‘Unconstitutional, unfunded, unsound’

Gov. Eloy S. Inos vetoed seven provisions in the newly enacted $145-million budget for fiscal year 2016 for being “unconstitutional, unfunded, or unsound,” according to a letter he sent to both chambers of the Legislature on Wednesday.

Inos’ signature on Tuesday prevented a government shutdown but also signed off on cuts to the CNMI’s tourism body, the Marianas Visitors Authority, and vetoed salary increases for law enforcers, among others.

“Last year, the Legislature passed a budget and presented it to me with ample time to review its provisions,” Inos wrote. “This year, the Legislature passed the budget very near to the start of fiscal year 2016.”

The House and Senate were deadlocked for weeks on the budget but emerged with “compromise” provisions that included these cuts to the MVA and raises for law enforcers.

But not everybody got what they wanted. Inos approved cuts to MVA that he earlier called an “invasion” of earmarked funds—but with strong comment. Inos also dropped the salary raises because it was not clear to the Executive Branch where the Legislature sourced its funding.

“Next year, I hope the Legislature acts more expediently so that I can have the 20 days allowed under the Constitution to thoroughly review the appropriations without the threat of a government shutdown,” Inos said.

The budget measure now sits with the Legislature for their discretion and possible override.

Reprogramming authority

Inos vetoed sections of the budget that gave 100 percent reprogramming authority to the chief justice and mayors.

“[The provisions] are disapproved as they do not support sound fiscal policy,” Inos said.

Inos writes that there is no “apparent basis” for authorizing the chief justice and the mayors to reprogram up to 100 percent of their respective appropriations.

Inos said the 10 percent statutory reprogramming authority for the chief justice and the mayors provide them with “more than enough flexibility to deal with unanticipated expenses.

Inos, though, signed off on provisions to give him up to 100 percent reprogramming authority. This is a jump from last fiscal year budget’s 50 percent.

“This flexibility is warranted as the governor needs the flexibility to respond to…obligations resulting from the damage the Commonwealth suffered during Typhoon Soudelor and the Commonwealth’s obligation to retirees under the Johnson v. Inos settlement agreement,” he said.

Suspension of 1 CNMC 8253

The Legislature wanted to suspend a part of the Budget Code on “Hiring Restrictions” that Inos said “requires the government to fill positions that become vacant when an employee retires with an employee who earns a lower salary than that earned by retiring employee.”

Inos called this unsound policy.

“The Secretary of Finance must remit a payroll savings realized by this procedure to the Retirement Fund. The requirement under section 8253 encourages government savings and should not be suspended.

“It appears the intent of suspending [the section] may have been to redirect funds from the Retirement Fund to Medical Referral Services,” Inos said.

“If that is in fact the intent,” Inos said, “the wholesale suspension of Section 8253 will not carry out that intent. The wholesale suspension also suspends the requirement that a lower paid employee be hired to fill the vacancy. To redirect the funds, the Legislature must limit the suspension to the portion of Section 8253 that requires the Secretary of Finance to remit funds to the Retirement Fund and redirect the funds to Medical Referral Services.”

Public Auditor’s fee

The Legislature—in Section 605 of the budget—proposed that any remaining balance of the Public Auditor’s Fee of 1 percent of the total appropriations for each government agency’s operations and activities would be applied to the Medical Referral Services.

Inos said this provision is unconstitutional and disapproved it in its entirety.

Inos said that, without saying so, the section would reprogram the Public Auditor’s budgetary appropriations. Essentially, Inos said, any remaining balance of the Public Auditor’s appropriation would be “reprogrammed” for Medical Referral Services.

“The Public Auditor’s appropriation cannot be reprogrammed,” Inos writes, citing the NMI Constitution that guarantee a budget of at least $500,000 and mandates that this appropriation not be reprogrammed for other purposes.

Unconstitutional

Sections that prevented budget reductions to the Judiciary or Legislature “without legislative approval” first were vetoed as unconstitutional.

“If estimated revenue is less than projected, the Secretary of Finance may reduce appropriations so that such decrease is absorbed proportionately by the three branches,” Inos said.

“Requiring legislative approval before the Secretary of Finance can proportionately reduce appropriations made…sidesteps the constitutional process for enacting law and violates the separation of powers doctrine,” he said.

“Here, ‘legislative approval’ alters the rights of parties outside of the legislative branch—it effectively allows the Legislature to veto the action of the Executive Branch and violates the separation of powers doctrine. If the Legislature wants to change the way the Secretary of Finance responds to a decrease in estimated revenues, it must do so through the enactment of law and not by merely requiring “legislative approval.”

Allocation for drug court

Inos vetoed allocations for a “drug court” because he says it impermissibly funds a program that does not exist.

Citing an analysis of the Constitution, Inos said appropriation bills are limited to “programs that have already been authorized.”

The Legislature allocated $150,000 for a “new” drug court, not a program that was already authorized.

“When the drug court is actually established by law, the Legislature can pass a supplemental appropriation bill to fund it should it so desire.”

Salary increases

The section that provide for 5 percent across-the-board increase for law enforcement employed was found “not equitable.”

The salary increase does not account for law enforcement officers on Rota and Tinian, said Inos.

“This is not fair and it will create moral problems for law enforcement. Moreover, requiring the law enforcement agencies to use 5 percent of their personnel budget to fund this mandate would require agencies to cut staff and would run counter to the 25 percent cap on overtime. This is not workable…Although, I am vetoing this provision, it should not be interpreted as disapproval of salary increases in general,” Inos said, urging that lawmakers find “a fair and workable plan” to raise salaries.

Public schools

Inos deleted provisions that the Public School System believed encroached on their constitutional authority to run their school:

A provision that gave the expenditure authority for the operations of each public school to the principal or his/her designee

A provision that requires the education commissioner to reprogram all funds allocated to personnel positions that are vacant at the end of each quarter to the operations account of each respective school.

“[These provisions] are disapproved as they are unconstitutional. Designating the expenditure authorities for public schools conflicts with section 1(b) or Article XV of the Constitution which places the administration of the public schools with the Commissioner of Education,” Inos said.

MVA earmarks

The Legislature cut $2.5 from MVA programs to fund other agency needs.

Inos, while avoiding a veto, urged caution in the future.

“Redirection of funds could have detrimental effects on tourism and could jeopardize the government’s credibility with the Hotel Association of the Northern Mariana Island when implementing increases in the hotel occupancy tax in the future…To the extent that the Legislature finds it necessary to redirect MVA’s earmarked funds to other items, the Legislature should ensure that there is a nexus between the item and the promotion of tourism.”

Inos said the items funded by the MVA earmarks—streetlights, x-ray scanners for cargo, and cleanup and beautification programs for the Saipan mayor—have a “direct nexus” to tourism enhancement.