By MAYRA GOULART & DAYENNE OLIVEIRA*

The legal nature of the budget raises complex questions about the distribution of competences in the exercise of financial power and about the balance of power between the Legislative and the Executive branches.

The public budget is more than just an administrative tool; it is the backbone of a country's financial planning and execution, playing an essential role in economic and social management. The Annual Budget Law (LOA) reflects the organization of the budgetary system, but it should be understood as part of a broader and more complex system, composed of plans and programs that establish the guidelines and priorities for the allocation of resources. 

The constitutionalization of public finances brought budgetary matters to the center of the legal system, establishing that they must be guided by constitutional principles. In this context, budgetary institutions began to play a fundamental role in achieving the objectives outlined in the Constitution.  

The public budget is therefore not just a technical instrument; it has become the most important substantive law since the Constitution, unifying the financial activity of the State and directly influencing collective well-being. However, this centrality of the budget also exposes a series of challenges, such as the risk of excessive politicization and the complexity of ensuring that resources are allocated efficiently and fairly. The importance of the budget requires rigorous and transparent management, but also constant vigilance to ensure that it does not become a tool of power concentrated in the hands of a few. 

 The budget cycle (which encompasses everything from preparation to evaluation and control) and its process is part of a system of checks and balances, where each branch of government plays a specific and limited role. The role of the President of the Republic is to present a government plan that reflects his electoral platform, while the National Congress has the responsibility of perfecting this proposal, ensuring that it meets national demands in an equitable manner. 

Tax amendments — what is being discussed? 

 Parliamentary amendments, constitutional prerogatives of the Legislative Branch, are crucial tools for modifying budget proposals submitted by the Executive Branch. They allow Congress to directly influence the allocation of public resources, becoming essential instruments for ensuring that regional and sectoral priorities are included in the budget. 

 However, the legal nature of the budget raises complex questions about the distribution of powers in the exercise of financial power and the balance of power between the legislature and the executive. Although the budget is traditionally seen as an authorizing document, which simply allows the executive to make expenditures, the question of whether the government can or should fail to execute a law that has been passed remains a subject of intense debate. 

 This scenario leads us to a necessary reflection on the checks and balances that guarantee the balance between the Powers. How can we ensure that the Executive respects the will of the people, expressed through their representatives, in the allocation of public resources? How can we prevent parliamentary amendments from becoming mere instruments of political bargaining, weakening the autonomy of the Legislative? These would be the questions that an analyst who is unaware of the singularities of the historical formation of Brazil could formulate. However, those who are familiar with the centrifugal force triggered by the actions of local elites, who, since the colonization process, have acted, through their economic and political arms, in favor of patrimonialist power projects, are aware of this. Likewise, those who depend on the State for the success of their enterprises strive to elect their co-religionists to ensure the effective representation of their enterprises. This effort, in a context in which private donations to candidates have been limited and campaign resources have become mostly public, now depends on each party's ability to elect deputies and, to a lesser extent, senators to the National Congress.  

However, once elected, these legislators will be able to use public resources not only to support the electoral dynamics that structure their power projects, but also to finance their various projects, using parliamentary amendments to this end. For this reason, patrimonialism, as the appropriation of the Public Budget for private coffers, does not indicate a dynamic that is alien to the State, but rather a drain that is triggered from within, by political actors. For this reason, this dynamic is prerequisite for winning elective mandates through electoral processes, which become the central focus of the efforts of those who wish to perpetuate their power projects. It is a cycle that involves a triangulation of resources between members of the National Congress and their allies in the municipalities where they establish their power projects, with the territorial dimension being an important element that reinforces its centrifugal and non-republican character, since, if each group is only concerned with its territory, there is no construction of the common or of the public.

Given this situation, those who dedicate themselves to politics in favor of national development projects, regardless of their ideological bias, function as centripetal forces whose capacity to act is reduced by the action of centrifugal forces, to the extent that the Public Budget is limited. However, those in the National Executive enjoy some budgetary prerogatives that reinforce such capacities. This is the case, for example, of the incomplete nature of our federalism, since the transfer of powers to the federative entities was not accompanied by a proportional transfer of taxes, leaving them to a certain extent dependent on a good relationship with the Presidency of the Republic.  

Another example of prerogative concerns the process of drafting the Annual Budget Law (LOA), in which the Executive branch was responsible for legal initiative, although legislators could propose amendments to the submitted bill. This prerogative has been threatened, as has the possibility of implementing policies designed in light of national development projects through the Public Budget, in which the objectives and rewards return to the republican principles of commonality and publicity.

