Torres: Some budget provisions unfair, irresponsible

While commending the Legislature for its hard work in passing the fiscal year 2021 budget bill, Gov. Ralph DLG Torres said it is “unfair and irresponsible” for the Legislature to include provisions in the bill that place on the Executive Branch the burden of bearing the financial obligations incurred by other branches or municipalities.

In his letter to Senate President Victor B. Hocog (R-Rota) and House Speaker Blas Jonathan T. Attao (R-Saipan) last Friday that explains his line-item vetoes on several provisions of the budget bill, Torres gave a point-by-point comments on items in the budget that he had issues with.

While recognizing the Legislature’s efforts to work and ensure that a balanced budget is passed for fiscal year 2021, Torres said the proposed budget bill was transmitted to his office in the early morning hours of Oct. 1, 2020, leaving him not enough time to provide comments in a timely manner.

He pointed out that, as required by the CNMI Constitution, he was supposed to submit a proposed budget to the Legislature by April 1, which he did, and that he even submitted a revised budget last July 1. He said the Legislature, in turn, must pass a balanced budget well before the start of the new fiscal year, which is Oct. 1, so that his office could thoroughly review the budget bill. Torres noted that the budget was not actually passed until after midnight on Oct. 1, thus forcing him, Lt. Gov. Arnold I. Palacios, Attorney General Edward Manibusan, and their staff to review the budget bill overnight so that he could sign the budget, avoid a government shutdown, and allow government employees to report to work that morning.

Torres urged the Senate and the House to prevent the same thing from happening again.

Torres also asked the Legislature to consider the inequities that can arise and have occurred during the budget allocation processes.

The governor said that, although he signed the budget bill into Public Law 21-35, he is compelled to address several sections that he found to be problematic in either their implementation or in their lack of fairness to other activities of the different branches of government.

Specifically, he said, the Executive Branch finds that the Legislature’s lack of transparency in providing clarifications for administrative provisions that move several sources of funding between programs, branches, and agencies and increase or decrease the number of positions affecting the current employment of personnel within an agency “were concealed irresponsibly.”

Torres said he is obliged to mention that many of the provisions added by the Legislature are either unclear or inconsistent with other provisions of law or impose additional and unnecessary steps that would delay efficient processes that are already in place.

“I find that many of these provisions unfairly burden our different branches of government,” he said.

Torres said Section 202 of the approved budget suspends earmarks previously placed to protect two critical components: the Group Health and Life Insurance benefit for retirees and the payment of debt service to the Marianas Public Land Trust.

Without the earmarks for GHLI, the amount appropriated for GHLI is only enough to cover 60 days or four semi-monthly payrolls for the GHLI benefits, Torres said.

The governor pointed out that in his July 1 submission, both the GHLI earmark and the allocation in the general fund were kept intact in order to provide the government with at least nine months to cover benefits. Additionally, this will give them more time to track collections versus projections so that they may able to secure other resources to fully fund this obligation’s remaining months, he said.

Torres said Section 202 places an unnecessary burden on the CNMI government, which now must ascertain the additional funding sources to meet this obligation, which is likely to unfairly include collecting from existing agencies and instrumentalities.

He said the second component affected by the suspension of earmarks is the payment of debt service to MPLT. This automatic appropriation, the governor pointed out, was intended to service the $15-million debt to pay expenses related to the government’s response to Super Typhoon Yutu.

Suspending this earmark therefore violates Public Law 21-3, which now requires the government to identify other sources to make this payment.

“It was because the earmarks upheld statutory mandates they were not touched during the fiscal summit held earlier this year,” said Torres. He asked the Legislature that similar intentions in future budgets be discussed beforehand so that they may be able to work together to avoid financial rises.

Another provision, Section 203, imposes additional reporting and requirements on the Finance secretary beyond what is already required by law, Torres said. Those additional requirements include quarterly fund status report and regular meetings with the chairpersons of the Senate Committee on Fiscal Affairs and House Ways and Means Committee.

