Avoiding a deadlock in the $123.4 million budget bill to prevent a government shutdown hinges on only a handful yet thorny issues, including giving the governor extra 25 or 75 full-time equivalent positions, centralized or decentralized government utility account, and giving more or less tourism funding, lawmakers said.
Gov. Eloy S. Inos and Lt. Gov. Jude U. Hofschneider, meanwhile, will review the Senate version of the budget “to see which provisions should be flagged as concerns that should be brought to the attention of the conference committee,” press secretary Angel Demapan told Saipan Tribune yesterday.
Demapan said the Inos administration expects the budget to go into conference committee, “if and when the House rejects the Senate version, in order for both houses to iron out their differences.”
House Ways and Means Committee chair Rep. Tony Sablan (Ind-Saipan) reiterated that the House is poised to reject next week the Senate version of the budget bill, which passed Wednesday night.
After that, a conference committee will be formed to settle the differences between the House and Senate versions of the budget.
“It’s obvious we’re having some differences and I hope we go into a conference with an open mind,” Sablan said yesterday.
Sablan, main author of the budget bill, identified a handful of issues in the Senate version that his committee is concerned about. “We’re hoping for a reasonable and responsible compromise,” he added.
The Inos administration has not yet prepared its government shutdown contingency plan at this time.
“In fact, the administration is hopeful that going into conference this early will result in getting a budget passed on time,” Demapan said.
Senate Fiscal Affairs Committee chair Sen. Jovita Taimanao (Ind-Rota) separately said yesterday she’s also hopeful the two chambers will be able to settle their budget differences to avoid a government shutdown.
House Speaker Joseph Deleon Guerrero (Ind-Saipan) said the House leadership will meet on Monday, wherein they will schedule a session and charter their next move on the budget bill.
25 or 75 FTEs?
Sablan said the Senate gave the governor extra 75 FTEs, compared to the House’s 25.
Earlier, the House gave the governor a total of 50 FTEs, 25 of which was only a fallback plan should the privatization of the Division of Parks and Recreation fall through.
Now that the administration will be phasing in the privatization of Parks and Recreation starting fiscal year 2014, it becomes status quo as far as FTEs at the division is concerned.
Sablan said this means the House and Senate will have to agree whether to give the governor 25 or 75 FTEs, which will be restricted to positions that are “essential” to the delivery of public services.
The governor asked for 100 additional FTEs, which may be filled at the governor’s discretion should the need arises.
However, these extra FTEs do not come with appropriations under the budget. It will be up to the governor’s office to fund them should there be a need to hire extra employees.
Sablan said the Ways and Means Committee is also concerned about the Senate’s decision to give only $100 for the 2014 operations of the Division of Parks and Recreation, which is under the Department of Lands and Natural Resources.
“While they put back the 25 FTEs under Parks and Rec, they almost zeroed out the operations. So what will the 25 FTEs do if there’s no funding for operations?” he asked.
Under the Senate’s proposal, Parks and Recreation/Grounds will have a personnel budget of $549,649 and $100 for operations.
The governor’s proposed budget, which the House adopted, was $468,179 for operations. This will be used to contract out all the services for parks maintenance as part of privatizing the program.
Now that the privatization will be phased in, the division would need both the personnel and operations budget.
The administration, meanwhile, said as the budget process goes forward, “the administration, through [the Office of Management and Budget], will work closely with the Legislature to produce a budget that is realistic and workable.”
Tourism, utility funding
House Ways and Means Committee chair Sablan said the panel is also concerned about the Senate’s move to further cut by $200,000 the budget for the Marianas Visitors Authority at a time when the CNMI is trying to improve the only industry it has.
The governor proposed a $1.161-million budget for MVA for 2014. This is down from $2.007 million in 2013.
However, MVA is set to get an increase from other sources such as the increase in hotel occupancy taxes since April 1 this year. This could be anywhere from $5 million to $8 million.
On Wednesday night, the Senate cut MVA’s general fund budget to $961,650, which is $200,000 less than the governor’s and House proposal.
Sablan said the Senate’s budget version placing government utility budget under “one account” like previous fiscal years “will bring us back to having government agencies not controlling their utility consumption, knowing it’s not going to affect their budget anyway.”
“The reason why the administration put the utility account under each agency budget is to make sure each agency becomes responsible for their energy consumption. By doing it lump sum again, we would continue to increase our arrears with [Commonwealth Utilities Corp.],” he said.
The Senate maintained the governor’s and the House’s $20 million general fund remittance to the NMI Retirement Fund for fiscal year 2014.
Sablan said his committee is also concerned about the drastic increase in the electronic gaming machine license fee from the original House proposal of $2,500 per machine to $10,000 per machine or 10 percent of net gaming proceeds.
A Senate committee’s version of the House electronic gaming recommended a $12,500 annual license fee but this was changed to $10,000 during session, which is still a big increase from $2,500.
“That’s a big difference and that has the potential to deter any investor from coming in,” Sablansaid.
He said the government should at least give the industry a chance to grow.
Sablan cited the poker industry wherein the license fee started with some $5,000 and then gradually increased until it reached $12,500 per machine on Saipan.
He said the same thing could be done with electronic gaming machines, which should start with at least $2,500 and if the industry proves viable, then that’s the time the government may propose an increase.
As for the “earmarking” of the license fee collection, Sablan said the Ways and Means Committee agrees in principle with the Senate in setting aside these funds mainly for the NMI Retirement Fund and Fund members’ deferred 25 percent pension and contribution interest.
But he said the committee has yet to decide on how much should be going to what.
“When I introduced the bill in April, there was no Fund settlement agreement yet or the 25 percent pension cut yet so this is something we have to consider,” Sablan said.