This blog post is part of our Frequently Asked Legal Questions series.
Introduction
Yesterday, April 16, the Swedish finance minister supplied the Swedish Parliament with a 2019 budget proposal, known as the spring fiscal bill. The delivery of the spring fiscal bill to the Parliament marks the beginning of the 2019 budget process, culminating in a budget to be adopted in the fall of 2018. In addition to outlining fiscal priorities for the upcoming fiscal year (January 1, 2019 to December 31, 2019, i.e. the calendar year, as per 9 kap. 5 § Riksdagsordningen), the spring budget is also a chance to revise the budget that was passed last year.
What is the timeline for adopting a state budget in Sweden?
Adopting a state budget follows the timeline found in the standing orders of the Swedish Parliament, also known as the Riksdag Act (Riksdagsordningen (SFS 2014:801)). The Riksdag Act is a law with special standing – meaning that although it is not part of the Swedish Constitution, it has special rules for amendment.
According to the Riksdag Act, the spring fiscal budget must be presented by April 15 (this year presented on April 16 as April 15 was a Sunday)(9.5.2 Riksdagsordningen), whereas the budget proposal for the fall must be presented no later than September 20 (9.5.1 Riksdagsordningen). In an election year (like this year) the budget may be submitted no later than November 15 ( 9.5.1 Riksdagsordningen), giving a newly elected government some extra time to complete its budget, as Election Day always falls on the second Sunday of September (Vallagen (SFS 2005:837).
Are there constitutional requirements related to the budget?
Yes, Chapter Nine of the Instrument of Government (Regeringsformen [RF]) deals with the state budget. The Swedish Constitution specifies that the budget should cover the following fiscal year unless there are special reasons to also include subsequent years (9 kap. 3§ RF). The use of funds in a manner not approved by the Parliament is prohibited (9 kap. 7§ RF). It also provides for the continuation of the previous fiscal year’s budget if a new budget has not been passed in time (9 kap. 5 § RF).
Are there other acts governing the budget?
Yes. The details are found in the Budget Act (Budgetlag (SFS 2011:203)) .
What must be included in the budget?
The budget must include
- a budget ceiling (2 kap. 2 § Budgetlag);
- a proposal for preliminary income assessments and a framework for expenditures for the second and third upcoming budget years (2 kap. 3 §)
- framework expenditures when there are specific expenditures listed (3 kap. 2 §)
What areas are covered in the budget?
The Riksdag Act also includes information on what spending areas must be included in the budget in Art. 9.5.3,
1. State Governance,
2. Socioeconomic and Financial Management,
3. Tax, Customs and Execution,
4. The Judiciary,
5. International Cooperation,
6. Defense and Emergency Preparedness,
7. International Development Cooperation,
8. Migration,
9. Well Care, Health Care and Social Care,
10. Financial Security in Case of Illness and Disability,
11. Financial Security for the Elderly,
12. Financial Security for Families and Children,
13. Equality and Establishment of New Immigrants,
14. Labor Force and Working life,
15. Student Funding,
16. Education and University Research,
17. Culture, Media, Religious Communities and Leisure,
18. Social Planning, Housing Supply, and Construction and Consumer Policy,
19. Regional Growth,
20. General Environmental and Nature Conservation,
21. Energy,
22. Communications,
23. Rural Activities, Rural Life and Food,
24. Business,
25. State Grants to Municipalities,
26. Interest on State Debt etc.
27. European Union Fee
The spring fiscal bill must include the activities for each area of expenditure.
How detailed is the budget?
The budget mostly include framework appropriations, but there may also be earmarks included.
How is the budget passed?
The budget is passed by the government presenting its budget, the opposition parties presenting unified or separate counter-budgets, and then the budget with the most votes in Parliament wins.
Is it always the governing coalition’s budget that receives most votes?
This caused a governing crisis in 2014 when an opposition party, the Swedish Democrats, decided to vote in favor of the four-party (Moderates, Center Party, Liberals and KD) opposition alliance budget. Customarily, once their own budget had failed, they would abstain from voting on another party’s budget. This alternative strategy made the four-party budget the winning budget instead of the government’s proposed one.
This budget vote caused the prime minister, Stefan Löfven, to announce that there would be an extraordinary (snap) election. The special election never took place, however, as the government and the four-party opposition alliance agreed to abstain from voting on a joint budget, allowing a minority government’s budget to pass even without a majority in favor of it. The agreement was commonly known as the December Deal Decemberöverenskommelsen [DÖ] (an unfortunate abbreviation as dö means die), which bound the parties until October 2015, when the KD party announced that it had left the agreement.
If the government’s budget doesn’t pass what happens then? Can the budget be amended?
Once passed, the budget is binding. However, the budget may be revised – but no more than two times – in addition to the fall and spring budgets (9 kap. 6 § Riksdag Act).
With regard to the opposition budget for 2015 that passed in 2014, the government and the government agencies were bound by it, but made revisions to the budget both in the spring and fall of 2015. In addition, the Swedish Parliament also approved a special amendment that fall because of the refugee situation in Europe.
What happens if a budget bill is not passed before the budget year starts?
If a full budget is not passed, the Parliament may pass designated budget appropriations. If a line item, for example health care, does not have a budget appropriation by January 1 then the previous year’s budget is automatically extended until a new resolution is passed (9 kap. 5 § RF). This means that government operations will automatically continue.
Does the budget have to be balanced?
Yes and no. Sweden has a requirement known as the “surplus target” (“överskottsmål”) which means that a saving goals must be included in the budget (2 kap. 1 § Budget Act). If the Parliament has decided on including savings in the budget, the government must report on how these saving targets are being met.
The current government has requested a review of the surplus target (En översyn av överskottsmålet (SOU 2016:67)).
Can the budget ceilings be exceeded?
Each area of the budget has a ceiling and if there is a risk that the cap will be exceeded, the government must take measures to prevent this from happening or ask the Parliament to approve the extra spending (1 kap. 3 § Budget Act).
Can the framework appropriations be exceeded?
Yes, temporarily, but not by more than 10% (3 kap. 8 § Budget Act). The Parliament may also give government the right to exceed framework appropriations resulting from unforeseen expenses (3 kap. 8 § 2 st Budget Act).
If you want to know how budgets and parliamentary decisions are reviewed or enforced around the globe, you can read the Law Library’s report on parliamentary oversight of the executive branch, which covers several countries, including Sweden.
Update: This was originally published as a guest post by Elin Hofverberg. The author information has been updated to reflect that Elin is now an In Custodia Legis blogger