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Supplementary Appropriation Act, 1760

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Supplementary Appropriation Act, 1760

14th Cortes Federales
Long title An Act to raise the limit on net new borrowing for the year 1760 set by the General Appropriations and Taxation Act, 1760; to authorize the first issue of recovery bonds within that limit; to make no appropriation in addition to the sums already appropriated for the year; and for connected purposes.
Introduced by The Council of State (Government of the Federal Accord), tabled by Treasury Secretary Tomás Iñiguez (CGA)
Extent Entire Federation of Nouvelle Alexandrie
Dates
Royal Assent 21.IX.1760 AN
Commencement 21.IX.1760 AN
Other legislation
Amendments None
Related legislation

The Supplementary Appropriation Act, 1760 (Alexandrian: Loi de crédits supplémentaires, 1760; Martino: Ley de Apropiación Suplementaria, 1760; Wechua: Yapasqa Qullqi Kamachiy, 1760) is a law of Nouvelle Alexandrie that raised the federal borrowing limit for 1760 AN set by the General Appropriations and Taxation Act, 1760 from NAX€975 billion to NAX€1,600 billion. The Council of State introduced it on 3.IX.1760 AN. The Federal Assembly passed it by 469 votes to 297 and the Chamber of Peers by 59 to 49, and it received Royal Assent on 21.IX.1760 AN.[1]

The Act appropriated no new money. Tax receipts in the first two quarters of the year fell short of the budget's forecast, and by the close of VIII.1760 AN the Treasury had used most of the year's borrowing limit. The Act let the Treasury borrow to cover the shortfall instead of holding back spending already voted. It also authorized the first issue of recovery bonds, which the Treasury sold in XIII.1760 AN with the backing of the Lindström Recovery Protocol.[2] It left in place the withholding of NAX€200 billion of emergency borrowing under the Economic Emergency and Recovery Act, 1758, which only a separate act of the Cortes may release.[3]

Background

The General Appropriations and Taxation Act, 1760, the first budget of the 14th Cortes Federales, appropriated NAX€21,155.0 billion against forecast receipts of NAX€20,180.0 billion. Its Article 37 limited the Treasury's net new borrowing for the year to NAX€975 billion, the size of the forecast deficit.[4] The limit left no margin for a shortfall in revenue. Article 33 of the same Act also barred any drawing in the year from the National Fiscal Reserve and Emergency Fund, the reserve meant to carry federal services through a revenue shock without emergency borrowing.[5][6] The Cortes had added to the federal borrowing in 1759 AN, when the recovery Act appropriated NAX€600 billion, met by borrowing, on top of the NAX€1,361.9 billion authorized by the 1758 AN budget.[7] Under the Lindström Recovery Protocol, Natopia had offered to take up to NAX€250 billion of New Alexandrian recovery bonds left unbought by private investors, though no such bond could be issued without the authorization of the Cortes.[8]

Receipts came in below the forecast. By the close of VIII.1760 AN the Treasury had borrowed NAX€895.2 billion over the first two quarters,[9][10] leaving NAX€79.8 billion of the year's limit, while the third quarter alone needed about NAX€368 billion. Without a higher limit the Treasury would have had to hold back payments the Cortes had already voted.

When the Government sought the confidence of the Cortes in I.1760 AN, it undertook that the NAX€200 billion of undrawn emergency borrowing under the Economic Emergency and Recovery Act, 1758 would stay withheld until a separate act of the Cortes released it. The independent deputy Piti Gándara had pressed for the undertaking, and thirteen independents led by her backed the Government on the vote of confidence.[11][3] From the start of the session the opposition questioned how the Government would pay for its plans: in II.1760 AN José Manuel Montero, the Leader of the Opposition, said the opening program gave "not one honest word about where the money is to come from once the emergency borrowing runs out".[12] The Government later asked the Cortes for a higher borrowing limit and left the tranche withheld.

Key provisions

The Act amends Article 37 of the 1760 AN budget to raise the borrowing limit from NAX€975 billion to NAX€1,600 billion. It authorizes the Secretary of the Treasury to raise up to NAX€250 billion of that borrowing by an issue of recovery bonds with a term of not more than fifteen years, the sum and maturity of Natopia's backstop under the Lindström Recovery Protocol.[13] The backstop may take any part of the issue that private investors do not buy. The Act makes no appropriation beyond the sums already voted for the year, and it does not release the withheld emergency tranche. The Secretary must report the year's borrowing to the Cortes within thirty days of the close of the year.

