Budget hearing starts; proposed budget at $70M net

The House of Representatives Ways and Means Committee will begin its series of budget hearings for fiscal year 2021 today, beginning with the CNMI Public School System at 10am, and the Northern Marianas College at 2pm.

Based on the proposed budget submitted by Gov. Ralph DLG Torres to the Legislature in April, PSS is to be allocated $17.5 million, a major cut from its $37.7 million fiscal year 2020 budget. The governor proposed $153,131 for the PSS board, also a far cry from the $322,837 allocation last year.

NMC, on the other hand, is proposed to be allocated $2.8 million, from the $5.9 million allocated in last year’s budget. Its board of regents is being proposed to be allocated $51,158, also a huge difference from last fiscal year’s $107,853.

The Department of Finance identified a gross budgetary resource of $144.4 million (as of March), with only $70.62 million in net resources that will be divvied up for the entire CNMI government. Also allocated is $50,813,963, or 35% set aside, for the legal obligations of the government to the Settlement Fund to pay 75% of class member benefits.

In his proposal, Torres cited the complete collapse of the CNMI tourism industry for the significant cuts in revenue, forcing the government to readjust its budget. He also stressed that, in the absence of the CNMI tourism industry and in terms of economic development, recovery efforts must be prioritized to revitalize the economy.

“We must continue to provide valuable services to the community; assess and improve areas affecting our current fiscal health, including the need to restructure government services; and reduce or eliminate redundancy,” he said in a letter to the Legislature.

With the significant reduction in resources, the governor noted that available funding “is only sufficient to cover 40 hours per pay period, which is 50% less what an employee will normally take home from an 80-hour per pay period.” They also considered minimal allocation for the delivery of basic public services.

Funding requested by

The departments’ original request was for a total of $215,446,529.

To maintain a balanced budget, critical activities and programs are considered with minimal allocation, with the governor also listing several assumptions and considerations, which include the payment of 75% of the salaries for retirees; 25% for PSS; and the 20-hour workweek for all employees with the exception of constitutionally mandated salaries.

It also included considerations for the $6,484,168, to fund the transfer of Medical Referral to the Commonwealth HealthCare Corp.; $1 million for NMC; and $400,000 for Latte Academy.

The governor also proposed removing all non-profit organizations in the budget, and the migration of 137 employees to other programs outside the general fund, either 100% or pro-rated time. This, according to the governor, will result in a net expenditure budget of $70,623,458.

“This net budget requirement excludes expenditures to be absorbed by sources outside the general fund, such as the leases from public lands and transfer of eligible expenditures into non-general fund sources amounting to $4,555,709 and $2,610,000 respectively,” he said. “The net operating budget for appropriation is $70,623,458, an amount equal to resources available for general appropriations and represents a balanced budget.”

Accordingly, the proposed budget excludes six non-profit organizations that the government can no longer sustain at the moment, which include the Humanities Council, Ayuda Network, Domestic Violence, and Karidat.

In addition, the proposed budget also reflects the elimination of all vacant positions that were not filled and can no longer be supported.

“The government is considering the implementation of a reduction-in-force that will carry over into the new fiscal year. A combined total of 99 vacant positions are removed in this proposed budget,” he said.

Based on the proposal, the Executive Branch will lose the most, with 107 positions to be reduced, followed by independent programs with 31, the First Senatorial District with 12, the Second Senatorial District with 11, and both the Judiciary and the Boards and Commissions with 4.

Tomorrow, the House Ways and Means Committee will hear the budgets of the Saipan Mayor’s Office and the Marianas Visitors Authority.