Record-early $134.3M budget law

Gov. Eloy S. Inos signed yesterday afternoon a record-early budget law capping the CNMI government’s operational budget at $134.33 million for fiscal year 2015, inclusive of the salaries of 2,778 public officials and employees and funding for public services such as education, health, safety and pension obligations. But the governor raised some concerns on salary and education funding provisions that need further actions.

The budget law also sets aside $338,751 to pay back members of the government employees’ credit union who do not have outstanding loans.

Inos signed the 2015 budget in the presence of Cabinet members, lawmakers, and other government employees on Capital Hill at past 1:30pm yesterday.

He once again urged everyone to continue pursuing new revenue-generating measures to avoid catastrophic fiscal situation and maintain fiscal sustainability.

This is the earliest time in CNMI history that a budget bill passed the Legislature and is signed into law two weeks before the start of a new fiscal year on Oct. 1.

Even after a constitutional change that disallowed continuing budget resolutions, the government saw one partial shutdown and passage of budget measures nearly by the deadline.

“I applaud the swift action of the 18th Legislature in working together to ensure that the budget for fiscal year 2015 reached my desk well before the Oct. 1st deadline. This allowed sufficient time for my thorough review and avoid any concern about the possibility of a government shutdown,” the governor said in his transmittal letter to the Legislature.

Fiscal year 2015 is from Oct. 1, 2014 to Sept. 30, 2015.

Senate President Ralph Torres (R-Saipan), during the budget signing ceremony, spoke of the “smooth” budget process even if the spending package reached once again a conference committee from the House and Senate.

Rep. Tony Sablan (Ind-Saipan), author of the budget bill and chairman of the House Ways and Means Committee, said the Legislature, working with the governor’s budget and management manager Vicky Villagomez and Finance Secretary Larrisa Larson, “made the [budget] process a whole lot easier.”

“We wrapped up conference [committee] process in a day,” he said.

Sablan reiterated that there is no such thing as a perfect budget but the spending package addresses the CNMI’s “pressing needs.” He also thanked his colleagues at the Legislature, the governor, and the media.

The budget measure, House Bill 18-201, House Draft 3, Senate Substitute 1, Senate Draft 2, Conference Committee Substitute 1, is now Public Law 18-66.

Rep. Christopher Leon Guerrero (Ind-Saipan) said the early passage and signing of the budget law is a showcase of “unity” of the present leadership.

‘Duplication’

In his transmittal letter, the governor pointed out that his budget for the Public School System accounted for 42 new positions and certain salary adjustments for existing positions.

He said notwithstanding the fact that this was accounted for, the budget bill that passed through the Legislature increased the funding for PSS by over $1.161 million to hire 35 new teachers and cover salary adjustments.

Inos said rather than duplicate his efforts, the additional funding “should have been earmarked specifically to pay for PSS’ outstanding payments to the Commonwealth Utilities Corp.”

PSS, the Commonwealth Healthcare Corp., and other government entities owe CUC over $20 million in unpaid utility bills.

The governor added that the PSS section of the budget “should have specifically stated that $3,419,511 of the PSS appropriation goes toward the Maintenance of Effort Agreement payments for FY 2010 and part of FY 2011.”

Salary inequities

Inos, who turns 65 on Sept. 26, said Section 607 of the budget bill overlooks his recommendation to increase the salary of the Department of Community and Cultural Affairs secretary to $54,000 to put the secretary’s salary on par with the salaries of other Cabinet-level appointees.

“I urge the passage of a separate legislation amending 1 CMC 8245 at the earliest possible time to address this inequity,” he said.

The governor also said this budget section created inequities within the Department of Finance by increasing the salaries of only two division heads.

It also increased the directors’ salaries without providing funding for the increase.

“These adjustments cannot be effectuated if funding is not identified and available within the current appropriations measure,” he said.

Furthermore, the salary cap exemptions are limited to fiscal year 2015.

He said an amendment to the Salary Compensation Act should be considered to address changes, given the changes in minimum wage.