Effects and implementation

The Treasury borrowed NAX€1,538.1 billion in 1760 AN, NAX€563.1 billion more than the original limit and within the raised one. Receipts for the year came to NAX€19,351.7 billion, NAX€828.3 billion short of the forecast, while spending ran NAX€265.2 billion below the sums appropriated. Gross public debt, 67.4 percent of output at the close of 1759 AN,[14] reached 69.0 percent at the close of VIII.1760 AN[10] and 69.6 percent at the close of the year, leaving it further above the 65 percent medium-term anchor of the standing fiscal framework.[4] The Federal Debt Review Board, which the budget Act continued in its Article 31, must report to the Cortes at least once a year on the path of gross public debt.[15]

Federal borrowing and debt by quarter, 1760 AN (NAX€ billion)
Quarter Months Receipts Net borrowing Gross debt at close Debt to output
First[9] I to IV 4,962.9 521.1 33,739.8 68.5%
Second[10] V to VIII 5,134.8 374.1 34,113.9 69.0%
Third IX to XII 5,231.9 367.5 34,481.4 69.5%
Fourth XIII to XV 4,022.1 275.4 34,756.8 69.6%
Year - 19,351.7 1,538.1 34,756.8 69.6%

According to a Treasury statement of 16.XIII.1760 AN, the first issue of recovery bonds under the Act came to NAX€250 billion in fifteen-year bonds, of which private investors bought NAX€150 billion and Natopia the other NAX€100 billion through the backstop of the Lindström Recovery Protocol. The bonds priced inside the Protocol's yield cap, though the final yield was not disclosed.[16][2] The issue fell within the borrowing the Act had allowed to cover lower tax receipts, and the Federation will repay the bonds as its own public debt.[16]

Legislative history

Treasury Secretary Tomás Iñiguez tabled the bill for the Council of State on 3.IX.1760 AN.[1] Article 35 of the budget Act requires an independent note from the Federal Budget and Costing Office estimating the cost and effect of every major bill before the Cortes.[17] The Office, under its Director Ingrid Halvorsen,[18] laid its note on the bill before the Cortes on 8.IX.1760 AN. It put the Treasury's borrowing need for the rest of the year at about NAX€645 billion, some NAX€565 billion more than was left under the original limit, and found that the new limit would leave a margin of about NAX€60 billion above that need. At the average rate of 3 percent that the Federation paid on its debt, the Office estimated that borrowing above the original limit would cost about NAX€17 billion a year in interest once drawn, and it forecast gross debt near 69.6 percent of output at the close of the year.

The bill took the ordinary legislative procedure, and the Budget and Finances Committee reported it without amendment on 10.IX.1760 AN. The Federal Assembly carried it at its final division on 16.IX.1760 AN by 469 votes to 297, with 35 abstentions. The Chamber of Peers concurred on 19.IX.1760 AN by 59 to 49, with 10 abstentions. King Sinchi Roca II granted Royal Assent on 21.IX.1760 AN, and the Act came into force the same day.[1]

Legislative history
Stage Date Chamber Action Votes (Y-N-A) Details
1 3.IX.1760 AN Federal Assembly Introduction - Introduced by the Council of State; tabled by Treasury Secretary Tomás Iñiguez
2 10.IX.1760 AN Federal Assembly Committee report - Budget and Finances Committee; reported without amendment
3 16.IX.1760 AN Federal Assembly Final division 469-297-35 Passed; sent to the Chamber of Peers
4 19.IX.1760 AN Chamber of Peers Concurrence 59-49-10 Concurred without amendment
5 21.IX.1760 AN - Royal Assent - Signed into law by King Sinchi Roca II; came into force the same day

Bill as submitted to the Hopper of the Federal Assembly, 1760 AN

Supplementary Appropriation Act, 1760

THE READING OF
A
BILL
TO
raise the limit on net new borrowing for the year 1760 set by the General Appropriations and Taxation Act, 1760; to authorize the first issue of recovery bonds within that limit; to make no appropriation in addition to the sums already appropriated for the year; and for connected purposes.

Supplementary Appropriation Act, 1760

Presented by the Council of State
Ordered, by the Cortes Federales of Nouvelle Alexandrie,
to be Printed, 3.IX.1760 AN.

BE IT ENACTED by the King's Most Excellent Majesty, by and with the advice and consent of the Cortes Federales, in this present session assembled, and by the authority of the same, as follows:-


PART I
GENERAL PROVISIONS

Article 1: Citation.

  1. This Act may be cited as the Supplementary Appropriation Act, 1760.

Article 2: Definitions.

