‘Budget’s cost-cutting proposal hostages lawmakers’ approval’

A legislative committee has taken issue with the inclusion of cost-cutting measures in the governor’s budget plan, saying it leaves little room for the Legislature to make its own cuts.

The administration’s budget proposal is premised on several cost-cutting plans, including the continued suspension of earmarks, a reduced retirement contribution rate for the government, and a biweekly government shutdown.

The Senate Committee on Fiscal Affairs, in an expanded report on the governor’s budget, said the proposals should have been presented to the Legislature for approval before they were factored into the budget. The complex calculations limit the Legislature’s ability to make changes to the governor’s submission.

“The Legislature is virtually being held hostage to approval of these measures without information clear enough to justify their support,” said the committee, led by Sen. Maria Frica T. Pangelinan.

For instance, the committee said, the proposed suspension of holiday pay needs a closer look. While “not an unreasonable measure,” the proposal requires a careful look at the impact on employee benefits, said the panel of lawmakers.

The legislators were also doubtful about the effectiveness of the so-called “austerity Fridays” in cutting personnel costs. The proposal, which entails shutting government offices down every other Friday, is designed to cut personnel costs by 10 percent. “While factoring a temporary reduction in personnel costs may serve to end FY2009 without adding to the current deficit, it is not the best or [a] definitive solution to the chronic issue of excess personnel,” the committee said.

The committee also raised concern that the both austerity measures would have a “much more severe” impact on the lowest paid employees. It said that alternative measures, such as limiting the cuts to those earning over $30,000 a year.

“The committee recommends that all possible alternatives be explored to accomplish this,” it said.

The committee said its review of the governor’s budget was done in anticipation of any changes the House of Representatives might make. Although Senate approval is required for any legislation, appropriation bills can only originate from the House of Representatives.

Gov. Benigno R. Fitial has requested a budget of $158.4 million for fiscal year 2009, a slight decrease from the spending limit for the past two years.

The budget calls for cost-cutting measures, including a substantially reduced retirement contribution rate, unpaid holidays, “austerity Fridays”, and continued reprogramming of lapsed funds and fund balances from various non-General Fund accounts. It also requires an increase in several fees.