IV. FRANCE

4.1.8. Budgets of Parliament and other constitutional bodies

Each house of Parliament is financially independent (see Ordonnance of November 1958 relating to the functioning of the two houses, Art. 7). The same law specifies that the budget of each house is prepared by a joint commission presided by a chair of a chamber of the Court of Accounts.

The LOLF does not address explicitly the budget procedures for nonexecutive State entities. However, a specific mission is envisaged for the “public powers” (Art. 7), each of which may receive one or more allocations (dotations). Dotations may allow single-line budget appropriations for the National Assembly, the Senate, the Court of Justice and the Presidency, without the need for them to present mission statements and performance indicators. The Court of Accounts is not shown separately – its budget will not be a separate mission, unlike the Economic and Social Council (also a constitutional body). The latter will have a single-programme mission under the new budget nomenclature, i.e. the objectives of the Economic and Social Council are among the 48 missions of the State, whereas the arguably more important body, the Court of Accounts, does not have its own mission.

4.2. Budget process in Parliament

Parliament has progressively been receiving more information on the draft budget from the government. In particular, before the draft budget law is submitted to Parliament, the National Assembly and the Senate have a chance to debate a pre-budget report provided by the government. The LOLF formalised this procedure, known as the débat d’orientation budgétaire.

4.2.1. The timetable for budget adoption and constraints on the budget debate in Parliament

The draft budget law must be submitted to in Parliament by the first Tuesday of October (LOLF, Art. 39). Annual budget laws – for the State and for social security financing – must be initiated by the government, not Parliament (Gicquel, 1998). The Constitution (Art. 39) specifies that the annual draft budget laws must first be debated in the National Assembly, i.e. the government may not first submit the draft budget law to the Senate. This article shows symbolically the political pre-eminence of the National Assembly.

The Constitution specifies strict time limits for debate in the two houses on the annual budget. The aim of these provisions is to accelerate parliamentary debate and to adopt the budget law and the law for financing social security before 1st January. Following the reception of the draft budget law in early October, the number of days allowed for completing the first readings are specified by law: the National Assembly has 40 days (Constitution, Art. 47) and the Senate 20 days (LOLF, Art. 40). A 70-day limit from the reception of the draft

IV. FRANCE

in early October is imposed on Parliament to make a final decision on the budget. This limit is inclusive of committee examinations in the two houses. In the case of disagreement of the committees of the two houses, the Prime Minister may establish a joint committee to resolve the impasse (Constitution, Art. 45).28 If the 70-day limit is not respected, the government adopts the budget by special ordonnance.29 Similarly, a 50-day limit for parliamentary decision on the draft law for financing social security is included in Article 47-1 of the Constitution.

4.2.2. Provisional budgets

Should the budgets not be adopted by 31st December, the executive is authorised by the Constitution (Art. 47 and 47-1) to adopt a provisional State budget and a provisional law for financing social security. For the State budget, expenditures (“services votés”) are based on policies of the previous year (LOLF, Art. 45); this is the only reason why the concept of services votés has been retained.

4.2.3. Powers of amendment

The Constitution does not allow Parliament to propose any amendments (to any law) that would create new expenditures, raise total State expenditure (charges) or lower revenues (ressources) (Art. 40). Parliament may only alter the composition of proposed State budget spending, by changing the amount allocated to programmes within missions (LOLF, Art. 47).

Even if Parliament proposes amendments, another constitutional provision allows the government to force through its own version of the budget. Article 49 authorises the Prime Minister, after agreement within the Council of Ministers, to commit the responsibility of the government on a draft law. If he/she does so, the text is considered to be passed into law unless the National Assembly proposes a motion of censure (which would result in the fall of the government) within 24 hours. This provision was used by a minority government in the early 1990s to adopt the annual budget (Hubert, 1996). Use of this provision was made possible by prior understandings with political parties supportive of the government’s budgetary policies.

