JUDGMENT NO. 9

YEAR 2024

Commentary on the decision of

Angelo Maria Quaglini

The irreducible core of accounting harmonization rules for the protection of budget balance

for g.c. by The Journal of the Court of Auditors

ITALIAN REPUBLIC

IN THE NAME OF THE ITALIAN PEOPLE

THE CONSTITUTIONAL COURT

composed of:

President: Augusto Antonio BARBERA;

Judges: Franco MODUGNO, Giulio PROSPERETTI, Giovanni AMOROSO, Francesco VIGANÒ, Luca ANTONINI, Stefano PETITTI, Angelo BUSCEMA, Emanuela NAVARRETTA, Filippo PATRONI GRIFFI, Marco D’ALBERTI, Giovanni PITRUZZELLA, Antonella SCIARRONE ALIBRANDI,

has issued the following

JUDGMENT

in the proceedings concerning the constitutional legitimacy of Article 7 of Legislative Decree No. 158 of December 27, 2019 (Implementation rules of the special statute of the Sicilian Region regarding the harmonization of accounting systems, judicial accounts, and controls), in its current text ratione temporis; of Article 4, paragraph 2, of the Law of the Sicilian Region No. 30 of December 28, 2019 (Budget adjustment for the financial year 2019 and for the three-year period 2019/2021) and of Article 110, paragraphs 3, 6, and 9, of the Law of the Sicilian Region No. 9 of April 15, 2021 (Programmatic and corrective provisions for the year 2021. Regional Stability Law), promoted by the Court of Auditors, Joint Sections for the Sicilian Region, in the judgment of approval of the general accounts of the Sicilian Region, for the financial year 2020, by order of February 7, 2023, registered under No. 40 of the register of orders 2023 and published in the Official Gazette of the Republic No. 15, first special series, of the year 2023.

Having seen the intervention documents of the President of the Council of Ministers and the Attorney General of the Court of Auditors;

Having heard in the council chamber of December 6, 2023, the Judge rapporteur Angelo Buscema;

Resolved in the council chamber of December 6, 2023.

Facts of the Case

1.– By order of February 7, 2023, registered under No. 40 of the register of orders 2023, the Court of Auditors, Joint Sections for the Sicilian Region, in the proceedings for the approval of the general accounts of the Sicilian Region for the financial year 2020, raised questions of constitutional legitimacy of Article 7 of Legislative Decree No. 158 of December 27, 2019 (Implementation rules of the special statute of the Sicilian Region regarding the harmonization of accounting systems, judicial accounts, and controls), in its current text ratione temporis; of Article 4, paragraph 2, of the Law of the Sicilian Region No. 30 of December 28, 2019 (Budget adjustment for the financial year 2019 and for the three-year period 2019/2021) and of Article 110, paragraphs 3, 6, and 9, of the Law of the Sicilian Region No. 9 of April 15, 2021 (Programmatic and corrective provisions for the year 2021. Regional Stability Law), in reference to Articles 81, 97, first paragraph, 117, second paragraph, letter e), and 119, first paragraph, of the Constitution, in conjunction with Articles 3, 5, and 120, second paragraph, of the Constitution. Article 110, paragraphs 3, 6, and 9, of the Sicilian Region Law No. 9 of 2021, was also censured with reference to Article 81, fourth paragraph, of the Constitution, in relation to Article 51 of Legislative Decree No. 118 of June 23, 2011 (Provisions on the harmonization of accounting systems and budget schemes of Regions, local authorities, and their bodies, pursuant to Articles 1 and 2 of Law No. 42 of May 5, 2009).

The Joint Sections for the Sicilian Region state that, in the approval proceedings, in ascertaining the exact quantification of the final appropriations to be entered in the 2020 Budget Account in relation to the financial deficit to be recovered, it emerged that the application of the provisions in question, different and more favorable to the Region than the general discipline dictated by Article 42 of Legislative Decree No. 118 of 2011, would have led to a significant improvement in the Region's accounts.

In particular, Article 7 of Legislative Decree No. 158 of 2019, in its current text ratione temporis, headed «Reabsorption of the deficit resulting from the effects of the extraordinary re-assessment», would have identified a path for the reabsorption of some shares of the overall financial deficit recorded as of December 31, 2018 (those concerning the deficit of the 2018 management and the shares of deficit not recovered by the end of the same year) in derogation from the general and uniform model of discipline provided by state legislation for the regions.