The escalation of the conflict

Constitutional Amendment No. 86 of 2015 marked a turning point in this relationship. Before it, the implementation of parliamentary amendments depended almost exclusively on the will of the Executive Branch, which often turned them into political bargaining chips.  

In the model known as Coalition Presidentialism, amendments were triggered when individual members of the parties that were part of the government coalition refused to vote in accordance with the instructions of their leaders. With the new rule, which made the execution of some of these amendments mandatory, the impact on the public budget became increasingly evident, especially with the significant increase in the amounts involved. According to data from the Chamber itself, in that year, the amount allocated to mandatory amendments was R$9,66 billion; in 2024, this amount jumped to R$44,67 billion, reflecting the growing protagonism of the Legislative Branch in the allocation of public resources.

Constitutional Amendment 86/2015 was a legislative initiative under an executive that had weakened and lost popularity after the June Protests and the events that followed. The regulation established that 1,2% of Net Current Revenue (RCL) should be used for individual amendments, giving it a certain mandatory nature, since the government could only allocate them in proportion to the blocking of discretionary expenses. The decision, orchestrated by then-President of the Chamber of Deputies Eduardo Cunha, was a milestone, as it initiated a process of budgetary escalation through parliamentary amendments, which represented 6,1% of discretionary expenses in 2014, doubling their proportion in 2019, the year in which they exceeded 12% of RCL.

This change led to a clear redefinition of the balance of power between the Legislative and Executive branches, reinforcing the independence of parliamentarians in relation to the government and their own parties. In their place, as agents in these negotiation processes with the Executive, the figure of the presidents of the Senate and, above all, of the Chamber of Deputies emerged.

The Speaker of the Chamber of Deputies plays a crucial role in the budget process for several reasons. First, the budget process begins in the Chamber, including mandatory amendments, as established in the Constitution (art. 66, II, bc/c art. 64). In addition, the Chamber has a significantly larger number of members than the Senate, which requires the Speaker of the Chamber to have a refined ability to articulate a wide range of regional interests and demands. This is evidenced by the fact that more than 75% of the budget allocated to individual amendments is allocated to members of the Chamber, as per Art. 166, §9º-A of the Constitution. This strategic position gives the Speaker of the Chamber a decisive influence in negotiations with the Executive, making him a central actor in the power dynamics between the two branches of government.

Constitutional Amendment No. 86/2015 initiated a cycle of reforms that gradually reinforced the mandatory nature of the public budget in Brazil. However, rather than simply paving the way for positive advances, these changes brought with them a series of challenges and controversies. Constitutional Amendment No. 100/2019, by expanding the mandatory execution of collective amendments, which include the programs of parliamentary groups from states and the Federal District, expanded the scope of this model, but also increased the pressure on fiscal management.  

Within this context, different types of amendments impact the budget process in different ways. Individual amendments allow members of parliament to direct resources to their electoral bases, while group amendments seek to meet broader regional interests. Committee amendments reflect sectoral priorities and are proposed by technical committees or by the Boards of Directors of the Legislative Houses.  

However, in the 2020 LDO, the introduction of the rapporteur's amendments, associated with the so-called “secret budget”, brought with it a new and significant controversy. These amendments, which allowed the allocation of federal funds without identifying the congressman responsible, were criticized for promoting shady negotiations and patrimonialist practices. In 2020 and 2021, the amendments accounted for more than 33% of the federal government's annual discretionary spending. The lack of transparency in their implementation generated intense debate, culminating in the prohibition of these amendments by the Supreme Federal Court in 2022.

The result of this process was the consolidation of a dynamic of imposition in the face of the amendments presented by the Legislature to the budget, leaving open crucial questions about the efficiency and equity in the distribution of public resources. These amendments unequivocally reinforce the power of the Legislature, raising concerns about the growing fragmentation of the budget, to the extent that this power does not act in a cohesive manner in favor of national development projects, resulting in a channeling of public resources towards patrimonialist power schemes in the localities where each deputy configures his electoral bases. 

This clash of forces culminates in the controversy over the nature of the budget: should it be mandatory or authorizing? In the authorizing model, the Executive Branch has greater control over spending decisions; in the mandatory model, the Legislative Branch gains prominence. The nature of the budget cannot be discussed without delving into the intricate relationship between the branches of government, where the dispute for control and influence over the use of public resources is constant. 

At the same time, it is observed that the centralization of mandatory amendments in the Legislative branch, often favoring local elites, has shifted the budgetary decision-making power away from the Executive branch, contributing to an escalation of the Legislative branch's control over the budget. The mandatory amendments, which originally aimed to guarantee greater parliamentary autonomy, have become powerful political bargaining tools, fueling local power projects without any impact on the construction of a better nation for all Brazilians.

