A BICAMERAL conference committee will meet on Thursday to discuss House Concurrent Resolution 23-2, which pertains to projected government revenues in the fiscal year 2024 budget.
The CNMI government has until Sept. 30, 2023, to enact a new balanced budget. Otherwise, there will be a partial government shutdown.
The House adopted H.C.R. 23-2, which concurred with Gov. Arnold I. Palacios’ budget submission, which projected $172.5 million in revenue that includes $9.1 million that would be generated by tax hike proposals.
The Senate, however, amended H.C.R. 23-2 by removing the $9.1 million, thus reducing the revenue projection to $163 million from $172.5 million.
On Friday, the House rejected the Senate version of H.C.R. 23-2 by a vote of 16 to 3. House Minority Leader Patrick San Nicolas, Rep. Roy Ada and Rep. Thomas John Manglona voted against the motion to reject the Senate version of H.C.R. 23-2.
Rep. Ralph N. Yumul, the chair of House Ways and Means Committee was excused.
Speaker Edmund S. Villagomez then appointed Yumul as the head of the House conferees with Rep. Blas Jonathan Attao as vice chairman, Rep. John Paul Sablan as member, and Rep. Marissa Flores and Rep. Angelo Camacho as alternates.
Senate Vice President Donald M. Manglona, for his part, chairs the Senate conferees. The vice chair is Senate Floor Leader Corina Magofna with Sen. Karl King-Nabors as member, Sen. Jude U. Hofschneider, Sen. Celina Babauta and Sen. Frank Q. Cruz as alternates.
In a joint memorandum on Monday, Yumul and Manglona informed the House and Senate conferees that there will be a joint conference committee meeting at 11 a.m., Thursday, Aug. 24, in the House chamber.
Contentions
The revenue projection in the House version of H.C.R. 23-2 takes into account the $9.1 million “shortfall” that should be addressed by tax hike proposals.
But Sen. Frank Q. Cruz said he and his fellow senators do not support the inclusion of the $9.1 million in the revenue projection. He said it is an “over-projection” of future government revenue.
“How can we include that $9.1 million in the budget law when there’s no tax hike law yet? The businesses are not going to pay additional taxes even in the beginning of the next fiscal year when there is no law yet,” Cruz said.
During the House session on Friday, Ada also expressed concern about the $9 million in projected revenue that was supposed be raised by a tax hike that had not been enacted by the Legislature.
“Including a projection from a non-existing law is really irresponsible [because] if we do not have the tax hike law to cover the $9 million, then we will be looking at a deficit again in FY 2024,” Ada said.
San Nicolas said a budget proposal that includes $9.1 million that has yet to be generated “is unconstitutional.”
Attao, for his part, said the House leadership respects their Senate counterparts.
“We understand their point of view [but] we also did our part in the House and adopted the resolution as presented by the administration. We do understand that the resolution only sets the ceilings of the appropriations,” he added.
He noted, however, that the Senate version removes 7% from the solid waste revolving fund in the amount of $85,400. The Senate also removed the Customs, Immigration and Quarantine or CIQ overtime revolving fund, which amounts to $323,231.
“Let’s be reminded the CIQ is paid for by the airlines that land in the CNMI. It’s dangerous to remove this portion because the airlines will be questioning what services are they paying for,” Attao said.
In addition, the $4.58 million in hotel occupancy tax collections earmarked for the Marianas Visitors Authority was decreased by $2.5 million in the Senate version, he added.
Also removed from the Senate version was the Revenue and Taxation enforcement fund in the amount of $200,000, Attao said.
He noted that the administration and lawmakers want Revenue and Taxation to be more aggressive in doing their jobs and collecting taxes due the government.
“But the Senate took away the $200,000 that is dedicated for tax enforcement,” he said.
Moreover, the $108,639 in developers infrastructure tax collection was removed by the Senate. “So what the Senate version does is to prevent any senatorial district from receiving any of their developer infrastructure tax collections that are used for appropriation purposes by each senatorial district,” Attao said.
The Senate also reduced the allotment for the government’s group health and life insurance or GHLI plan, he added.
“The administration is going to be put in a situation in which it either has to remove GHLI or lower the cost, which would obligate employees and retirees to pay a higher premium. That’s a big issue. That’s why we should reject [the Senate’s version of the] concurrent resolution,” Attao said.
“For all these reasons, I respectfully asked [House] members to reject [the Senate version] so we can get into conference committee and address these issues,” Attao said.
He said if the $9.1 million is removed from the governor’s budget proposal, “it has to be amended to include the sections under the suspension of earmarks, which would essentially inflate the budget.”