Article 4, paragraph 2, of the Sicilian Region Law No. 30 of 2019, headed «Financial deficit as of December 31, 2018», would have introduced implementing provisions of Article 7 of Legislative Decree No. 158 of 2019, quantifying the shares subject to appropriation and annual reabsorption in derogation from the aforementioned Article 42, paragraph 12, of Legislative Decree No. 118 of 2011.

Article 110, paragraphs 3, 6, and 9, of the Sicilian Region Law No. 9 of 2021, headed «Repeals and amendments to Regional Law No. 33 of December 28, 2020, to Regional Law No. 36 of December 30, 2020, and to Regional Law No. 1 of January 20, 2021», would have provided, with the financial year already concluded, for budget changes with substantial effects on the final expenditure appropriations entered in the 2020 Budget Account subject to the approval proceedings, quantifying the relevant amounts on the basis of the provisions of Article 7 of Legislative Decree No. 158 of 2019 and Article 4, paragraph 2, of the Sicilian Region Law No. 30 of 2019.

The referring judge focuses preliminarily on the legitimacy of the Court of Auditors to raise a question of constitutional legitimacy during the approval proceedings, pursuant to Article 1 of Constitutional Law No. 1 of February 9, 1948 (Rules on constitutional legitimacy proceedings and on the guarantees of independence of the Constitutional Court) and Article 23 of Law No. 87 of March 11, 1953 (Rules on the establishment and functioning of the Constitutional Court).

First of all, the referring judge emphasizes that the approval proceedings are conducted with the formalities of contentious jurisdiction, provide for the participation of the Attorney General in adversarial proceedings with the representatives of the administration, and conclude with a ruling adopted following a public hearing.

The referring Panel points out that the approval proceedings, in the current state of legislation, are the only possibility offered by the legal system to subject to constitutional scrutiny legislative provisions that, by affecting individual items, modify the articulation of the budget and may alter its overall balances.

The referring judge then recalls the consistent case law of this Court, which has recognized the legitimacy to raise, in the context of the approval proceedings of the accounts, questions of constitutional legitimacy, in reference to Article 81 of the Constitution, against all those provisions of law that determine modifying effects of the articulation of the budget by the very fact of impacting, in a global sense, on the elementary units, i.e. on the items, with repercussions on the management balances, designed with the system of differential results (cited are the judgments No. 121 of 1966, No. 181 of 2015, No. 89 of 2017, No. 196 of 2018, No. 138 and No. 146 of 2019, No. 112 and No. 244 of 2020, No. 215 and No. 235 of 2021, and No. 253 of 2022).

The a quo judge attempts to interpret the censured provisions in a constitutionally oriented manner, arguing, however, that the clear literal meaning of the normative precepts whose legitimacy he doubts would not allow an interpretation compatible with the constitutional framework of reference. On the one hand, in fact, the existence of special legislation on the reabsorption of the deficit of the Sicilian Region, such as that established by the provisions under scrutiny, would be in derogation of the ordinary regime identified by Article 42, paragraph 12, of Legislative Decree No. 118 of 2011, which, in the exegesis of the constitutional jurisprudence, has been considered an expression of the need to harmonize public budgets under the specific profile of the discipline of the administration deficit and the uniformity of the times of its reabsorption, for the purposes of pursuing the constitutional precept of budget balance; on the other hand, the final expenditure appropriations of the 2020 Budget Account, relating to the financial deficit under accountability, would result from budget changes that unequivocally occurred after the end of the financial year, in violation of the constitutional principle of the annuality of the budget, referred to in Article 81, fourth paragraph, of the Constitution.

On the issue of relevance, the a quo judge argues that the questions of constitutional legitimacy are relevant for the purposes of the definition of the approval proceedings, since the outcome of the judgment on constitutional legitimacy would condition the final judgment on the general accounts under review. If the rules suspected of constitutional illegitimacy were to be removed from the legal system, in fact, the share of the deficit to be recovered recorded in the budget of the financial year 2020 would be illegitimate because it is seriously underestimated, with the immediate consequence of compromising the administration result at the end of the financial year and with a potential collapse of the entire planning and related accountability (on this point, the judgments of this Court No. 184 of 2022, No. 235 of 2021, No. 49 of 2018 and No. 184 of 2016 are cited).

In the opinion of the referring judge, the possible constitutional illegitimacy of the censured provisions would determine effects, not only on the balances of the 2020 accounts, but also on the budgets of future financial years planned on the balances of said accounts, since each budget is genetically linked to the findings of the previous year, from which it starts for the determination of its own (on this point, the judgment of this Court No. 49 of 2018 is cited).

