Senate Fiscal Analyst Dave Demapan, inset, speaks during a meeting with senators in the Senate chamber on Wednesday.
GOVERNOR Arnold I. Palacios and Lt. Gov. David M. Apatang on Thursday met with senators and their key staff “to clarify misconceptions … aired on the previous day’s Senate session,” the administration said.
In a session on Wednesday, senators said the governor violated the Planning and Budgeting Act, 1 CMC § 7101 when he restored the full 80-hour pay period for executive branch employees in October.
But according to the administration on Thursday, “work hour reductions were lifted for the first quarter of Fiscal Year 2025 using residual ARPA funds, i.e., outside, non-local sources.”
Thus, restoring the full working hours did not exceed the governor’s budgetary authority over local revenues under Public Law 23-26, the Appropriations and Budget Authority Act of 2025, the administration said.
It added that “because allocating these non-local funds did not constitute an increase in available local revenues for the fiscal year, no special message to the Legislature was required under 1 CMC § 7604.”
The administration said, “The meeting with the senators clarified that Governor’s Directive 2025-002, which lifted the 10 austerity hours per pay period beginning November 3, 2024, did not constitute an unauthorized appropriation and thus did not violate the Planning and Budgeting Act.”
The governor announced the lifting of the austerity measure in a media conference on Oct. 31, 2024, during the early voting period, five days before Election Day.
He made no reference to using “residual ARPA funds” for the restoration of the 80-hour work period.
But his office stated that, “Given that the Appropriations Act (P.L. 23-26) did not provide the funds to pay for the restored hours,” the governor and the lt. governor “will be working closely with the Office of Management & Budget and the Department of Finance to prepare a proposed amendment to Public Law 23-26 that will be submitted to the Legislature.”
A community member, who declined to be identified, said, “They’ve been saying no more ARPA since last year, but every time they spend money they say ‘ARPA funded.’ What happened to their report on ARPA expenditures? Two years already, still nothing.”
Joining Palacios and Apatang in the meeting with the senators was Secretary of Finance Tracy Norita. The Senate attendees were Senate President Edith Deleon Guerrero, Senate Floor Leader Corina Magofna, Senate Fiscal Affairs Committee Chairman Donald Manglona, Senate Fiscal Analyst Dave Demapan and Senate Legal Counsel Joe Bermudes.
Pension obligation bond
In its statement Thursday, the Palacios-Apatang administration said it explained to the Senate “that the Commonwealth’s issuance of a pension obligation bond to meet its Minimum Annual Payment obligation to the NMI Settlement Fund will free up funds within the General Fund to maintain full working hours for the remaining quarters of FY 2025.”
Based on the FY 2025 budget law, the CNMI government has allotted $32 million as payment to the NMI Settlement Fund.
The administration on Thursday said a “special budget message and proposed revised budget for the fiscal year will be forthcoming to reflect the bond proceeds and planned reallocation of funds from the Settlement Fund to government operations.”
The administration also “reiterated its concern at press reportage that paints efforts at fiscal responsibility and restoring the community’s livelihood as improper. Troublingly, the local papers, without having reached out to the Office of the Governor for comment, printed inaccurate allegations from the Senate session that the Governor’s Directive violated Commonwealth law. The meeting stressed the importance of factual accuracy regarding the administration’s effort to restore fiscal transparency and accountability.”
Wednesday’s Senate session was livestreamed on YouTube starting at 10:30 a.m.