The minimum wage in the CNMI will increase by another 50 cents an hour on Sept. 30, as mandated by federal law. The minimum wage will then become $6.05 an hour, up from the current $5.55 an hour.

CW funds

Section 713 of the budget law recommends allocating $400,000 of the Commonwealth Worker, or CW, funds to the Northern Marianas Technical Institute.

Inos pointed out that under federal law, Commonwealth Worker Funds may only be used “for the purpose of funding ongoing vocational educational curricula and program development by Commonwealth educational entities.”

“Accordingly, NMTI must submit documentation of its vocational curricula and program objectives before it can be considered for Commonwealth Worker Funds,” the governor said.

The governor said the CNMI’s political leaders must be proactive.

“The Executive Branch is committed to pursuing enforcement actions to collect revenue, and I ask the Legislature to strive to find new sources of revenue to encourage the growth of our economy. I am dedicated to do all that I can to help the Commonwealth thrive. The Commonwealth can only grow and improve if we work in a cooperative fashion and stay focused on doing what is in the best interest of the people as a whole,” he said.

Although the CNMI’s financial resources have increased, Inos said a significant portion of the gains must be devoted to satisfying the CNMI’s obligation to the Defined Benefit Plan members under the settlement agreement in Johnson v. Inos.

If the CNMI does not meet its settlement obligations, a $779-million judgment will be enforced against the Commonwealth.

For fiscal year 2015, the budget sets aside $27 million for the government’s minimum guaranteed payment to the retirement settlement agreement.

Who gets what?

Under the budget law, the Judiciary gets over $4.638 million, a little over 3 percent of the year’s budget.

The Legislature gets more than $5.567 million or 4 percent of the $134.33 million budget.

The Executive Branch gets over $30.135 million. This includes funds for the different executive departments and agencies, including the Office of the Attorney General, departments of Commerce, Community and Cultural Affairs, Finance, Labor, Lands and Natural Resources, Public Safety, and Public Works.

Rota or the First Senatorial District gets over $5.551 million. Tinian or the Second Senatorial District is allocated over $5.916 million. Saipan and the Northern Islands, meanwhile, gets over $2.106 million.

Different boards and commissions get over $1.481 million.

Independent programs get a total of more than $39.691 million.

These include over $4 million for Medicaid reimbursement, over $1 million for Medical Referral, and over $1,592 million in Scholarship funds, among other things.

The central government subsidy to the Commonwealth Healthcare Corp. is $1.22 million.

PSS gets $33.441 million-plus in general fund, while the Board of Education gets $172,257.

Northern Marianas College gets over $4.405 million.

The Marianas Visitors Authority gets $1 from the general fund, as over $1 million was moved by the Legislature to PSS. MVA as the CNMI’s tourism agency, however, gets millions of funding from hotel occupancy tax and other sources.

Credit union

The 2015 budget law appropriates $338,751 for the Commonwealth Government Employees’ Credit Union.

Angel Demapan, board chairman of the credit union, told Saipan Tribune that the budget law appropriation doesn’t dissolve the credit union.

“It only allows us to pay our depositors who don’t have loans. After taking of this, the CGECU will then determine its plan of action to address the members who have delinquent loans. The CGECU cannot effectively be dissolved until we square away all the liabilities,” said Demapan, who personally witnessed the budget law signing as credit union chairman.

Demapan is currently on leave as press secretary because he is a candidate for a House of Representatives seat in Precinct 1.

The credit union appropriation comes after months of meetings between the credit union, its board of directors, the governor and the Legislature.

“The CGECU is very much grateful for the support of the Legislature and the administration for providing this assistance so that the CGECU can finally make whole with its depositors who do not have any outstanding loans. Unfortunately, when this new board took office, the CGECU was already battling many challenges resulting from an alarmingly high rate of delinquent loans,” he said.

The disbursement of funds will be in early October.

“Our members have waited for too long, so we are definitely pleased that we have reached this point today,” said Demapan. “We thank our members for their patience the past several months. With the new law in place, we are readying to roll out disbursements early next month.”