Governor signs FY 2024 budget

GOVERNOR Arnold I. Palacios on Saturday, the last day of fiscal year 2023, signed the $114.2 million Fiscal Year 2024 Appropriation Act into law.

House Bill 23-66, which is now Public Law 23-09, identifies $163.4 million in projected revenue and $114.2 million in net budgetary resources available for appropriation. It also includes a 10-hour cut in government employees’ working hours while providing the governor with a 100% reprograming authority.

Palacios commended the Legislature “for passing the budget on time, preventing a partial shutdown and allowing continuity of government operations and delivery of services to our people.”

But he said there are certain provisions in the budget bill that are “very concerning,” because they do not sustainably and meaningfully address the “chronic” funding shortfall of critical programs and services that are mandated by the CNMI Constitution and federal laws.

Aside from the “disproportionate” level of funding for the executive branch that will “force” his administration to decide “whether to reduce, suspend or close affected programs and services due to lack of revenue, the other significantly concerning part of the bill is the provisions pertaining to Medicaid and group health and life insurance.”

He said the $6.6 million allotted by the budget bill does not adequately match the $65 million federal funds that the CNMI stands to receive for Medicaid, under the 83/17 matching ratio.

The amount proposed by the Legislature will limit the CNMI’s chance to receive the full benefit of the federal matching fund for Medicaid, he added.

In his transmittal letter to Senate President Edith Deleon Guerrero and Speaker Edmund S. Villagomez, the governor said “the Medicaid program and [the government’s Group Health Life Insurance] program will see the most drastic drop in service levels, with Medicaid reducing its available federal funds by $26.8 million.”

He said the government’s GHLI program may “potentially” terminate health insurance coverage.

The governor said his 100% reprogramming authority will “move funds” within the executive branch to cover the already anticipated shortfalls for Medicaid, Medical Referral/Health Network Program, GHLI, the Commonwealth Utilities Corp., the Solid Waste Management program and the retirees’ 25% pension payment.

But he said reprogramming “only works if there is sufficient funding available to meet the already anticipated shortfalls.”

“Punting obligations down field or throwing Hail Mary passes hoping for a miracle is not the responsible approach in budgeting when lawmakers knowingly approve a spending plan that is not adequately funded,” the governor said.

Line-item vetoes

The governor said he line-item vetoed several provisions of the budget bill that he found “unclear, ambiguous, or problematic” because they are inconsistent with Commonwealth and federal law, or may impose “unnecessary steps that would hinder efficiency in government operations.”

He vetoed the last sentence of the bill’s administrative provision on reduction of hours “for clarity.”

The governor struck out the following sentence: “This provision shall not apply for first responders and law enforcement personnel, whose normal work exceeds 80 hours per pay period.”

The governor also vetoed the provision on legal holidays because “it is unclear whether only federally funded employees would receive leave with pay for holidays and holiday pay for work performed on holidays.”

He said the lack of clarity also presented a legal question whether the restriction would apply only to new employees hired during the fiscal year.

He also disapproved the provision on Tinian’s budget. He said his budget proposal for the Tinian Mayor’s Office was formulated based on the cash availability received from the American Rescue Plan Act, which was confirmed by Tinian Mayor Edwin P. Aldan. The same methodology was applied to the Saipan Mayor’s Office after confirming its ARPA cash availability, the governor said.

This methodology, he added, is consistent with the Planning and Budgeting Act, which requires the formulation of the Commonwealth budget by taking into account all revenue resources available.

The governor disapproved the transfer of funding for 24 Tinian Mayor’s Office employees and its ARPA funds to the Commonwealth Treasury. The transfer of the employees and the funding are not included in the Schedule A or the budget bill’s spreadsheet.

Palacios said the Tinian Mayor’s Office retains the option to keep the 24 employees and funding them adequately with its ARPA funds.

He also disapproved H.B. 23-66’s provision on the Health Network Program that includes stipends, airfare and lodging for patients and escorts in their inter-island medical referral services.

He said the appropriation for the Health Network Program is insufficient to cover such cost.

He said CHCC should have flexibility to identify outside sources to address the gap in the budget for the program.

Revenue-generating measures

The governor also reminded the Legislature of the “urgency” to pass revenue-generating bills, including his proposal for a limited increase in business gross revenue tax, “to close the budget gaps” for critical services and programs.

He said the 100% reprogramming authority that the bill provides him “will not effectively address the severe under-appropriation” of the government’s Medicaid match, the GHLI program, Medical Referral/Health Network Program, the Commonwealth Utilities Corp. bills and the 25% pension payment.

He urged the Legislature to “fast track” tax-hike measures.

Failure to do so, he said, will “jeopardize the critical services and programs that affect the lives and livelihood of our community, the health care of our public servants and retirees, and the essential services provided by the Commonwealth Healthcare Corp. and CUC.”