Babauta’s analysis of La Fiesta turnover is ‘mixing apples with oranges’

Gov. Juan N. Babauta’s recent rationalization to the media that the eventual transfer of ownership of the La Fiesta complex to the Governor’s Office from Northern Marianas College is not illegal because the administration used federal grants and not local appropriations is clearly illogical and not substantive.

As indicated in a recent opinion given to the media by Senate minority leader Pete P. Reyes, the governor’s move to assume responsibility for La Fiesta may be illegal as it would cause the CNMI government to incur a debt without the approval of the Legislature. In addition, Reyes indicated that the $4 million remains “unpaid” and creates a debt for this government, which is contrary to what the Commonwealth Constitution stipulates. The senator went on to say that the Constitution provides that “nobody” has the authority to create a public debt unless it is backed by majority of the Legislature.

It should be noted that the $4-million debt with interest that was initially established between the NMC Board of Regents and the proprietors of the La Fiesta Mall complex, and then transferred recently vis-à-vis a signed formal agreement by Babauta and the BOR—effectively allowing the fiscal responsibility and financial onus of the operational costs, as well as the annual lease payments of $200,000 plus interest to be relinquished and passed on to Babauta to take care of—is a completely “separate issue” from the $3.5 million of federal funding that came out of the Jobs Growth and Tax Relief Reconciliation Act of 2003 and used to purchase the physical La Fiesta Mall complex.

Notwithstanding the fact that there was federal funding used to purchase the La Fiesta Mall, there is no relevant correlation between the type of funding, i.e., federal versus local appropriations, used to buy the complex and the creation of the $4-million debt with interest that must be paid back annually until 2024 that was stipulated publicly when the transaction was made between the BOR and the proprietors. Babauta’s reasoning that the federal funding to purchase the La Fiesta Mall complex and the resulting debt from the $7.5 million transaction being one of the same is akin to “mixing apples and oranges.”

And even if the Babauta administration attempts to pay the fiscal obligation of monthly operational costs and annual lease payments for La Fiesta with “federal funding,” it still does not change the obvious fact that the $4 million debt was established without the full consent and approval of the CNMI Legislature which, according to the Commonwealth Constitution, would not make it legitimate.

Had the $4 million debt not been established from the transaction incorporating approximately $7.5 million for the La Fiesta Mall, then Babauta’s argument that the transaction was “legal” because the funds that were used came from a “federal grant,” as opposed to “local appropriations,” might be considered substantive and within the parameters of the law.

However, since there was clearly the establishment of a multi-million dollar debt that is the fiduciary responsibility of the Babauta administration to take care of, then the governor’s argument and position that the official turnover and paying back the public debt of $4 million without the full consent of the CNMI Legislature was not illegal is not substantive and clearly without merit.

An important question that must be posed at this juncture is: Why is the governor and not Pamela Brown, the attorney general for the CNMI, making statements regarding “legal issues” involving the La Fiesta Mall transfer of fiscal obligation and the payment of a public debt of $4 million that is in conflict with what the Constitution stipulates?

Section 11, Article III of the Commonwealth Constitution states that, “the attorney general shall be responsible for providing legal advice to the governor and executive departments, representing the Commonwealth in all legal matters, and prosecuting violations of Commonwealth law.”

If the advice given to the governor by the attorney general is not in compliance with the mandates of the Commonwealth Constitution, then the question of whether the highest law enforcement official of the CNMI should either resign, or face the prospect of a “recall” due to giving advice that is in conflict with the supreme law of the CNMI, should be entertained.

Thus, if it is ascertained that Gov. Juan N. Babauta violated one or several of the Commonwealth Constitutional mandates, then he would presumably be subject to prosecution by the CNMI attorney general and/or Section 3, Article IX (Recall), “Elected officials are subject to recall by the voters of the Commonwealth. The petition must identify the official by name and office and be signed by at least 40 percent of the persons qualified to vote for the office occupied by the public official,” because it is her job to “prosecute violations of Commonwealth law.”

Another important question that must be posed is, “Is the payment of $200,000 plus interest that was due this past Oct. 31, 2004 and recently made by Babauta considered ‘not legitimate’ since it involves the $4 million debt in question—created without the official backing and approval by the majority of the CNMI Legislature?”

Section 6, Article X (Liquidation of Deficits) of the Commonwealth Constitution states that “any person may bring an action to require the government to reallocate its expenditures in accordance with a deficit reduction plan.” Moreover, if anyone who believes that the governor has “neglected his duty” (Section 19, Article III, Impeachment) because of raising the deficit and violating the Commonwealth Constitution by establishing a “public debt” without the approval of the CNMI Legislature, then Section 9, Article X (Taxpayer’s Right of Action) states that, “a taxpayer may bring an action against the government or one of its instrumentalities in order to enjoin the expenditure of public funds for other than public purposes, or for a breach of fiduciary responsibility and duty.”

At the gubernatorial inauguration in January 2002, Babauta swore on a Bible that he would “defend the Constitution and the laws of the Commonwealth of the Northern Marianas Islands, as well as discharge his duties to the best of his ability.” Moreover, the Commonwealth Constitution stipulates in Section I Article III that “the governor shall be responsible for the faithful execution of the laws.”

Since one of the constitutional mandates—Section 3, Article X (Public Debt Authorization), “public debt may not be authorized or incurred without the affirmative vote of two-thirds of the members of both houses of the Legislature”—has clearly not been adhered to by the governor, then one could argue that the governor is not following the supreme law of the NMI to the letter.

Other Commonwealth Constitution mandates that the governor has not adhered to are in Section 6, Article X (Liquidation of Deficits) which states that, “if an operating deficit is incurred in future fiscal years (beyond 1985), then the government must retire [that deficit] during the consecutive fiscal year following the year”; and Section 4, Article X (Public Debt Limitation) which states that, “Public indebtedness may not be authorized for operating expenses of the Commonwealth Government or its political subdivisions.”

And still another Constitutional mandate that has clearly not been followed by Babauta pertains to the Retirement Fund. Section 20, Article III (Executive Branch) states, “that accrued benefits for this system shall not be diminished or impaired.” Since Babauta was sworn in as CMNI governor, the payments by the CNMI government to the Retirement Fund have been inconsistent and sporadic. Not consistently paying the retirement fund is in direct violation of what the Commonwealth Constitution stipulates.

The governor has increased the “public debt” by $4 million, which brings the deficit for the Commonwealth in excess of $105 million. And since the establishment of an additional deficit is the reverse of implementing a deficit reduction plan discussed in 1985 to pare down the deficit, then the governor is, once again, violating one of the clauses of the supreme law of the NMI.

If the governor continues to support a position that does not adhere to all of the mandates of the Commonwealth Constitution, then is the governor not abiding by what he swore he would do on the day he was sworn into office? Since the Commonwealth Constitution is the supreme law of the NMI, then it is evident that no one, not even the CNMI governor, can override and take precedence over the laws that are designed to protect the entire island community.

Dr. Jesus D. Camacho
Delano, California