MANILA. Mincing no words, Malacañang yesterday branded the proposed P13.5 billion additional "pork barrel" of the House of Representatives as "unconstitutional" which, if allowed, would imperil the Arroyo administration's goal of a balanced budget this year.

Budget Secretary Rolando Andaya Jr. said that President Gloria Macapagal-Arroyo could use her veto power if the House panel failed to stick to the budget proposal she had submitted to Congress, which amounted to P1.227 trillion.

"Malacañang has nothing to do with it," said Andaya. "Without engaging the members of Congress in an argument, (the President) has the veto power. This is something we can do after, but it's best for the two chambers to talk things out."

He urged the House leadership to adhere to the constitutional provision which bars Congress from increasing the amount of the President's proposed budget yearly.

"From the standpoint of the Department of Budget and Management, we recognize the power of Congress to realign, reallocate budget," said Andaya, adding: "But of course we, in the end, also have the duty to follow the Constitution and adhere to the President's major policy of a balanced budget for 2008."

Andaya pointed out that the national government could easily incur a budgetary deficit of P8.3 billion for 2008 if Malacanang went along with the proposal of Albay Representative Edcel Lagman, chair of the House committee on appropriations.

Senate President Franklin Drilon claimed the other day that the House had "inserted" an extra P13.5 billion "pork barrel" in its version of the national budget for 2008 which, in effect, amended the President's budget.

Drilon said the House added the P13.5 billion pork barrel - which funds the pet projects of legislators and is a known source of kickbacks - to the Department of Public Works and Highways budget of P86.7 billion.

This is on top of the P12.4-billion pork barrel allocated to the 24 senators and more than 200 congressmen for their priority projects each year, Drilon said.

Lagman countered that the increase in the DPWH budget consisted of realigned funds from other items within the department's budget and other departments' budgets.

For instance, some P8.3 billion was realigned from the slow-moving foreign-assisted projects (FAPs) to locally funded projects within the DPWH to avoid "immobilizing such fund," he said.

In addition, some P756 million allotted for the Rural Road Network Development and the Laoag River Basin Flood Control was realigned from loan proceeds to personal counterparts and vice versa, according to Lagman.

And so was some P515 million, from the Quirino Highway project to the Tarlac-Nueva Ecija-Aurora-Dingalan Road, he added.

Andaya, however, noted that the House panel in effect increased Arroyo's proposed budget by P8.3 billion.

How? Andaya explained that there were two types of funding -- programmed and unprogrammed items.

The programmed items are listed in the National Expenditures Program submitted to Congress along with the proposed national budget. As regards the 2008 budget, programmed items are worth a total of P1.227 trillion.

He said the unprogrammed items are "off-budget" since they "can only be spent depending on certain conditionalities but is mainly the availability of revenues."

"What they (Lagman panel) did was to put the programmed items (worth P8.3 billion) with loan counterparts to unprogrammed items," he said.

(A foreign-assisted project has two components - local counterpart and loan counterpart or proceeds from official development assistance.)

But this increased the P1.227-trillion budget by P8.3 billion since the House in effect "doubled" the budgetary allocation for these items.

"Since the loan proceeds are sure to come in this year, what the House did was to place the counterpart loan proceeds (of the P8.3 billion) into unprogrammed items," he said.

Citing an example, he said if DPWH was given P10 in the programmed items, the House put an extra P10 in the unprogrammed items, for a total of P20.

"They actually doubled the budget (for the items). The danger there is it's unconstitutional - you can't increase the President's budget proposal. Second, it's fiscally unsound because it's tantamount to double expenditures," said Andaya.

This will result in deficit since the P1.227 trillion proposed budget is backed by expected revenues for the year, eventually putting at risk the target of a balanced budget for 2008.

"The (P8.3 billion) translates into additional spending," said Andaya, explaining that Congress' authority actually only covered the P770.73 billion representing programmed appropriations.

"They can't touch the P295.75 billion in interest payment and P210.73 billion in internal revenue allotment because they are mandated by law," said the budget chief, who had held the chairmanship of the House appropriations committee several times before assuming his current post.