4.2.4. Approval of resources

The authority for the government to collect taxes and other revenues is re-issued for a 12-month period in each budget, by a single vote of Parliament on the first part of the State budget (LOLF, Art. 34). Revenues are projected on a gross basis, although in execution, withholding of revenues destined to local governments and the EU is allowed (Art. 6). The draft budget law is voted in two parts, with Parliament first approving revenues, total expenditure ceilings

IV. FRANCE

(for the general budget, budget annexes and special accounts) and balance, before beginning a discussion on the second part of the budget law (Art. 42), namely detailed appropriations – a vote for each mission (Art. 43). If this procedure is not followed, the Constitutional Council may annul the entire budget law by declaring it to be unconstitutional (this happened in 197930). In order to renew the annual authority to collect taxes as from 1st January, the Constitution (Art. 47) includes an emergency procedure on which the LOLF (Art. 45) elaborates: a special temporary law to authorise tax collection must be passed prior to the adoption of the annual budget law.

4.2.5. The nature, structure and duration of appropriations

Prior to 2006, budget appropriations are by ministry and by economic type of expenditure (salaries, other current expenditures, investment, etc.), with the latter broken down between existing and new policies. The 2001 LOLF replaced this appropriation structure by one based on missions and programmes. Parliament particularly wished to see results from government programmes and an avoidance of overlap in government functions that had been perpetuated by a budget adopted on the basis of administrative units (see Arthuis, 2003).

Although the annual budget, as from 2006, is to be voted by mission and by programme, the programmes are to be broken down by seven different types of expenditures (salaries, running expenses, investment, etc.) (LOLF, Art. 5). With one exception, these are purely indicative; budget programme managers may reallocate between them. For example, investment and running expenses for a programme may be swapped by the budget manager without the authority of Parliament (not the case under the 1959 Ordonnance). The exception is for personnel expenditure: the upper limit for each programme is binding (LOLF, Art. 7). Moreover, the budget law must contain, for each ministry, binding ceilings for the number of personnel (Art. 7-III).

Under the LOLF, Parliament authorises a maximum amount for expenditure for each programme of the general State budget, each budget annex and each special account. Authority to spend is provided for both commitments and cash payments (LOLF, Art. 34). For commitments, Parliament grants authority and approves an upper limit for the State to enter into contractual arrangements that involve future payment. There is no time limit on commitment budget authority (LOLF, Art. 8). In contrast, the authorisations of cash payment are the upper limits for payment order issuance or actual payment within a 12-month period (LOLF, Art. 8). For personnel spending, the law states that commitments and payments are equal.

For most expenditures, budgeted amounts are binding maximum limits (crédits limitatifs). For certain expenditures (debt servicing, call-up of government guarantees, and others enumerated in Art. 10 of the LOLF), the limits

IV. FRANCE

are non-binding (crédits évaluatifs). These are items that must be paid irrespective of possible projection errors. If any excess spending relative to approved budgetary projections occurs on these items, the Minister of Finance must inform the parliamentary budget committee of each house of the reasons why overspending occurred. The Minister must also propose rectification in a supplementary budget before the end of the fiscal year (LOLF, Art. 10).

4.2.6. Carryover of appropriations and borrowing of future appropriations

Carryover of previous-year commitment authorisations must be stated in a government order (LOLF, Art. 15). For cash spending authorisations, carryover of expenditures within a given programme is allowed up to 3%. For non-personnel expenditures beyond this limit, any carryover has to be re-appropriated in a new budget law (Art. 15). Borrowing from next year’s appropriations is permitted for expenditure commitments, under conditions established in budget laws (Art. 9).

4.2.7. Public debt approval

Net increases in negotiable State debt are approved annually in the context of approval of the total resources – the first part of the budget (Art. 34-9). Lending by the State is subject to binding limits (except for foreign currency lending to countries where France has a monetary union). The LOLF also establishes mechanisms for following up on loan defaults by beneficiaries (Art. 24).

The law does not fix quantitative limits on the projected stock of public sector debt, nor does the LOLF refer to the need to establish prudent debt levels. This is in line with the constitutional limitation that the LOLF only deals with revenues and expenditures (Art. 34), not debt, other liabilities or assets. France, like other EU member countries, reports general government debt levels to the EU at least once a year. The MINEFI updates France’s threeyear Stability Programme, which is approved by the Council of Ministers (but not Parliament). After assessment by the EU Commission, the EU Council adopts a formal opinion of the programme, in particular in relation to the Maastricht criteria.

4.2.8. Promulgation, veto and publication of the adopted budget

All laws, including annual budget laws, must be promulgated by the President of the Republic within 15 days of their adoption (Constitution, Art. 10). The President may, within the 15-day limit, require Parliament to reconsider the budget. Promulgated laws are published in the Official Gazette.