How the Riksdag determines the central government budget

The Government has presented the proposed Budget Bill to the Riksdag. The parties and members of the Riksdag have presented their counter-proposals during the general private members' motions period in the autumn. Now it is time for the parliamentary committees to consider the proposals before the Chamber takes a final decision on the central government budget. The Riksdag determines the budget in two stages; first as a whole and second in detail.

In the first stage, the Riksdag takes a decision on total expenditure and an estimate of revenue in the central government budget. This decision determines how much money goes to the various areas of society– the expenditure areas. Once this decision has been made, normally at the end of November, the Riksdag decides on the details in a second stage. This involves deciding what the money in the various expenditure areas is to be used for. By mid-December, the Riksdag has normally taken all the necessary decisions on the central government budget.

A framework for each expenditure area

The Riksdag's decision-making procedure when considering the Budget Bill and counter-proposals is known as the framework model. This means that an expenditure framework is set for each expenditure area, specifying the maximum limit for expenditure in each expenditure area and an estimate of revenue in the central government budget.

Taxes and charges

At the same time as it determines the framework for each expenditure area, the Riksdag also decides the taxes and charges that are to be implemented. This enables the level of central government revenue for the following budget year to be estimated, which also makes it possible to calculate the level of central government borrowing requirements.

Counter-proposals to the Government's proposals

All expenditure ceilings and tax changes are treated as a single "package". The parties in the Riksdag that do not support the Government's proposal must present their counter-proposals in a similar way.

This means that, under the framework model, the opposition parties cannot form a majority on a single issue in the budget and use this to reject a proposal, they must agree on a whole package of proposals. The various packages are weighed up against each other when the Riksdag adopts a decision.

Stage 1: Proposals for expenditure ceilings

All proposals to the Riksdag must be considered by one of the 15 parliamentary committees before the members of the Riksdag take a decision in the Chamber. It is the Committee on Finance that prepares the Chamber's decisions on expenditure frameworks for the 27 expenditure areas.

The Committee on Finance

The other parliamentary committees are responsible for their specific expenditure areas. Each committee can inform the Committee on Finance of its views on the Government's and opposition parties' proposed ceilings. These views are known as statements of opinion.

The committees can also propose that an expenditure area receive more or less money or that money be distributed differently between the different expenditure areas.

The Committee on Finance's proposed expenditure ceilings

Once all the committees have submitted their statements of opinion, the Committee on Finance examines the statements and uses them as a basis for an overall proposal on ceilings for each expenditure areas in the central government budget. The Committee on Finance's proposal is presented in the form of a committee report.

The members of the Riksdag debate and take a decision in the Chamber on this proposal around 20 November. With this first decision on the budget, the Riksdag determines:

• the expenditure ceiling for each of the next three years;
• total expenditure for the next budget year;
• how much money each expenditure area will receive in the next budget year;
• changes in taxes and charges in the next budget year;
• an estimate of central government revenue for the next budget year;
• preliminary expenditure frameworks and estimates of revenue for the following two budget years.

There then remains the more detailed task of determining the allocation of expenditure within each expenditure area. This is dealt with in the second stage of the budget process.

Stage 2: Proposals for activities and appropriations

In the second stage of the Riksdag's work with the central government budget, the various parliamentary committees consider the Government's and opposition parties' proposals as to how the money is to be allocated within each expenditure area. For example, the Committee on Health and Welfare is responsible for the expenditure area Health care, medical care and social services, the Committee on Transport and Communications is responsible for the expenditure area Transport and communications and the Committee on Education is responsible for the expenditure areas Education and academic research and Financial support for students.

Committees can redistribute money

The committees can set different priorities to those presented by the Government and can redistribute money between different appropriations in an expenditure area, However, they cannot present any proposals that would lead to limits determined in stage I of the budget process being exceeded.

If a committee wishes to take an initiative of its own, or act on a private member's motion, it must estimate the expected impact on public finances. Any increases must be financed by an equivalent reduction elsewhere.

A committee may decide that more money is needed in a particular expenditure area, and that the limit therefore needs to be increased. The situation may, for example, have changed since the expenditure ceiling was determined.

In a situation such as this, the expenditure ceiling can only be increased following a decision by the Riksdag after a proposal from the Committee on Finance. The Committee on Finance can then examine whether an expenditure ceiling should be reduced within another expenditure area. The Committee on Finance and the Riksdag always have to decide how proposed increases in expenditure are to be financed.

Ready in December

At the beginning of December, the committees complete their proposals regarding the allocation of money within the various expenditure areas. The Chamber of the Riksdag then debates and decides on the proposals during December. The Riksdag takes a decision for each expenditure area. Once all the decisions have been taken, the Riksdag compiles the finalised central government budget for the coming year and hands it over to the Government a few days before Christmas.