With regard to Article 110, paragraphs 3, 6, and 9, of the Sicilian Region Law No. 9 of 2021, the question of constitutional legitimacy would also be relevant for the changes that these provisions would allow after the financial year has concluded, with retroactive effects on the articulation of the budget closed on December 31, 2020, for the purposes of verifying the exceeding of the extent of the financial space for the coverage of new expenses through the application of shares of the administration result (on this point, the judgment of this Court No. 215 of 2021 is cited).

The removal from the legal system of Article 110, paragraphs 3, 6, and 9, of the Sicilian Region Law No. 9 of 2021 would determine the illegitimacy of the appropriations relating to the deficit to be recovered recorded in the 2020 Budget Account, as well as the violation of the limits established by Article 1, paragraphs 897 and 898, of Law No. 145 of December 30, 2018 (State budget for the financial year 2019 and multi-year budget for the three-year period 2019-2021) and by paragraphs 9.2.15 and 9.2.16 of Annex No. 4/2 to Legislative Decree No. 118 of 2011 on the subject of limits to the application of the deficit for the deficitary bodies.

1.1.– The referring judge initially doubts the constitutional legitimacy of Article 7 of Legislative Decree No. 158 of 2019, of Article 4, paragraph 2, of the Sicilian Region Law No. 30 of 2019 and of Article 110, paragraphs 3, 6, and 9, of the Sicilian Region Law No. 9 of 2021 in reference to Article 117, second paragraph, letter e), of the Constitution, in the matter of «harmonization of public budgets», in relation to Article 42, paragraph 12, of Legislative Decree No. 118 of 2011, cited as an intermediate norm.

The procedure for the production of sources of law, and therefore also those for the implementation of the special statute of the Sicilian Region, could only be in accordance with the constitutional provisions on the matter of «harmonization of public budgets», which would not be subject to territorial derogations, not even in the context of special autonomies.

The referring judge emphasizes the indispensability of the principle of harmonization, which would be ontologically linked to the need to achieve uniformity of languages and homogeneity of the financial and accounting expression of all bodies operating in the system of extended public finance, without which it would not be possible to consolidate public accounts and pursue the objectives relating to economic and financial planning, coordination of public finance, fiscal federalism, compliance with EU rules, and prevention of irregularities capable of undermining budget balances (the judgments of this Court No. 168 of 2022, No. 184 of 2016 and No. 80 of 2017 are cited).

The uniformity of financial and accounting expression underlying the mathematical structure of public budgets would have been reiterated precisely with reference to the rules that introduce precise constraints on the methods of re-entering from the deficit, limiting the autonomous determination of the territorial body on the capacity of expenditure.

The referring judge doubts the legitimacy of the normative complex introduced by Article 7 of Legislative Decree No. 158 of 2019, by Article 4, paragraph 2, of the Sicilian Region Law No. 30 of 2019 and by Article 110, paragraphs 3, 6, and 9, of the Sicilian Region Law No. 9 of 2021, which would deviate from the uniform model outlined by Article 42, paragraph 12, of Legislative Decree No. 118 of 2011, an intermediate norm with respect to Article 117, second paragraph, letter e), of the Constitution, declining on the territory of the Sicilian Region different and more favorable rules for the Region itself.

The a quo judge observes that among the matters of exclusive and concurrent legislative competence referred to in Articles 14 and 17 of Royal Legislative Decree No. 455 of May 15, 1946 (Approval of the statute of the Sicilian Region), converted into Constitutional Law No. 2 of February 26, 1948, accounting and budget regulations are not included, nor does there seem to be any correspondence between the censured provisions and a specific statutory competence to be implemented through acts of concrete management of the budget and disbursement of the expenses allocated therein.

Moreover, in the opinion of the a quo judge, the matter of deficit reabsorption would not even fall within the objects identified among the areas of the contractual instrument, since Constitutional Law No. 1 of April 20, 2012 (Introduction of the principle of budget balance in the Constitutional Charter) has attracted the harmonization of public budgets to the matters of exclusive legislative competence of the State.

The referring judge also highlights that the instrument of the agreement between the State and the Sicilian Region, as outlined by Article 7, paragraph 2, of Legislative Decree No. 158 of 2019, would distance itself from the model envisaged by Article 27 of Law No. 42 of May 5, 2009 (Delegation to the Government on fiscal federalism, in implementation of Article 119 of the Constitution), insofar as, in conditioning the ten-year re-entry path from the deficit, it would focus on the mere structural reduction of expenditure, disregarding the qualifying aspects of the discipline established by the aforementioned Article 27, aimed at redesigning the contribution of special autonomies to the achievement of the objectives of equalization and solidarity, the internal stability pact, and the fulfillment of obligations arising from the EU legal system, under precise conditions and prerequisites, to be duly taken into consideration in the drafting of the implementation rules.

