Senate raises 2005 budget to over $217M

After hours of deliberation, the Senate unanimously voted yesterday to amend the House-adopted budget resolution and raised its level from $212.651 million to $217.751 million for fiscal year 2005.

This came about after the Babauta administration submitted to the Legislature yesterday documents identifying $5.1 million in additional funds for 2005.

The additional amount would come from the projected revenues from two recently enacted laws: some $2.1 million from Public Law 14-28 or the tax amnesty law and at least $3 million from P.L. 14-35 or the CNMI Revenue and Taxation Code.

“These [additional] estimated revenues—together with other revenue generating actions the Legislature is considering, such as House Bill 14-68—should provide increased flexibility in your deliberations on the FY 2005 budget and allow for a level of public service our growing Commonwealth requires,” said Babauta in a letter to the Legislature yesterday.

The Senate earlier rejected an exactly the same House Concurrent Resolution (14-1).

Yesterday, the Senate changed its mind, moved to amend the budget level, and voted to adopt the resolution, now dubbed H.C.R 14-2.

Senate President Joaquin Adriano said that the Senate Committee on Fiscal Affairs, chaired by Sen. Joseph Mendiola, would meet today to revise the budget bill.

The House and Senate will then convene a conference committee to jointly address the budget and agree on the amended bill.

During yesterday’s session, minority bloc senator Pete P. Reyes doubted that the two laws would generate additional revenues for the government.

For instance, the Tax Reform and Taxation Code would only strengthen the government’s collection efforts in going after delinquent tax payers.

“They’re only collecting money which had been appropriated. This is not a tax increase. It will not provide new revenue. I’m assured by the Revenue and Tax Division that it won’t mean new taxes. I made it clear before I signed the bill,” said Reyes.

He said the administration’s projection of $3 million to $6 million is “plain fantasy.”

Reyes further said that the government only needs to cut costs to save on funds, not impose new taxes. He said this can be done only “if there are no more travels.”

“Our responsibility is to cut costs, not find ways how to tax people,” he said.

He cited that, as a minority lawmaker, he would always remit back to the Treasury some of his remaining funds at the end of the fiscal year.

“We can fund priorities. We need not go out and tax the people. So let’s go ahead and reject the budget,” he said.

Reyes in the end, though, voted for the $217 million budget level. “We’re still rejecting the budget bill. It’s now up for conference committee,” he said.

When asked during yesterday’s session, governor’s senior policy adviser Bob Schwalbach maintained that the “adequate” budget for the government is $226 million, the original proposal submitted by the administration.

He said the budget would be realized if the Legislature approves the administration’s Integrated Fiscal Plan, which is projected to generate some $13 million.

The House, however, had rejected the plan saying it would result in tax increases.

Meantime, Sen. Luis P. Crisostimo said that the IFP would actually generate $20 million for the government. He said he made his own computation of the proposal and came up with $20 million.

“We just need to be creative. You see, our job in the Legislature is to be creative. We can do things without raising taxes,” he said.

Among others, he said, that the IFP would decrease the rebates and increase the fees for motor vehicles.

The House-reintroduced concurrent resolution provides for $212.651 million appropriation for FY 2005. HCR 14-2, lowers to 1 percent the amount allotted for deficit reduction, which used to be 2 percent of the total appropriation.

HCR 14-2 makes available $212.651 million spending for FY 2005: $210,525,392 for operation and activities of the CNMI government, and $2,126,519 for the deficit reduction.

The Senate added $5.1 million for operations and retained the 1 percent for deficit reduction.