The CNMI Constitution requires the passage of a balanced budget, but it also allows the government to continue spending under the ceiling set by the last budget law if it fails to enact a new one.
Without a new budget, the government is said to be under a “continuing resolution,” which means that the last budget law remains in effect.
Since 1998, however, government revenue has been declining and only four budget laws have been enacted — including P.L. 16-32, for the current fiscal year, after the Legislature overrode the governor’s veto.
Pangelinan said continuing resolutions add to the deficit by allowing the government to spend more than its actual revenue collections.
Her still unnumbered legislative initiative will “make continuing resolutions subject to the same fiscal discipline as budgets. It won’t matter whether the Legislature passes a budget or not,” she added.
Under her proposal, if revenue projections for the new fiscal year are lower than the previous FY, then the amount set by the continuing resolution will also be reduced.
Pangelinan, D-Saipan, said she is proposing a default-to-decision rule.
This “allows the Legislature, in the first instance, to decide how to meet the outstanding debt and deficit within the current year. If the Legislature is unrealistic in its budget and does not provide sufficiently for deficit reduction, then the default-to-decision rule will apply specified percentages.”
She said it is “unrealistic to have the Legislature tackle deficit reduction without some default-to-decision rules staring the legislators in the face. The political will just cannot be summoned under those circumstances, especially when we are talking about such large amounts.”
Pangelinan also doesn’t believe that “one deficit reduction rate is practical for all aspects of the government’s overall deficit. A more realistic approach would be to classify the debt and provide an individual schedule for each kind of debt. So the solution is to put the responsibility on the secretary of finance to obey the constitutional commands.”
She said there is “nothing lawyerly about this initiative. This makes it very clear for the voters to understand exactly what is going to happen.”
She added, “We are in a big deficit hole and it is going to take a long time to get out. This is one step of getting our government on the right path.”
A legislative initiative is a proposal to amend the Constitution. It must be passed by three-fourths of the members of each house and does not require the governor’s approval. However, it needs to be ratified by voters.