The referring judge also dwells on the reference that the censured provision makes to Article 9 of Law No. 243 of December 24, 2012 (Provisions for the implementation of the principle of budget balance pursuant to Article 81, sixth paragraph, of the Constitution) in the context of the initial phrase («[a]lso in order to take into account the provisions of Article 9 of Law No. 243 of 2012»). The binding content of Article 7, paragraph 2, of Legislative Decree No. 158 of 2019, in the opinion of the a quo judge, would go beyond the scope marked by Article 9 of Law No. 243 of 2012 in reference to the possibility of intervening with implementation rules, if one considers that the immediate and direct effect of the concerted mechanism (i.e. the conclusion of an agreement between the State and the Sicilian Region) would consist in a deferral of the deadlines for re-entering from the deficit through a reabsorption plan more favorable than that provided by the general and uniform model of Article 42, paragraph 12, of Legislative Decree No. 118 of 2011.

1.2.– The referring judge also doubts the constitutional legitimacy of Article 7 of Legislative Decree No. 158 of 2019, of Article 4, paragraph 2, of the Sicilian Region Law No. 30 of 2019 and of Article 110, paragraphs 3, 6, and 9, of the Sicilian Region Law No. 9 of 2021, in reference to Articles 81, 97, first paragraph, and 119, first paragraph, of the Constitution, from the perspective of the violation of the balance and sound financial management of the budget, as well as of the interdependent principles of multi-year coverage of expenditure, responsibility in the exercise of the elective mandate, and intergenerational equity.

In fact, the referring judge reports that the mandatory expenditure appropriations, «to be quantified at EUR 1,634,375,715.41, appear, evidently, different and more consistent than the appropriations recorded in the Budget Account subject of this approval proceedings, equal to EUR 461,889,971.86 as a result of the substantive ten-year reabsorption discipline followed by the Sicilian region in the application of Article 7 of Legislative Decree No. 158 of 2019 and Article 4 of Regional Law No. 30 of 2019. [T]he amounts of the final appropriations recorded in the expenditure items of the Budget Account under the heading of Financial Deficit, totaling EUR 461,889,971.86, constitute the final result of normative interventions that took place in 2021 on the articulation of the budget resulting at December 31, 2020, with retroactive effects starting from December 29, 2020 (Article 110, paragraphs 3, 6 and 9, of Regional Law No. 9 of 2021). According to the provisions in force at the time of the closure of the financial year, in fact, the amount of the relevant expenditure appropriations was equal to EUR 45,506,780.72».

The referring judge further reports that the aforementioned appropriations are also higher than those that – equal to EUR 1,328,793,634.70 – should have been allocated in the 2020 Budget Account, as a result of the three-year reabsorption provided for by Article 7, paragraph 2, of Legislative Decree No. 158 of 2019, in force ratione temporis. The deficit recorded in the budget influences the extent of the financial space for the coverage of new expenses by means of the application of shares of the administration result for their financing through the use of allocated, bound, and earmarked shares of the administration result, totaling EUR 694,700,914.92, in a preponderant part (specifically, for EUR 690,671,572.65) by means of budget changes in revenue and expenditure forecasts arranged directly with administrative measures, some of which were also adopted later.

Articles 3, 5, and 120, second paragraph, of the Constitution would also be violated, since the special discipline for the adjustment of the Sicilian regional legal system for re-entry from the deficit would have prevented the shares of the 2018 administration deficit (in this case, the deficit before harmonization and from extra-deficit, for EUR 916,746,242.27) from being reabsorbed according to the methods established generally by Article 42, paragraph 12, first sentence, of Legislative Decree No. 118 of 2011.

On the subject of the lengthening of the times for re-entry from the deficit, the referring judge refers to the constitutional jurisprudence consistently aimed at censoring various normative solutions aimed at prescribing the reabsorption over long and differentiated time frames, well beyond the ordinary budget cycle (the judgments No. 168 of 2022, No. 246 and No. 235 of 2021, No. 115 of 2020 and No. 18 of 2019, No. 10 and No. 107 of 2016 are cited).

1.3.– Furthermore, Article 110, paragraphs 3, 6, and 9, of the Sicilian Region Law No. 9 of 2021 would be constitutionally illegitimate for violation of Article 81, fourth paragraph, of the Constitution, in relation to Article 51 of Legislative Decree No. 118 of 2011.

