Partial Government Shutdown Ends After Fitial Signs Budget Bill, With Reservations

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Guam – The CNMI Governor’s Office released the following statement on budget bill and the partial government shutdown that affected the CNMI over the past week and a half.

Government employees can now breathe a sigh of relief. Gov. Benigno R. Fitial has signed House Bill 17-123, HD1, SS1, into law. The long awaited budget bill now becomes Public Law 17-21, and brings an end to the partial government shutdown that left some 1,400 government employees without work since October 1, the beginning of Fiscal Year 2011.

In his approval message to the presiding officers of the legislature, Gov. Fitial stated, “After 8 full days of the government shutdown, the legislature passed a balanced budget, which by this enactment, restores all government activities. Clearly, the legislature’s aspirations to lessen the financial impact on our government employees seemingly delayed the timely passage of a balanced budget. While I share the same concerns as yours, we cannot turn a blind eye on the fact that our Commonwealth has been experiencing a decline in revenue for some time now and can no longer sustain the activities and employees it has without much needed austerity measures. Thus, in an effort to retain as many employees as possible, my budget submission included a 16 hour bi-weekly reduction in work hours.”

Cause for concerns

However, Fitial also pointed out serious concerns in the appropriations measure that requires further legislative attention. “While I am approving this measure into law, I am compelled to address several sections which may be problematic in its implementation or in its fairness to other activities of the government,” said Fitial as he cited the following:

• Section 402 requires the Governor to seek approval from the legislature to reduce appropriated funds. If the Secretary of Finance reports that projected resources are decreasing, it would be distressing to know that the corresponding reduction in expenditure may be made only with legislative approval. This provision is irresponsible and fails to provide any logical intent for its inclusion in the passage. Moreover, it perpetuates the culture of deficit spending.

• The reprogramming authority in Section 501(b), if exercised, will benefit only those activities listed under Section 704 as Section 501 (c) requires the approval of the legislature to reprogram other funds. This restriction is wholly unreasonable as it deprives non Section 704 funded activities to receive the benefit of much needed reprogrammable funds.

• Section 601 appropriates funds for utilities for the branches, departments, and agencies of the Commonwealth government with exceptions as listed. The difficulty with the appropriated amount is that it is over $1.5 million less than my submission. Adequate utility allocation is important for government operations; therefore, this appropriation should not have been decreased while other activities’ appropriations were increased. It
is highly imperative that the legislature address this shortfall to ensure utility service without interruption. If this matter is not immediately addressed, the Commonwealth Utilities Corporation will be in the same predicament as in the past fiscal year, which will force the government to scramble for funds to keep the CUC afloat.

• Section 602 provides that should a vacancy be filled for critical or emergency positions absent a law defining such positions, the legislature must approve by joint approval. This section is problematic for two reasons: one, it fails to state whether the approval must come in the form of a resolution or a public law, and two, if the legislature does not act expeditiously on a request to hire, there may be detrimental effects in the case wherein
the position needing to be filled would be a health care professional or another position affecting the health, safety, or welfare of our community.

• Section 605 (a) repeals payment for legal holidays during fiscal year 2011. In essence, repealing abolishes — rather than suspends — the payments. Legal holiday payments for fiscal year 2011 should have been suspended. The legislature must be conscientious of this abolishment and restore the legal holiday payments in the following fiscal years.

• Section 605 (c) authorizes the Governor to select one or more holidays for which employees shall receive leave with pay. Section 605 (d) authorizes the expenditure authorities to grant leave with pay if funds are available in their personnel accounts. While this is permissible under the Act, which does not immediately and directly impact the funds appropriated, exercise of the authority could potentially increase costs, thereby defeating the non-paid holiday restriction of Section 605 (a) and associated savings. The restriction of Section 605(a) is intended to reduce expenditures so as to keep the
government operational for the duration of Fiscal Year 2011.

• Section 702 increased the Judicial Branch’s appropriations by $350,000. Earlier, the Judicial Branch requested an additional allocation for payment of legal fees for indigent defendants, and an administrative provision allocating $200,000 was proposed, but such language was not included in this measure. Despite the legislature’s failure to include that administrative provision, I am confident that the Judicial Branch will allocate the funds for that purpose.

