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On the Law on the Approval of the Financial Indicators of the 1998 State Budget and the Municipal Budgets

Case No. 18/98

 

 

THE CONSTITUTIONAL COURT OF

THE REPUBLIC OF LITHUANIA

 

R U L I N G

 

On the compliance of Item 4 of Article 10 of the Republic of Lithuania’s Law on the Approval of the Financial Indicators of the 1998 State Budget and the Municipal Budgets, Item 2 of the Resolution of the Government of the Republic of Lithuania (No. 105) “On the Reorganisation of the Department for Standardisation of Lithuania Under the Ministry of Public Administration Reforms and Municipal Affairs” of 27 January 1998, Item 2 of the Resolution of the Government of the Republic of Lithuania (No. 117) “On the Transfer of the Right of the Founder of the Lithuanian Zoological Garden” of 30 January 1998, and Item 3 of the Resolution of the Government of the Republic of Lithuania (No. 366) “On the Transfer of Certain Functions of the Ministry of Agriculture and Forestry to the Ministry of Environmental Protection and on the Establishment of the Department for Forests and Protected Territories Under the Ministry of Environmental Protection” of 30 March 1998 with the Constitution of the Republic of Lithuania

 

Vilnius, 9 July 1999

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court: Egidijus Jarašiūnas, Egidijus Kūris, Zigmas Levickis, Augustinas Normantas, Vladas Pavilonis, Jonas Prapiestis, Vytautas Sinkevičius, Stasys Stačiokas, and Teodora Staugaitienė

The court reporter—Daiva Pitrėnaitė

Seimas member Česlovas Juršėnas, acting as the representative of a group of members of the Seimas of the Republic of Lithuania, the petitioner

The Constitutional Court of the Republic of Lithuania, pursuant to Paragraph 1 of Article 102 of the Constitution of the Republic of Lithuania and Paragraph 1 of Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, on 28 June 1999, in its public hearing, considered case No. 18/98 subsequent to the petition submitted to the Constitutional Court by a group of Seimas members, the petitioner, requesting an investigation into whether Item 4 of Article 10 of the Republic of Lithuania’s Law on the Approval of the Financial Indicators of the 1998 State Budget and the Municipal Budgets, Item 2 of the 27 January 1998 resolution (No. 105) of the Government of the Republic of Lithuania, Item 2 of the 30 January 1998 resolution (No. 117) of the Government of the Republic of Lithuania, and Item 3 of the 30 March 1998 resolution (No. 366) of the Government of the Republic of Lithuania were in compliance with Articles 5, 94 and 132 of the Constitution of the Republic of Lithuania.

The Constitutional Court

has established:

I

On 2 December 1997, the Seimas adopted the Republic of Lithuania’s Law on the Approval of the Financial Indicators of the 1998 State Budget and the Municipal Budgets (Official Gazette Valstybės žinios, 1997, No. 114-2869, 1998, No. 111-3059; hereinafter referred to as the Law). Item 4 of Article 10 of the said law provides that the Government or its authorised institution shall be granted the right “respectively to change the approved appropriations following re-assignment of certain functions of ministries, counties, departments and state services”.

Enforcing the Law, the Government adopted several resolutions: (1) the Resolution (No. 105) “On the Reorganisation of the Department for Standardisation of Lithuania Under the Ministry of Public Administration Reforms and Municipal Affairs” of 27 January 1998 (Official Gazette Valstybės žinios, 1998, No. 12-276), by Item 2 whereof it commissioned the Ministry of Finance to “decrease the appropriations approved for the Department for Standardisation of Lithuania from the 1998 budget for routine spending and reapportion these appropriations to the State Metrological Service under the Ministry of Administration Reforms and Municipal Affairs and the National Accreditation Bureau under the Ministry of Administration Reforms and Municipal Affairs”; (2) the Resolution (No. 117) “On the Transfer of the Right of the Founder of the Lithuanian Zoological Garden” of 30 January 1998 (Official Gazette Valstybės žinios, 1998, No. 13-307) by Item 2 whereof it commissioned the Ministry of Finance “to specify, without increasing the general size of the budget of the State of the Republic of Lithuania, the appropriations approved in the 1998 budget of the State of the Republic of Lithuania for the Ministry of Environmental Protection and the Administration of the Chief of the Kaunas county under the inter-coordinated planned indicators”; (3) the Resolution (No. 366) “On the Transfer of Certain Functions of the Ministry of Agriculture and Forestry to the Ministry of Environmental Protection and on the Establishment of the Department for Forests and Protected Territories Under the Ministry of Environmental Protection” of 30 March 1998 (Official Gazette Valstybės žinios, 1998, Nos. 35-939 and 35-942), by Item 3 whereof it commissioned the Ministry of Finance to “transfer corresponding budgetary appropriations from the Ministry of Agriculture and Forestry to the Ministry of Environmental Protection”.