  1. In this Act:
    1. "Appropriation Act" means the General Appropriations and Taxation Act, 1760;
    2. "Protocol" means the Lindström Recovery Protocol;
    3. "recovery bond" means a bond issued by the Secretary under Article 6;
    4. "Secretary" means the Secretary of the Treasury;
    5. "withheld tranche" means the NAX€200,000,000,000 of borrowing authorized by the Economic Emergency and Recovery Act, 1758 and not drawn at the close of the year 1759.

Article 3: Purpose.

  1. The purpose of this Act is to allow the Federation to finance the sums appropriated for the year 1760 where receipts fall short of the forecast on which the Appropriation Act was made.

PART II
BORROWING

Article 4: Limit on net new borrowing.

  1. Article 37 of the Appropriation Act is amended as follows.
  2. In paragraph 1, for "NAX€975,000,000,000" substitute "NAX€1,600,000,000,000".
  3. The fiscal rules of Article 30 of the Appropriation Act continue to apply to borrowing under the limit as amended.

Article 5: No additional appropriation.

  1. This Act appropriates no sum in addition to the sums appropriated by Article 15 of the Appropriation Act.
  2. The Secretary must not apply borrowing under this Act to any purpose other than the payment of sums appropriated by the Appropriation Act or the service of the public debt.

PART III
RECOVERY BONDS

Article 6: Recovery bonds.

  1. The Secretary may raise not more than NAX€250,000,000,000 of the borrowing authorized by Article 37 of the Appropriation Act by an issue of recovery bonds.
  2. A recovery bond must have a term of not more than fifteen (15) years and is a charge on the credit of the Federation.
  3. The Secretary may accept the purchase under the Protocol of any recovery bonds not taken by private investors.
  4. The Secretary must lay before the Cortes, within fourteen (14) days of each issue, a statement of the sum issued, the term, and the sums taken by private investors and under the Protocol.

Article 7: Withheld tranche.

  1. This Act does not release the withheld tranche.
  2. The withheld tranche may be released only by an Act of the Cortes passed for that purpose.

Article 8: Report to the Cortes.

  1. The Secretary must lay before the Cortes, within thirty (30) days of the close of the year 1760, a report of the net new borrowing done in the year, the recovery bonds issued, and the receipts and payments of the Federation for the year.

PART IV
CLOSING PROVISIONS

Article 9: Commencement and application.

  1. This Act applies to all of the Federation of Nouvelle Alexandrie.
  2. This Act does not become law unless it has been given Royal Assent by H.M. King Sinchi Roca II, and must be published in the Federal Gazette within seven (7) days of the Assent.
  3. This Act comes into force on the day on which it receives Royal Assent.
  4. Articles 4 and 6(1) have effect for the year 1760 only; Articles 5, 6(2) to 6(4), 7 and 8 continue in force after the close of that year.
  5. If a provision of this Act is held invalid or unenforceable, only that provision, and not the whole Act, is inoperative.

Amendments

No amendments to date.

Voting record

The three parties of the Federal Accord held 448 of the 801 seats and voted for the bill: the Alliance for a Just Nouvelle Alexandrie, formed by the Democratic Socialist Party Democratic Socialist Party and the Wakara People's Party Wakara People's Party; the Civic Governance Alliance Civic Governance Alliance; and the Federal Consensus Party Federal Consensus Party, which is also bound to support the Government on confidence and supply. The bill was carried on the final division by 469 votes to 297, with 35 abstentions.[1]

Federal Assembly final reading (16.IX.1760 AN)

Notable votes on the Supplementary Appropriation Act, 1760 AN
Deputy Region Party Vote Role/Notes
Tomás Iñiguez North Lyrica North Lyrica Civic Governance Alliance CGA Yes Treasury Secretary; tabled the bill for the Government of the Federal Accord
Marcos Ferreira Gonçalves Santander Santander Democratic Socialist Party DSP Yes Premier; the bill was a government measure
Pierre-Antoine Blaise Valencia Valencia Democratic Socialist Party DSP Yes Deputy since 1749 AN
José Manuel Montero Wechua Wechua Nation Federal Humanist Party FHP No Leader of the Opposition
Fred Strong North Lyrica North Lyrica Federal Humanist Party FHP No Former Vice-Premier and Secretary of Defense
Sumaili Humahuaca Wechua Wechua Nation Federal Humanist Party FHP No Former Secretary of Justice
Yuiza Bohi'o Boriquén Boriquén Wakara People's Party WPP Yes Leader of the Wakara People's Party, a coalition party
Francisco Gabaza Santander Santander Federal Consensus Party FCP Yes Leader of the Federal Consensus Party; supported passage under the Accord
Cao Qiang Alduria Alduria Federal Consensus Party FCP Yes Special Counselor to the Council of State
Piti Gándara Alduria Alduria Independent Yes Pressed the undertaking that keeps the emergency tranche withheld

