accounts. His previous decision required specific accounts, but the justice recognized this could harm municipalities with mayors nearing the end of their terms and authorized this exception. However, he maintained the requirement that these accounts be opened for the payment to be effectively made.
The impasse over committee allocations is likely to cause further tensions in the relationship between President Lula and Congress after the recess. For members of the center-right bloc, Mr. Dino’s decision was calculated, as he waited for the voting on spending freeze bills to suspend the payments. This also sustains the suspicions of a legislative faction that the initiative was orchestrated with the government.
However, they argue that the government should be more concerned about the funds’ freeze because it will begin 2025 “entangled” and with pending issues with the Legislative. One possible retaliation is to further delay the voting of the Annual Budget Act (LOA), which was not voted on in December and will only be analyzed by Congress starting in February.
Another possible reaction is to intensify pressure for the next Lower House Speaker, likely Hugo Motta, to advance constitutional amendment proposals (PEC) to transform committee allocations to the budget into individual parliamentary earmarks, with mandatory execution by the federal government, and to prohibit individual Supreme Court justices from suspending laws approved by Congress.
Mr. Lira and Senate President Rodrigo Pacheco did not comment on the decision. Valor learned that the government is unlikely to file a new appeal, given the proximity to the end of the year, and the priority is to focus on committing and paying what is possible in the last two days of 2024.
* By Flávia Maia, Raphael Di Cunto, Marcelo Ribeiro, Renan Truffi, Caetano Tonet e Murilo Camarotto — Brasília
Source: Valor International