A group of Seimas members have applied to the Constitutional Court with a petition requesting an investigation into whether Item 4 of Article 10 of the Republic of Lithuania’s Law on the Approval of the Financial Indicators of the 1998 State Budget and the Municipal Budgets, as well as the aforesaid provisions of the government resolutions, was in compliance with Articles 5, 94 and 132 of the Constitution.

II

The request of the petitioner is grounded on the following arguments.

By Item 4 of Article 10 of the adopted Law the Seimas granted the right to the Government or its authorised institution in the course of its maintenance of the national budget “respectively to change the approved appropriations following re-assignment of certain functions of ministries, counties, departments and state services”. As particular appropriations and their particular managers are confirmed by the budget law, therefore, in the opinion of the petitioner, the Seimas has delegated part of its rights “to the Government or its authorised institution”, thus, this provision of the Law contradicts Paragraph 2 of Article 132 of the Constitution.

The petition draws the conclusion that the Constitution clearly establishes the principle of the separation of powers in the sphere of the budget and separates the functions of legislative and executive powers. Neither does the Constitution provide for any prerogatives of the Seimas to transfer permanently or temporarily its certain rights to the Government.

The petitioner points out that the Government, conforming to the defective provision of the impugned Law, by means of its resolutions of 27 January 1998, 30 January 1998, and 30 March 1998, commissioned the Ministry of Finance to reapportion the budgetary appropriations.

On the grounds of this the petitioner believes that the said items of the aforementioned legal acts contradict Articles 5, 94 and 132 of the Constitution.

III

In the course of the preparation of the case for the Constitutional Court hearing a written explanation of the representatives of the party concerned Assoc. Prof. Dr. A. Marcijonas, a consultant to the Legal Department of the Chancery of the Seimas, and E. Žilevičius, Vice-Minister of Finance, was received. They contend that under the Constitution and the Republic of Lithuania’s Law on Budgeting, the Budget of the State is approved by law conforming to the indicators pointed out in the Law on Budgeting. The budget is maintained by the Government. The amount of general expenditures and its purpose is approved by law and remained unchanged.

Granting the right to the Government to change the approved appropriations, the Seimas did not transfer its exclusive right to change the budget of the State but merely established additional powers for the Government in the sphere of the maintenance of the budget of the State, i.e. respectively to reapportion the funds among the managers of budgetary appropriations without exceeding the appropriations designated for financing some or other functions of governance and among which, in the interests of administration reform, corresponding administration functions have been redistributed and for the financing whereof the Seimas has approved budgetary appropriations.

The right of the Government to reapportion the appropriations is more likely to be regarded as a technical rule creating the conditions for using the funds of budget of the State in a more effective and faster way for the purpose of the implementation of administration reform without exceeding the amount of appropriations and those approved by the Seimas which were designated for the maintenance of individual functions of administration.

Conforming to the provisions of Article 94 of the Constitution and the Law on the Government of the Republic of Lithuania, the Government adopted the impugned resolutions by which it reapportioned the budgetary appropriations for individual institutions, taking account of the change of their functions. Therefore, in the opinion of the representatives of the party concerned, neither Item 4 of Article 10 of the Law nor respective items of the impugned resolutions of the Government contradict Articles 5, 94 and 132 of the Constitution.

IV

In the course of the preparation of the case for the judicial investigation, written explanations of the specialists—Assoc. Prof. Dr. P. Puzinauskas who works at the Department of Finance and Credit at the Faculty of Economics of Vilnius University, A. Stankaitienė, Head of the Monetary Markets Division of the Bank of Lithuania, and J. Kabašinskas, an auditor of the audit partnership J. Kabašinskas and Partners—were received wherein it is maintained that the impugned items of the legal acts contradict the Constitution.

On the grounds of Articles 131 and 132 of the Constitution and an analysis of the content of the Law on Budgeting, P. Puzinauskas pointed out in his explanations that the laws which clearly distinguish the functions of the Seimas and the Government do not provide for an opportunity for the Seimas to transfer its prerogatives in the sphere of the budget to the Government.