Vote summary by party

Federal Assembly final reading, 16.IX.1760 AN
Political party Yes No Abstain/absent Total % Support
Democratic Socialist Party Democratic Socialist Party 232 0 0 232 100%
Wakara People's Party Wakara People's Party 28 0 0 28 100%
Civic Governance Alliance Civic Governance Alliance 95 0 0 95 100%
Federal Consensus Party Federal Consensus Party 93 0 0 93 100%
Federal Humanist Party Federal Humanist Party 0 293 0 293 0%
Republican Party of Oportia Republican Party of Oportia 0 0 10 10 0%
Independent 21 4 25 50 42%
Total 469 297 35 801 58.6%

Analysis

The three Accord parties voted as a bloc, and their 448 votes were a majority of the Assembly on their own. The Federal Humanist Party Federal Humanist Party voted against as a body, and the Republican Party of Oportia Republican Party of Oportia abstained. Twenty-one independents supported the bill and four opposed it, three more in favor than had voted for the budget in IV.1760 AN.[19]

The bill passed by 172 votes; the budget had passed by 169. The bill did not release the withheld emergency tranche, which under the undertaking Piti Gándara pressed in I.1760 AN only a separate act may release, and Gándara voted for the bill.[11]

Chamber of Peers

The Chamber of Peers concurred in the bill on 19.IX.1760 AN by 59 votes to 49, with 10 abstentions.[1] As a revising house the Chamber may delay or amend an ordinary bill but cannot block one, and a bill on which it takes no decision within sixty days is deemed passed.[20]

Royal Assent

The bill received the Royal Assent of King Sinchi Roca II on 21.IX.1760 AN, on which day the Act commenced.[1]

Aftermath

After the first recovery-bond sale in XIII.1760 AN, Treasury Secretary Tomás Iñiguez said: "Three écus in five came from private buyers, and that is the number I watch. The backstop did what it was built to do. It meant we never had to sell this debt in a hurry or at any price the market chose to name." Montero said that "selling our bonds to Natopia does not make them cheaper to repay" and that the sale made the recovery "a little more dependent on decisions taken in Lindström".[16] The rest of the Protocol's backstop remained available for any further issue the Cortes might authorize.[16]

See also

References

  1. ^ a b c d e f Legislation introduced in the 14th Cortes Federales.
  2. ^ a b Lindström Recovery Protocol, "Recovery bonds".
  3. ^ a b Economic Emergency and Recovery Act, 1758, "Aftermath".
  4. ^ a b General Appropriations and Taxation Act, 1760, Article 37 and "Economic and fiscal outlook"; Royal Assent 22.IV.1760 AN.
  5. ^ General Appropriations and Taxation Act, 1760, Article 33.
  6. ^ National Fiscal Reserve and Emergency Fund of Nouvelle Alexandrie.
  7. ^ Economic Emergency and Recovery Act, 1758.
  8. ^ Lindström Recovery Protocol, "Terms".
  9. ^ a b "Nouvelle Alexandrie Economic Dashboard (Month IV, 1760)", NBC Newsfeed, 24.IV.1760 AN.
  10. ^ a b c "Nouvelle Alexandrie Economic Dashboard (Month VIII, 1760)", NBC Newsfeed, 24.VIII.1760 AN.
  11. ^ a b "The Accord wins the confidence of the Cortes, 461 to 293, and Gonçalves takes office", NBC Newsfeed, 15.I.1760 AN.
  12. ^ "The Federal Accord agrees its opening legislative program after weeks of coalition bargaining", NBC Newsfeed, 1.II.1760 AN.
  13. ^ "Natopia backs New Alexandrian recovery with orders, Alexandrium purchases, credit and bank capital", NBC Newsfeed, 29.XV.1759 AN.
  14. ^ "The Federal Accord inherits a frozen NAX€200 billion and the budget fight to release it", NBC Newsfeed, 14.I.1760 AN.
  15. ^ General Appropriations and Taxation Act, 1760, Article 31.
  16. ^ a b c d "Natopia buys NAX€100 billion of the Federation's first recovery bonds", NBC Newsfeed, 16.XIII.1760 AN.
  17. ^ General Appropriations and Taxation Act, 1760, Articles 32 and 35.
  18. ^ Federal Budget and Costing Office.
  19. ^ General Appropriations and Taxation Act, 1760, "Voting record".
  20. ^ General Appropriations and Taxation Act, 1760, "Chamber of Peers".
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