“It doesn’t seem right,” Senate President Pete P. Reyes said in an interview. “It seems to me that the administration should welcome the opportunity to have a budget that sets the spending level at the amount they themselves projected. So I’m not sure I understand why they, with all due respect to the governor, why the administration cannot pay [the contractual employees] now that we have a budget.”
The Senate and the House of Representatives have overridden Gov. Benigno R. Fitial’s veto of the $148 million budget for fiscal year 2009, which started on Oct. 1, 2008 and ends on Sept. 30, 2009.
The governor is now saying that contractual government employees will lose their jobs and payless paydays are a possibility because the new budget does not include the austerity Fridays, no-pay holidays and full reprogramming authority he proposed.
Reyes, R-Saipan, said based on past experience, Fitial is likely to go ahead with the threatened furloughs.
“And then he’ll shift the blame to the Legislature,” the Senate president added.
Like other lawmakers interviewed on Friday, he noted that the new budget allows agency heads to make the needed spending cuts.
“When we passed the first budget he vetoed it, and came back informing us he reduced the budget from $156 million to $148 million, so that was already a sign that we should reduce spending,” Reyes said. “The Legislature and the Legislative Bureau began cutting down their expenditures — salaries of employees were cut by as much as 20 percent so our expenses would fit into the new budget level, which did not come from us, but from the administration.”
Reyes said “it makes a lot of logical sense that because they informed us of the reduced budget that they would also take precautions in the expenditure of funds because we would not see any magical change at the end of the fiscal year — we know that the level of expenditure had been reduced so why spend more than what we had?”
The Senate, he added, “demonstrated its support for the governor’s austerity measures, but the House rejected that, so in the spirit of cooperation we passed the budget while hoping that the austerity measures would be treated as separate legislation. We hope to see some progress in that area — there’s already [an austerity] bill pending in the House.”
Reyes reiterated that under the new budget, agencies can determine the needed cuts.
“We should remember what President Obama said about Americans willing to accept pay cuts to save the jobs of their fellow employees,” he added.
Unfortunate
Speaker Arnold I. Palacios, R-Saipan, said he wants to know if contractual employees were hired “beyond the spending limit the governor himself identified — $148 million.”
“The revenue is down so what does he want us to do? Not to have a spending plan that controls spending?”
Palacios said it was “unfortunate [that the governor] hired contractual employees while we didn’t have a new budget and revenue was going down.”
Based on the governor’s communications to the Legislature, the speaker estimates that at least 200 new personnel were hired in the past year.
“He’s the chief executive — he knows cuts have to be made. If he wants austerity Fridays he can do that in the executive branch. The Legislature and its Legislative Bureau have already made cuts, renegotiating salaries, including those of the professional staff, and as painful as it was for these folks to accept it, we knew what our spending level was, so we had to make the necessary cuts. It’s either you cut salary or cut personnel. If the governor wants to cut the number of contractual personnel, that’s his option. Or he can also renegotiate their salaries so they’ll stay within the budget. He can also impose an across the board salary reduction.”
Palacios said the governor’s “threats” indicated that “we were already in deficit spending despite his declaration of reduced revenue projection — his own projection. What that means is that they were hiring more people despite the reduced revenue. Now he’s saying that because we finally have a new budget we have to cut personnel costs — which he should have been doing in the first place. Yet he continued hiring and gave false hopes to these contractual employees, and now it’s the blame game. He said the $156 million budget had to be reduced so he vetoed the budget bill. He said the amount should be $148 million and we did pass a $148 million budget. Now he’s saying there will be massive furloughs and it’s all our [the Legislature’s] fault. But we didn’t hire additional folks.”
Blank check
House Ways and Means Committee Chairman Ray N. Yumul, R-Saipan, said without a new budget, the government overspent $10 million in FY 2008 and $4.5 million in the first quarter of FY 2009.
“So why did the government overspend? That tells us that for FY 2009 there would be no spending controls without a new budget in place,” he said. “The government has supposedly made the necessary adjustments already. We’re supposed to be on track. Lawmakers and the Legislature Bureau have implemented cuts. Now that we have a new budget, the secretary of finance must come to the Legislature and show us what are we looking at in terms of outlays — what are we going to spend and the collections, assuming the collection are still within his $148 million projection.”
Yumul said lawmakers would also like to know who are the contractual employees in danger of losing their jobs.
“Are they critically needed? If they are and they can’t be funded by the new budget then we need to sit down and identify funds. But I cannot in good conscience give the governor a blank check. We’re already at the bottom of the barrel. What the governor wants is austerity with full reprogramming authority — a blank check. We’ve been trying to have a new budget, and this will be in vain if he gets another blank check. Lawmakers are not doing their job if we allow that.”
Fear mongering
Asked to comment on the governor’s threatened layoffs, Rep. Tina Sablan said: “All of a sudden, now, we have to make [personnel] cuts — we should have been making those cuts anyway and what the governor hasn’t explained is how this would have been any different under a continuing resolution. If anything, it would have been worse without spending controls in place.”
Sablan, Ind.-Saipan, said the governor and the secretary of finance “should have been well aware [of the need to control costs] because they do have the numbers and as they’ve said repeatedly in the media, cuts were needed to be made and there was nothing prohibiting them from making those cuts.”
The new budget, she added, allows for cuts.
“What it also does is it lays out the priorities for how the funds and resources identified should be spent. It sets a cap on hiring and controls on hiring. The question that the governor has yet to answer is why hiring has continued? Why is it that we have many contractual employees? How many of them were hired just in the last year? What justification does he have for them? And why did the secretary of finance authorize that when they knew the revenue was declining?”
Under the CNMI Constitution, if a balanced budget is not approved before the first day of the fiscal year, appropriations for government operations and obligations will be at the level for the previous fiscal year. This is called a continuing resolution.
The last budget law was enacted in 2006 and amounted to $163.5 million.
Sablan said the administration is now into “fear mongering.”
“And it’s not a surprise that they’re using scare tactics to try to hinder the passage of a new budget. They’re saying that if we did pass a budget they would have to make cuts, but those cuts should have been made anyway. We should not have been spending beyond our means anyway and so the threats ring rather hollow. Like I said, why is it suddenly worse when we have a budget? A continuing resolution is worse — overspending is worse. That’s his number, $148 million. He identified those resources so we passed the budget and now the government has to shut down? It doesn’t make any sense.”