A. Stankaitienė pointed out in her explanation that the Government, implementing the budget of the State of a particular year, has certain rights which are granted to it by means of the law that approves the budget of the State of a particular year. After the finances of one institution have been transferred to another institution, even though the overall amount of the expenditures of the budget of the State remains the same, the size of expenditures for individual managers of appropriations may either increase or decrease. This, in its turn, contradicts Article 131 of the Constitution, which stipulates that “expenditures established by law may not be reduced as long as said laws are not amended”.

The explanation of J. Kabašinskas draws one’s attention to the fact that the Law grants the right to the Government (or its authorised institution) “respectively to change the approved appropriations following re-assignment of certain functions of ministries, counties, departments and state services” (Item 4 of Article 10 of the Law). On the grounds of the granted right, in 1998, the Government commissioned the Ministry of Finance to reapportion the budgetary appropriations. Due to this reapportionment the confirmed budget data were specified once again without amending the Law. Not only the size (amounts) provided for in the appendices to the Law but also the amounts among the appendices had to be changed as the result of the amendments made by the Government. Paragraph 2 of Article 131 of the Constitution provides: “During the budget year the Seimas may change the budget. It shall be changed according to the same procedure by which it was drafted, adopted and approved.” Thus, only the Seimas may make amendments on the grounds of the drafts submitted by the Government in pursuance of Article 94 of the Constitution, therefore, Item 4 of Article 10 of the Law, Item 2 of government resolution No. 105 of 27 January 1998, Item 2 of government resolution No. 117 of 30 January 1998, and Item 3 of government resolution No. 366 of 30 March 1998 contradict Articles 5, 94 and 132 of the Constitution.

V

During the Constitutional Court hearing Č. Juršėnas, representative of the group of Seimas members, a Seimas member, virtually reiterated the arguments set forth in the petition.

VI

The specialists spoke at the Constitutional Court hearing: Assoc. Prof. Dr. P. Puzinauskas who works at the Department of Finance and Credit at the Faculty of Economics of Vilnius University, and J. Kabašinskas, an auditor of the audit partnership J. Kabašinskas and Partners. They reiterated their arguments set forth in writing concerning the rights of the Seimas and the Government in the sphere of the budget.

The Constitutional Court

holds that:

I

On the compliance of Item 4 of Article 10 of the of the Republic of Lithuania’s Law on the Approval of the Financial Indicators of the 1998 State Budget and the Municipal Budgets with Articles 5, 94 and 132 of the Constitution.

1. On 2 December 1997 the Seimas adopted the Republic of Lithuania’s Law on the Approval of the Financial Indicators of the 1998 State Budget and the Municipal Budgets. Article 10 thereof defined the rights of the Government in the sphere of budget maintenance. This article provides: “To grant the right to the Government of the Republic of Lithuania or its authorised institution:

<…> 4) respectively to change the approved appropriations following re-assignment of certain functions of ministries, counties, departments and state services.”

The petitioner maintains that Item 4 of Article 10 of the Law contradicts Articles 5, 94 and 132 of the Constitution.

Reviewing this petition, the Constitutional Court is deciding the question whether the Seimas, after it has provided for respective appropriations to their managers in the Law, by the same Law was entitled to grant the right to “the Government or its authorised institution” to change them provided there existed the conditions as provided for by the Law.

2. Conforming to the norms of Article 5 and those of other articles of the Constitution, the Constitutional Court has held in its rulings that the principle of the separation of powers means that the legislative, executive and judicial powers must be separated, sufficiently independent but there must also be a balance between them. Every state institution is granted the competence according to its purpose. The concrete content of such competence also depends on the place of this institution among other state institutions, as well as the relation of its empowerment with that of the other institutions.

In its ruling of 3 June 1999, the Constitutional Court noted: in cases when the powers of a concrete branch of power are directly established in the Constitution, then no institution may take over these powers, while an institution whose powers are defined by the Constitution may neither transfer nor waive these powers. Such powers may neither be changed nor limited by law.

The Constitution also separates the powers of the Government and the Seimas in the sphere of the forming and maintenance of the budget.

The following is attributed to the competence of the Government: prepare the draft budget of the State and submit it to the Seimas; to execute the Budget of the State and report on the fulfilment of the budget to the Seimas (Item 4 of Article 94 of the Constitution).

The Seimas shall approve the Budget of the State and supervise the implementation thereof (Item 14 of Article 67 of the Constitution). The draft budget of the State shall be approved by law by the beginning of the new budget year (Paragraph 1 of Article 131 of the Constitution).

