Lawmakers hesitant on austerity measures

With the possibility of federal stimulus funds covering the cost of government payroll for the rest of the fiscal years, members of the Legislature are hesitant to enact austerity measures.

The Fitial administration has repeatedly called on lawmakers to enact measures such as unpaid holidays and austerity Fridays in an effort to avoid mass furloughs, even drafting a bill that was introduced in the House of Representatives in February.

Lawmakers had seemed somewhat open to the idea lately until news broke last week that Gov. Benigno Fitial was planning on using a discretionary portion of the State Fiscal Stabilization Funds to cover payroll costs.

The fund, part of the American Recovery and Reinvestment Act of 2009, appropriates money to states and territories for education and other government services. (see related story)

The CNMI, according to the administration, is poised to receive $43 million in stabilization funds. Fitial plans on using $8 million, or the maximum 18 percent in government services funds allowed under the law, to pay employee salaries. Last week Finance Secretary Eloy Inos said the CNMI could expect to see the earmarked funds in 30 to 45 days.

The Legislature has been opposed to austerity measures like unpaid holidays and austerity Fridays until the size of the government is reduced or hiring is frozen.

Charles Reyes, press secretary for the Governor’s Office, said the administration is disappointed lawmakers are not pursuing austerity measures and are instead relying on the stimulus money.

“We believe it would be prudent to implement austerity measures that should have been implemented years ago,” the press secretary said, adding that federal funds like the stimulus package and cover over money will not go on forever.

Last week Fitial said someone must like the administration, noting that in Fiscal Year 2008 a last minute payment of $17 million in cover over funds from the Internal Revenue Service gave the government a slight surplus. The $17 million was a part of a total of $50 million the CNMI received, he said.

“Again it’s a relationship. I went to the Treasury, and I spoke to the right people, and they came through,” the governor added.

Enacting austerity measures now will allow the government a safety net, Reyes said.

“It would behoove us to be safe, to have a margin of safety,” he added.