Lula sanctions Budget Law 2024 with vetoes on health and social assistance

President Luiz Inácio Lula da Silva (PT) sanctioned with vetoes the Budget Guidelines Law (LDO) of 2024, which provides for the guidelines for the preparation and execution of the Union budget throughout this year. The project was approved by Congress on December 22, with a record value of R$53 billion for parliamentary amendments and R$4.9 billion for the electoral fund. The new law was published in the Official Gazette of the Union (DOU) this Tuesday (2).

The sanctioned text establishes that the execution of the respective Law must be compatible with the goal of zero deficit for Tax and Social Security Budgets. The upper limit equivalent to the primary surplus and the lower limit equivalent to the primary deficit in the amount of R$ 28,756,172,359.00.

In 2024, the majority of federal spending will continue to be on refinancing the public debt, around R$1.7 trillion, although the largest amount only has an accounting impact on the federal budget due to the debt rollover. The budgeted value repeats the level of the last three years.

Among Lula’s vetoes, which were determined after hearing the Ministry of Finance and Planning, is the determination of payment from the Union to federated entities in the first half of 2024, for the areas of health and social assistance. In justifying the veto, the president said that the determination increases “rigidity in budgetary and financial management and makes the management of public finances more difficult”.

The allocation of resources for “the construction and maintenance of state and municipal roads and road works intended for the integration of transport modes or productive flow” was also vetoed. “The legislative proposal goes against the public interest, as it would exceptionalize, from the prohibitions for the allocation of LOA resources, expenses that are not the responsibility of the Union, related to the construction and maintenance of state and municipal roads and road works”, explained the government.

Conservative amendment overturned

The amendment presented by conservative parliamentarians that would prevent certain expenses that violate “traditional values” was also vetoed by the government. The section prohibited the government from spending resources to encourage or finance:

• invasion or occupation of private rural properties;
• influence of children and adolescents to have “sexual options” different from their biological sex;
• actions to deconstruct, diminish or extinguish the concept of traditional family, formed by father, mother and children;
• sex change surgeries for children and adolescents;
• carrying out abortions, except in cases authorized by law.

According to the government, the text of the amendment creates strong legal uncertainty, compared to the proposal that vaguely prohibited expenses that “directly or indirectly, promote, encourage or finance” various conducts.

30-day deadline for committing resources is prohibited

The 30-day deadline for commitment and payments for individual amendments and state benches after the proposals were released was vetoed by President Lula.

In justifying the veto, the government reported that the measure “would directly affect the management of the budgetary and financial execution of the federal Executive Branch, without express constitutional provision and would violate the provisions of article 2 of the Constitution, as well as going against the primacy that The federal Executive Branch establishes the financial disbursement schedule, provided for in Complementary Law No. 101, of May 4, 2000 – Fiscal Responsibility Law”.

And he added that “the 30-day deadline for commitment could conflict with the systematic execution of budgetary expenses, which varies according to each type of execution and contracting, and requires the completion of regular steps within the scope of administrative processes”.

The government also vetoed the amount of 0.9% of revenue for commission amendments, which was being called a new secret budget and provided for two thirds for the Chamber of Deputies and one third for the Senate.

The amount represented R$11.3 billion, resulting in an increase in resources planned in recent years. In 2022, for example, the amount authorized for these amendments was R$329.4 million. In 2023, it reached R$6.9 billion.

See below other sections vetoed by the government from the LDO:

• use of Union resources allocated to the Fund for Maintenance and Development of Basic Education and Valorization of Education Professionals (Fundeb) to pay for transportation, food and school uniform expenses;
• attribution of competence to the Ministry of the Environment to implement public policy for ethical population control of animals, including castration, in addition to actions aimed at animal welfare and veterinary care;
• possibility of allocating resources for construction, expansion or completion of works to private non-profit entities;
• reservation of at least 30% of resources for housing programs, such as “Minha Casa, Minha Vida”, for cities with up to 50 thousand inhabitants.

Electoral fund is maintained

President Lula did not veto the R$4.9 billion ceiling for the Electoral Fund. The amount can be used by parties to finance expenses for the 2024 municipal elections.

The amount is equivalent to the amount authorized for these expenses in 2022. The government sent the proposal to Congress with a forecast of R$900 million for the fund, which provoked criticism from parliamentarians.

Before the joint session of Congress, which approved the budget project, the president of the Senate, Rodrigo Pacheco (PSD-MG), said, in a conversation with journalists, that he was against the value set by the rapporteur. “I completely disagree. I think there is no criteria. He [relator] took parameters from a 2022 general election,” he said.

“The electoral fund based on 2022 for municipal elections is a serious error by Congress. People won’t understand. Because in 2020, in the same municipal election, it was R$2 billion. Take the 2020 fund, correct it and apply it to 2024. It will cost R$2.6 billion for the correction,” said Pacheco.

In the vote, which took place in the Chamber plenary, the Novo party highlighted the need to undo the authorization for the use of R$4 billion for the fundão, but the proposal was rejected by the majority of parliamentarians (355 to 101, with two abstentions).