‘We are unable to see true picture of ARPA balance’

As of Friday last week, the Legislature, especially the House of Representatives, which holds the purse strings of the CNMI government, is unable to see a true picture of the American Rescue Plan Act funding balance of the CNMI government, according to Dave Demapan, who is the fiscal analyst at the Legislative Bureau.

“We don’t know what it is. But there is a system in there that can give us that balance. And that’s the purpose of a fund system balance,” said Demapan, who provided a snapshot of the fund system and particular financial guidance to the Senate during a special session last week.

Demapan testified at the request of Sen. Jude U. Hofschneider (R-Tinian) before senators voted on floor leader Corina L. Magofna’s (D-Saipan) motion to override Gov. Arnold I. Palacios’ veto of Sections 604 and 713 of the budget law.

Section 604 refers to the revised CNMI ARPA Spending Plan, while Section 713 pertains to giving access to the Legislature to the Munis Financial Management Information System of the CNMI government.

Demapan said he believes that at this stage of the CNMI government’s financial condition, it is “very prudent and critical” to have a handle on the amount available to the CNMI.

“We’re in deep financial trouble,” he added, so it is important to have confidence in the numbers so the Senate can make a better decision on financial matters.

He said the intent of why Sections 604 and 713 were included in Public Law 23-04, or the revised budget law, has nothing to do with taking away a large chunk of the Finance secretary’s responsibilities.

“That’s not the intent there. The intent there is basically to give us an eyeball picture of the financial status of the CNMI by looking into the financial system and in this case, for example, the Munis system,” Demapan said.

He said a financial system will basically give a financial report on a timely basis as it captures the true picture of the financial spectrum of a transaction. In this case, Demapan said, they’re talking about ARPA funds that were transmitted to the CNMI in fiscal year 2021.

He said the money would have been already reported and recorded under the JD Edwards system that was the CNMI government’s financial management system at the time. Munis came in later so there is a transition period between these two systems.

“So the intent of this law is to give us an eyeball as to see whether the numbers are there, their transactions were properly recorded and then reports can be easily be generated and give us the fund status of ARPA by the specific Sections 602, 603, 604,” Demapan said.

He said 604 is the capital projects fund, while 603 relates to local fiscal recovery fund, and 602 relates to state fiscal recovery fund.

“Those items [amount to] approximately over half a billion of funds that we’re talking about,” Demapan said.

In asking Demapan to testify, Hofschneider said there is a need to clarify Finance Secretary Tracy B. Norita’s earlier statement whether or not there is still any ARPA funds left, because, as disclosed by Norita herself, there is still some.

“It kind of created a question moving forward, but nevertheless, we went ahead and blessed the requests from the House on House Bill 23-31, HS1, which is essentially became Public Law 23-04,” he said.

Hofschneider asked Demapan to guide the senators as to where the CNMI is at with this ARPA funding status.

He said he understands that the administration executed cost-containment measures to lessen the CNMI government’s financial dilemma.

That was the reason the administration cited why it let go of some employees and terminated the “ infamous airline contract and so forth.”

Hofschneider said before making the vote on the motion to override, he wants Demapan to articulate some of the documents that are before the Senate.

Hofschneider was among the four senators who voted “yes” to the motion to override Palacios’ veto. With four voting “no,” and three absences, the motion to override the veto did not pass the Senate. Six “yes” votes were needed to override the veto.