During the budget year the Seimas may change the budget. It shall be changed according to the same procedure by which it was drafted, adopted and approved. As necessary, the Seimas may approve an additional budget (Paragraph 2 of Article 132 of the Constitution).

3. Under the Constitution, the budget of the State shall be approved by the Seimas upon passing a law. It is characteristic of this law that it approves the overall amount of revenues and expenditures, cash turnover etc. Alongside, in its appendices the budgetary expenditures are distributed and particularised: those of ministries, departments, state services, enterprises, institutions and organisations according to the titles of the managers of appropriations (Appendix 1); according to the finances for the social economic programmes from the appropriations approved in Appendix 1 by indicating the titles of ministries, departments, state services and organisations, which are managers of the appropriations (Appendix 2); the expenditures of the budget of the State according to the titles, i.e. by singling out the expenditures designed for general governance of the State, defence, education, medical care etc. (Appendix 3). The other appendices (Appendices 4 and 5) provide for the portions of the tax of natural persons designated for the municipal budgets, the general subsidy from the budget of the State for equalising the differences between tax revenues and the structure of expenditures, etc.

The Constitutional Court notes that all parts of a normative legal act (including its appendices) constitute a whole, they are inseparably interrelated and have equal legal power. It is impossible to isolate the appendices from the legal act as in the case that the content particularly set forth therein is changed, consequently, the content of the whole legal act is changed as well. Thus, not only the articles wherein the revenues and expenditures of the budget of the State, the financial indicators of the municipal budgets, etc., are confirmed, constitute the Law passed by the Seimas, but also the appendices to the Law that particularise the revenues as well as the expenditures set forth according to the managers of the appropriations and other indicators.

4. In the opinion of the party concerned, the Seimas, granting the right to the Government to change the approved appropriations, did not transfer its exclusive right to change the budget of the State but merely established its additional empowerment to maintain the budget, i.e. respectively to redistribute the funds by not exceeding the appropriations designated for financing some or other administration functions among those managers of budgetary appropriations, among which, in the course of the implementation of the administration reform, respective administration functions were redistributed, and for which the Seimas had approved budgetary appropriations.

The Constitutional Court emphasises that it is impossible to categorise the change of the size of appropriations for its individual managers as belonging to budget maintenance. After the Government or its authorised institution has been granted the right to change the amounts of expenditures provided for in the appendices to the Law for individual managers of appropriations by the impugned norm of the Law, alongside, it was provided that the Government or its authorised institution has the right to amend the Law by means of a substatutory act. A law, however, may only be changed by means of a law.

Thus, there are grounds to assert that the Seimas transferred some of its rights to “the Government or its authorised institution” by Item 4 of Article 10 of the Law, i.e. it delegated some of its rights in the sphere of the budget to the Government. The Constitution does not provide for delegation of legislation (the Constitutional Court’s ruling of 26 October 1995).

Paragraph 2 of Article 135 of the Constitution stipulates: “During the budget year the Seimas may change the budget. It shall be changed according to the same procedure by which it was drafted, adopted and approved.” The Government must fulfil the approved budget of the State according to its purpose and in such an extent as provided for by the law on the budget (the Constitutional Court’s ruling of 3 June 1999). Thus, under the Constitution, the Government, let alone its authorised institution, is not to be granted powers to change the budget on its own accord.

On the grounds of the arguments set forth, it should be concluded that Item 4 of Article 10 of the Republic of Lithuania’s Law on the Approval of the Financial Indicators of the 1998 State Budget and the Municipal Budgets contradicts Article 5, Item 4 of Article 94 and Paragraph 2 of Article 132 of the Constitution.

II

On the compliance of Item 2 of the Government Resolution (No. 105) “On the Reorganisation of the Department for Standardisation of Lithuania Under the Ministry of Public Administration Reforms and Municipal Affairs” of 27 January 1998, Item 2 of the Government Resolution (No. 117) “On the Transfer of the Right of the Founder of the Lithuanian Zoological Garden” of 30 January 1998, and Item 3 of the Government Resolution (No. 366) “On the Transfer of Certain Functions of the Ministry of Agriculture and Forestry to the Ministry of Environmental Protection and on the Establishment of the Department for Forests and Protected Territories Under the Ministry of Environmental Protection” of 30 March 1998 with Article 5, Article 94 and Article 132 of the Constitution.

1. Conforming to Item 4 of Article 10 of the Law, the Government adopted the impugned resolutions by which commissioned the Ministry of Finance to reapportion the budgetary appropriations.

