Revised budget is now law

Gov. Arnold I. Palacios signs the revised fiscal year 2023 budget bill, House Bill No. 23-31, HS1, SS2, CCS1, into law during a news briefing yesterday morning at the Office of the Governor conference room. The new law is now Public Law 23-04. (OFFICE OF THE GOVERNOR)

Citing the need to avert a fiscal disaster, Gov. Arnold I. Palacios enacted into law yesterday a bill that revises the budget law for the CNMI government’s operations for the remaining months of fiscal year 2023 and provide an updated spending plan.

With Lt. Gov. David M. Apatang at his side, Palacios signed the legislation, House Bill 23-31, into Public Law 23-04. Others present at the ceremony—members of the Legislature’s majority and Cabinet members—clapped after witnessing the signing at the governor’s conference room on Capital Hill.

Under the revised budget the total estimated gross budgetary resources for fiscal year 2023 is $164,198,068. Minus earmarks and transfers out in the total amount of $48,004,271, the total local revenue and resources available for appropriation in fiscal year 2023 is $116,193,797.

Adding the $5,407,897 budget for the Department of Public Lands, the grand total local revenue and resources available for appropriation is $121,601,694.

Former governor Ralph DLG Torres had identified original projected resources in the amount of $150,415,492 for the CNMI government and related agencies in fiscal year 2023. This resulted in the enactment of Public Law 22-22, the Appropriations Act of 2023, which had a total amount identified for appropriations at $104.37 million. Palacios asked the Legislature to revise and repeal Public Law 22-22.

Palacios informed House of Representatives Speaker Edmund S. Villagomez (Ind-Saipan) and Senate President Edith E. DeLeon Guerrero (D-Saipan), who were also present, that he approved the legislation using his discretion under the CNMI Constitution to line-item veto several administrative provisions that would have presented a constitutional issue or lacked sufficient clarity to enforce.

“The numbers didn’t really change. Nothing really changed in the numbers. It’s just some of the provision [that] I had to veto,” the governor said.

Apatang said the revised budget shows that working together is always fruitful. The work on the new budget is credited to the Office of Management of Budget, Department of Finance, the Executive Branch staff, as well as the Legislature who worked on the bill for about a month.

Palacios said in a letter yesterday to Villagomez and DeLeon Guerrero that revising the budget for the current fiscal year became apparent during the fiscal recovery team’s discovery that the two sources of federal funds from the Community Disaster Loan and the American Rescue Plan Act, which the previous administration had assured the Legislature would be available to supplement Commonwealth resources for fiscal year 2023, had been overspent and over-committed.

“Had we continued on the original budget approved by Public Law 22-22, the Commonwealth government would have ended in a fiscal disaster with a substantial operating deficit,” the governor said.

He said his administration had no choice but to tighten the fiscal reins, cancel contracts, and reduce the biweekly work hours to 72 hours and to ask the Legislature to revise the budget.

The governor said the Department of Finance continues its review of the ARPA funding to determine the extent of any transfer of funds that are not in compliance with ARPA regulations and law.

Within the revised budget is a sensible spending plan, Palacios said, bolstered by the cautious optimism that the Commonwealth’s tax revenues will continue to trend upward and exceed the original revenue projections by 11% and the austerity measures that reduced the outlay for personnel expenses.

He said the Health Network Program (Medical Referral operations under the Commonwealth Healthcare Corp.), the government’s group insurance program (GHLIP), and the retirees’ 25% pension, are now funded by Commonwealth resources; the previous administration had planned to exclusively use ARPA and CDL funds.

The governor said that under Section 601 of the bill, timely payment of utilities is mandated but without any appropriation to fund the payments.

He said the Commonwealth Utilities Corp. has informed the federal court overseeing compliance of the stipulated order relating to CUC’s governance that not only the Commonwealth Healthcare Corp., but the Commonwealth central government also owes CUC substantial amounts that are past due.

He said the Legislature should ensure the adequate funding for CUC utilities in future budget cycles.

Palacios vetoed Section 604, which refers to revised CNMI ARPA Spending Plan, on constitutional grounds that any measure that is intended to have the force and effect of law must be originally introduced as a bill in the Legislature, which upon passage must be presented to the governor for approval.

He said the procedures sidestep the constitutional lawmaking process and would require only legislative approval through a joint resolution and reduce his office’s role to that of a consultant.

Under Section 604 of the bill, prior to the submission of a Revised Spending Plan of the ARPA funds to the Secretary of the U.S. Department of Treasury, the revised spending plan must be approved by the CNMI Legislature by joint resolution after collaboratively consulting with the administration to ensure that the critical needs of the Commonwealth are addressed.

Under Section 705(c), which Palacios disapproved as a line-item veto, the Finance secretary is to reserve $7.2 million from the CDL to fund the local Medicaid matching. Not only would that provision violate a Code of Federal Regulations, Palacios said, but the previous Torres administration has exhausted all CDL funding and there is no balance in the account to allocate for any use.