• Section 706 increased the Tinian and Aguiguan Legislative Delegation’s FTEs by 17 positions and increased its funding level by almost half a million dollars. We find such increase troubling as one of the main focuses of the budget impasse was the work-hour reduction and the ability to support the number of current employees at the projected resources for this fiscal year. It is ironic that while other departments, agencies, instrumentalities, branches, and programs are required to absorb deep funding cuts, the Second Senatorial District has seen it fitting to increase its appropriation just to have equal funding level to that of the First Senatorial District.

• Section 707 increased the Saipan Mayor’s FTE ceiling by 16 positions and increased its funding level by $377,284. It also increased the Northern Islands Mayor’s funding level by $40,000. As in the case of the Second Senatorial District, it is ironic that while other departments, agencies, instrumentalities, branches, and programs are required to absorb deep funding cuts the Saipan Mayor is allocated new FTEs and additional funds. While
we recognize the importance of the Office of the Mayor, much of the functions of the Mayor’s Office are duplicative of the Department of Public Works and the Parks and Recreation Division of the Department of Lands and Natural Resources.

Shutdown ends, finally

While the administration raised several red-flags in the budget bill, Gov. Fitial highlighted the impact of that the shutdown period has made on thousands of government employees and their families.

Included in his message to the legislature, Gov. Fitial noted, “The shutdown of government services, along with the hardships endured by government employees, their families, and businesses should be heeded as a lesson of the severe impact caused by failing to timely pass a balanced budget as required by our Constitution. Therefore, despite the many concerns of this appropriations measure, I approve this legislation to restore normalcy into our government operations and the lives of our government employees.”

The governor also lauded both houses of the legislature for ensuring that MOE requirements for PSS and NMC were met. “I am pleased that the Legislature maintained the appropriate levels of funding for the Public School System and the Northern Marianas College so as to ensure that the
Maintenance of Effort agreement with the U.S. Department of Education is maintained. In these challenging times, our educational system is privileged to receive such assistance from both the local government and the federal government,” added Fitial.

Fitial also reminded lawmakers that there is much work that remains to be done, stating, “As we implement and expend funds under this Act, we must not lose sight of the other challenges that we continue to seek resolution for, such as the increasing costs for health and life insurance, as well as the increasing employer contribution rates for the defined benefit plan members of the Northern Mariana Islands Retirement Fund. I recommend that the members of the legislature begin exploring options as to address these issues.”

Funds for charter flights subsidies disapproved

Gov. Fitial disapproved a line item in the budget bill and warned lawmakers of the need to be cautious in setting bad precedence for the future of the government. Instead of approving subsidies for charter flights to Rota, the administration urged greater legislative collaboration in assisting the Marianas Visitors Authority in its effort to effectively promote the NMI as a single destination.

In disapproving Line 20 under Section 708 (a), Fitial told lawmakers, “This particular appropriation subsidizes a private company for charter flights and related tourism activities to the island of Rota. The appropriation is not supported by any detailed cost analysis to justify the amount claimed. It should be noted that Tinian and Saipan also face immense challenges with charter flights to the respective islands. Subsidizing charter flights for one island and/or one company may lead to subsidies for the other islands as well, but more importantly, may lead to government subsidies in other private efforts in the CNMI. Instead of subsidizing one particular company for one particular island, I strongly urge the legislature to work collaboratively with the
Administration in assisting MVA to achieve greater success in promoting the Commonwealth as one paradise destination.”

Fitial declares Oct. 11 a paid holiday

Recognizing the financial hardships that the shutdown has brought upon many government employees and their families, Gov. Fitial has exercised his authority pursuant to Section 605(c) of P.L. 17-21, to declare one or more holidays to which employees may receive leave with pay. I In a directive to all instrumentalities, Gov. Fitial announced, “I hereby declare Commonwealth Cultural Day, October 11, 2010 as a holiday which shall be paid as detailed herein. Government employees who are not scheduled to work on Commonwealth Cultural Day shall be paid charging available annual leave hours for this holiday. Government employees who are scheduled to work on this holiday shall be paid their regular pay. I take this step to ease the financial hardship experienced by our employees and their families as a result of the government shutdown caused by the delay in the passage of the budget.”

The Fitial administration is pleased that the whole budget ordeal is over and done with.

All government employees are being advised to report back to work on Tuesday, October 12