Bill penalizing govt for late payments defeated

With only seven “yes” votes from the House leadership, a bill that aims to penalize the government if it fails to settle debts owed to vendors after 60 days was defeated during Wednesday’s session.

House Bill 14-290, or the Government Prompt Payment proposal authored by Vice Speaker Timothy Villagomez, was rejected by nine lawmakers—the entire minority bloc plus leadership member Janet Maratita. Another leadership member, Tinian congressman Norman S. Palacios, abstained.

Prior to voting, minority bloc Rep. Heinz S. Hofschneider said the bill “is redundant and not really necessary.”

“Finance is the trustee of funds under the Constitution, not the agencies, so this bill only adds another complication,” said Hofschneider.

Villagomez said, though, that the bill offers “clarification” of rules.

He cited that right now, “there is a huge backlog at Finance” which makes it hard for vendors to claim payments on time.

Rep. Clyde Norita, who supports the bill, said that due to the government’s failure to settle debts with vendors, agencies suffer. For instance, he cited that police personnel were not allowed to gas up their vehicles last weekend because the police department has not paid Mobil for its fuel use.

“Agencies are getting hit because Treasury is not getting the checks out,” said Norita.

Hofschneider said the problem “is the lack of government funds.”

“People are misled, vendors are misled that this government has funds,” said Hofschneider.

Still, he said, the bill “is a finger-pointing legislation” because it only wants to put the burden on the Department of Finance. If money is available anyway, vendors should get paid within 30 days upon receipt, he said.

House Speaker Benigno R. Fitial said there is definitely a problem with government cash flow.

“Someone is lying, deceiving, certifying that there’s money, when there is none,” he said.

In his bill, Villagomez said there is no reason why the government cannot fulfill its duty considering that “funds are appropriated for the operation of the Commonwealth government.”

He said many vendors or contractors have to wait months and even over a year to receive their payment from the government without interest.

H.B. 14-290 proposes to impose a 2-percent penalty fee against the government for non-payment of debts due to vendors or contractors 60 days after receipt.

The penalty shall not be assessed against the requesting agency but shall be withdrawn from the Department of Finance’s account.