In this context, the STF has played a fundamental role in defending the Constitution. On December 19, 2023, Justice Rosa Weber, in a single-judge decision, prohibited the use of amendments by the budget rapporteur-general to create expenses or expand the programs provided for in the annual budget bill, emphasizing that these amendments must be limited to correcting errors and omissions, according to the Constitution (art. 166, § 3, III, item “a”). This decision caused significant friction between the Judiciary and Legislative branches, by limiting a practice that had been used to shape the budget in a non-transparent manner and outside of constitutional control. The Legislative branch quickly adapted, introducing the so-called “pix amendments” — direct transfers to municipalities without requiring specific projects and without transparency regarding their traceability. 

On August 14, 2024, Justice Flávio Dino, in a single-judge decision, imposed new restrictions on the use of mandatory amendments, seeking to restore control of the national budget and rebalance power between the Legislative, Executive, and Judiciary branches. The decision requires that the amendments meet technical criteria of efficiency, transparency, and traceability, and assigns to the Executive the responsibility of assessing, in a substantiated manner, whether the amendments are suitable for execution. In addition, it determines that execution will only occur if there is a work plan compatible with the budget and full transparency and traceability of the resources.  

In response to Flávio Dino’s decision, the presidents of the Chamber of Deputies, Arthur Lira, and of the Senate, Rodrigo Pacheco, and ten parties (PL, União Brasil, PP, PSD, PSB, Republicanos, PSDB, PDT, Solidariedade, and PT) submitted a request to the president of the STF, Luís Roberto Barroso, to suspend the injunction of Flávio Dino’s single-judge decisions. However, Barroso maintained the injunction, stating that the STF plenary should decide on the matter. In an extraordinary session on August 16, the STF justices voted unanimously to continue the suspension of the mandatory amendments until Congress established new transparency rules. Interestingly, justices Nunes Marques and André Mendonça, appointed by Jair Bolsonaro, also voted with Dino to suspend the payments of the “Pix” and mandatory amendments. Less than a week later, at a meeting at the Supreme Court, it was agreed that the Pix amendments would continue, but with new requirements, such as prior identification of objects, priority for unfinished works, and accountability to the TCU and CGU. It was also decided that the bench amendments would be directed to structural projects, while the committee amendments would focus on projects of national or regional interest, defined jointly by the Legislative and Executive branches.  

The decision therefore restores the Executive's influence over the allocation of these resources, which will be channeled into national projects, led and outlined under the leadership of the President of the Republic. In his third term, as in the previous ones, Lula continues to bet on developmentalism as a strategy to stimulate the economy and increase the perception of well-being among citizens, stimulated by consumption. Hence his concern with increasing revenue and containing the budgetary drain through amendments.

This result weakened the position of the Legislature, which now faces the prospect of ceding some of its power in negotiations with the Executive and Judiciary. In response, the Chamber of Deputies quickly moved to curb the actions of the Supreme Court. The Constitution and Justice Committee (CCJ) put on the agenda a package of measures aimed at restricting the powers of the Supreme Court justices.

Among the proposals under discussion was the possibility of Congress suspending Court decisions that are considered to be an overreach of the jurisdictional function. Another measure was the “PEC of Monocratic Decisions”, approved by the Senate last year, but stalled in the Chamber until the recent clash with the STF. In addition, the package included two bills that would classify as a crime of responsibility by STF ministers any “usurpation of powers” ​​of the Legislative or Executive branches. However, after negotiations by the government base, the CCJ postponed the vote on these proposals, including the two bills. Although the bills were under discussion in the CCJ, this did not imply that they would be taken to the plenary of the House for a vote.

Although mandatory amendments were created with the aim of strengthening parliamentary autonomy, the modality currently under discussion in the STF raises serious concerns regarding the lack of transparency in the allocation of resources. The transformation of these amendments into political bargaining tools compromises governability and efficient fiscal management, creating an environment conducive to the misuse of public resources. It is essential that the debate in the STF take into account the need to improve transparency and control mechanisms, ensuring that these amendments fulfill their original purpose of serving the collective interest in a clear and responsible manner.  

Just as occurred in the relationship with the authoritarian drifts of Jair Bolsonaro and the Rape Bill, the STF fulfills the role granted to it in the neo-constitutionalist arrangement, arising from the traumas arising from the Second World War, acting as guardian of the Constitution and the principles of political liberalism in the face of the formation of majorities contrary to its basic principles such as civil rights and the separation of powers.

*Mayra Goulart is a professor at the Department of Political Science at UFRJ.

*Dayenne Oliveira has a master's degree in Regional Economics and Development from UFRRJ.

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