The aforementioned Article 51, in generally providing that «[d]uring the financial year, the budget forecast may be subject to changes authorized by law» (paragraph 1), however, provides that «[n]o change to the budget may be approved after November 30 of the year to which the budget itself refers», without prejudice to the exceptions expressly indicated by the same provision (paragraph 6). This provision would constitute an expression of the general accounting principle of the annuality of the budget, also enunciated in Annex 1 to Legislative Decree No. 118 of 2011 and in Law No. 196 of December 31, 2009 (Law on accounting and public finance), Annex 1, principle No. 1.

The referring judge argues that, pursuant to the principle of annuality, the legislative decisions inherent to the budget, which provide for the allocation of financial resources and the consequent authorizations to which the management of appropriations is subject, should be elaborated on a time horizon of at least three years and refer to the distinct management periods included in the budget forecast, which, coinciding with the calendar year, should present themselves as current or subsequent, but never expired, as this would produce the substantial emptying of the planning function proper to the budget forecast.

The referring judge highlights that the ratio underlying the rule that requires the recording of the amount of the administration deficit as the first of the budget expenditure appropriations (Article 39, paragraph 7, letter c, of Legislative Decree No. 118 of 2011) would be closely correlated to the planning function of the provisional financial document, since the extent of the obligations for re-entry from the deficit would determine compression effects on the general size of the expenditure to be authorized, thus also identifying the financial space useful for the use of the administration result for the financing of new expenses in the financial year.

In the opinion of the referring judge, the postulate of the annuality of the budget would naturaliter contain the principle of the non-modifiability of the state of the budget after the closure of the financial year to which it refers (December 31), so that said principle should be considered violated not only in the event that the alteration of budget appropriations occurs with subsequent rules that make direct changes to a financial year that has already concluded, but also if subsequent rules provide for the repeal of changes already made within the reference financial year, arranging their effect on a date prior to the financial year that has already concluded.

The censured provision, by providing for the allocation of expenses with retroactive effects on the budget of the 2020 financial year that has already closed, would have altered the final results of the Budget Account that flowed into the closing document, in violation of the principle of annuality deriving from Article 81, fourth paragraph, of the Constitution and from Article 51 of Legislative Decree No. 118 of 2011, which constitutes an interposed parameter.

2.– The President of the Council of Ministers, represented and defended by the State Attorney General's Office, intervened in the proceedings, requesting that the censures raised by the referring judge against Article 7 of Legislative Decree No. 158 of 2019 be declared unfounded.

The President of the Council of Ministers argues that Legislative Decree No. 158 of 2019, establishing rules for the implementation of the special statute of the Sicilian Region, would have the nature of a source of primary rank with «reserved and separate» competence with respect to that exercisable by ordinary state and regional laws. Furthermore, Article 1, paragraph 2, of Delegation Law No. 42 of 2009 provides that with respect to the Regions with special statutes and the Autonomous Provinces of Trento and Bolzano «the provisions of Articles 15, 22, and 27» of the same delegation law apply exclusively, in accordance with the statutes.

The state defense recalls that, in harmony with the provisions of the aforementioned Law No. 42 of 2009, Article 79 of Legislative Decree No. 118 of 2011 establishes that «[t]he commencement and methods of application of the provisions of this legislative decree to the Regions with special statutes and to the autonomous provinces of Trento and Bolzano, as well as to the local bodies located in the same special regions and autonomous provinces, are established, in accordance with the relative statutes, with the procedures provided for by Article 27 of Law No. 42 of May 5, 2009».

It would follow that the principles of harmonization of public budgets, as regulated by Legislative Decree No. 118 of 2011, would be applicable to territorial autonomies only by means of the implementation rules of the special statutes (on this point, judgment No. 178 of 2012 of this Court is cited) and that the aforementioned Legislative Decree No. 118 of 2011– while representing an extension to territorial bodies of the state legislation to guarantee the homogeneity of the public accounting discipline that found its basis in Article 117, second paragraph, letter e), of the Constitution–, would not preclude particular articulations of the budget of the region or autonomous province based on the need to mark the economic and financial planning in the accounting procedures (on this point, judgment No. 80 of 2017 of this Court is cited).

The state defense also argues that the constitutional rule invoked attributes the matter of harmonization of public budgets to the exclusive legislative competence of the State, therefore the state law reserve could not be considered violated, since the censured Article 7 of Legislative Decree No. 158 of 2019 is a legislative provision of state source and an instrument for the implementation of the special statute of the Sicilian Region. For this reason, the censures raised by the referring judge in reference to Article