In Item 2 of resolution No. 105 of 27 January 1998, the Government established the following: “To commission the Ministry of Finance to decrease the appropriations approved for the Department for Standardisation of Lithuania from the 1998 budget for routine spending <…> and reapportion these appropriations to the State Metrological Service under the Ministry of Administration Reforms and Municipal Affairs <…> and the National Accreditation Bureau under the Ministry of Administration Reforms and Municipal Affairs <…>.”

In Item 2 of resolution No. 105 of 27 January 1998, the Government established the following: “To commission the Ministry of Finance to specify, without increasing the general size of the budget of the State of the Republic of Lithuania, the appropriations approved in the 1998 budget of the State of the Republic of Lithuania for the Ministry of Environmental Protection and the Administration of the Chief of the Kaunas county under the inter-coordinated planned indicators.”

2. The grounds for adopting the impugned resolutions were created by the right conferred to the Government or its authorised institution to change the approved appropriations.

In its ruling of 3 June 1999, the Constitutional Court noted that during the budget year “it is only the Seimas that may change the budget, and only according to the same procedure by which it was drafted, adopted and approved”, and that “only the Seimas was entitled to change the size of the appropriations allocated to the abolished Ministry of the European Affairs, the Ministry of Communications and Informatics and the Ministry of Construction and Urban Planning and it was only possible to do so by passing a law changing the law by which the budget had been approved”.

This ruling of the Constitutional Court has also judged the granting of the right to the Government or its authorised institution to reapportion the appropriations approved by the Law to be in conflict with the Constitution.

Adopting the impugned resolution, the Government was acting according to the powers established by the Law, which, however, are attributed to another institution, i.e. the Seimas, in the Constitution.

Thus, the conclusion should be drawn that Item 2 of government resolution No. 105 of 27 January 1998 and Item 2 of government resolution No. 117 of 30 January 1998 contradict Article 5, Item 4 of Article 94 and Paragraph 2 of Article 132 of the Constitution.

3. In Item 3 of its resolution of 30 March 1998, the Government established the following: “To commission the Ministry of Finance to transfer corresponding budgetary appropriations from the Ministry of Agriculture and Forestry to the Ministry of Environmental Protection.” The Constitutional Court holds that this government resolution was partially amended by resolution No. 424 of 9 April of the same year by which the Ministry of Finance was commissioned to change the budgetary appropriations for their other managers as well.

The repeal of the impugned legal act constitutes the grounds for adopting the decision to dismiss the initiated legal proceedings. Conforming to Paragraph 4 of Article 69 of the Law on the Constitutional Court, the initiated legal proceedings in this part of the case should be dismissed.

Conforming to Article 102 of the Constitution of the Republic of Lithuania and Articles 53, 54, 55, 56 and Paragraph 4 of Article 69 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania gives the following

ruling:

1. To recognise that Item 4 of Article 10 of the Republic of Lithuania’s Law on the Approval of the Financial Indicators of the 1998 State Budget and the Municipal Budgets contradicts Article 5, Item 4 of Article 94 and Paragraph 2 of Article 132 of the Constitution of the Republic of Lithuania.

2. To recognise that Item 2 of the Resolution of the Government of the Republic of Lithuania (No. 105) “On the Reorganisation of the Department for Standardisation of Lithuania Under the Ministry of Public Administration Reforms and Municipal Affairs” of 27 January 1998 and Item 2 of the Resolution of the Government of the Republic of Lithuania (No. 117) “On the Transfer of the Right of the Founder of the Lithuanian Zoological Garden” of 30 January 1998 contradict Article 5, Item 4 of Article 94 and Paragraph 2 of Article 132 of the Constitution of the Republic of Lithuania.

3. To dismiss the initiated legal proceedings concerning the compliance of Item 3 of the Resolution of the Government of the Republic of Lithuania (No. 366) “On the Transfer of Certain Functions of the Ministry of Agriculture and Forestry to the Ministry of Environmental Protection and on the Establishment of the Department for Forests and Protected Territories Under the Ministry of Environmental Protection” of 30 March 1998 with the Constitution of the Republic of Lithuania.

This ruling of the Constitutional Court is final and not subject to appeal.

The ruling is pronounced in the name of the Republic of Lithuania.

Justices of the Constitutional Court:

 

Egidijus Jarašiūnas      Egidijus Kūris     Zigmas Levickis

 

Augustinas Normantas     Vladas Pavilonis      Jonas Prapiestis

 

Vytautas Sinkevičius      Stasys Stačiokas      Teodora Staugaitienė