Another provision, Section 501, grants the governor unlimited reprogramming authority in fiscal year 2021. Torres said that, while he appreciates the Legislature’s intent, this provision is tied to Section 902 of this act, which dictates the reprogramming authority of the Executive Branch to pay for the 25% pension of retirees. He said the Legislature’s generous act ignores the 64-hour pay period already imposed on the Executive Branch due to existing financial limitations and further thrusts onto the Executive Branch the responsibility of meeting the 25% pension payment obligation (amounting to $14 million annually). As such, he said, he finds that this provision callously compromises all critical public services.

Pertaining to vetoed parts of the bill, Torres said Section 404 ignores the existence of a law that defines the processes needed to be taken whenever there are changes in revenue estimates. He said the Planning and Budgeting Act dictates this requirement’s application for any changes to revenue estimates, whether there is an increase or decrease. For this reason, Torres said, he vetoed this provision.

Torres said Section 501 requires the administration to submit written notices no less than 15 days to the Legislature prior to exercising any reprogramming authority. He said the volume of reprogramming processed daily comes from programs outside the general fund and from members of the Legislature moving funds within members or committees. Thus, he said, this provision would now require him to notify them of their own request. Because detailed reporting requirements are submitted quarterly, Torres vetoed this provision in order to eliminate steps that create redundancies.

With respect to Section 601 (b), Torres said this provision mandates the Executive Branch to pay for the utilities for the Tinian and Rota, that this unfairly places a burden on the Executive Branch.

He said given that their budget allocations were increased from his submission by $892,000 and $1.3 million respectively—decreasing the Executive Branch’s allocation by $1.3 million—all utility costs and payments incurred shall be reverted back to Tinian and Rota. As such, Torres said, he must line-item veto this provision.

Section 602 (b) gives priority to furloughed employees when filling new or vacant positions. For this reason, Torres said, he applauds the Legislature’s action to grant him with this authority. This section, however, provides that these positions be blocked if they are not filled within 45 days. Because the process of hiring sometimes take more than 90 days, Torres said he must line-item veto this provision.

With respect to Section 603(a), this provision exempts semi-autonomous and autonomous agencies from paying the 1% Public Auditor’s Fee. Torres said it is unequitable and unfair to consider these exemptions when it is the responsibility of the government as a whole to bear all expenses associated with the mandates of the OPA. Torres finds it critical that the collection of the 1% OPA fee be equitable across all government agencies in order to enable OPA to perform its mandate. He said the non-collection of the 1% OPA fee from these government corporations creates a funding gap for OPA, leaving the agency underfunded.

The governor said Section 700(b) is problematic as it restricts the maximum number of positions for each business unit. He said realigning positions are necessary when expenditure authorities agree to assist each other through a reallocation of the number of positions within a department and its divisions such as in lateral transfers.

Torres said on Schedule A that appropriates budget to Tinian Environmental Quality, Micronesian Legal Services, and Northern Marianas Technical Institute, with his line item vetoes, there now exists additional funding in the amount of $368,934 for appropriation.

Torres pointed out that the Environmental Quality Tinian is a federally funded program and that the Micronesian Legal Services is a non-profit organization that cannot be funded through the budget appropriation. Although the NMTI, formerly the NMI Trades Institute, is now a publi entity, the agency’s transitionary period has not been completed and no transition report has been submitted to the Executive and Legislature, as required by law.

Under the budget bill that Torres recently signed, the revenue and resources available for appropriation for government activities in fiscal year 2021 is $96,476,054 and $4,556,164 from the Department of Public Lands, for a grand total of $101,032,218.

Under the new budget law, $4,746,200 is appropriated to the Judiciary; $6,089,186 to the Legislature; and $22,545,611 for the Executive Branch.

Rota is appropriated $5,617,805; Tinian and Aguiguan, $5,561,686; and Saipan and Northern Islands mayors and Saipan Municipal Council, $2,084,002.