House seeks new talks with Senate on budget

The House of Representatives yesterday postponed action on what is supposed to be a compromise budget bill, after lawmakers raised concern about $9.1 million worth of proposed expenditures that are not funded in the budget.

The House members agreed to open another round of talks with the Senate, which has already passed the bill, to address the unbalanced budget.

Rep. Heinz Hofschneider, during debate on the House floor, said the appropriation bill practically allows deficit spending and thus, violates both the CNMI Constitution and the Planning and Budgeting Act.

The proposed legislation, which is the product of a joint conference committee between the House and Senate, appropriates $174.47 million for government operations despite projections that the government will only have $165.37 million available.

The bill is premised on a projection that the government will collect $169.55 million in revenue from Oct. 1, 2008 to Sept. 30, 2009. Of this amount, $12.85 will go debt service and other pre-existing obligations, leaving $156.7 million available for government operations.

The bill proposes to augment this with $3.5 million from several sources from outside the general fund, and $5.17 million of “Compact Impact” funds, which is federal government’s reimbursement to the Northern Marianas’ for the cost of hosting citizens from Micronesia. These additional funds bring to $165.37 million the amount available for government operations in the 2009 fiscal year.

Hofschneider said the assumption that there will $156.7 million left in the general fund, after obligations are paid, may be unjustified. He said the government is not collecting that much now, evident in its failure to pay retirement contributions even at the reduced rate of 11 percent.

“Our actual resources could be below $140 million. It’s time to make the real, hard choices,” Hofschneider said.

Rep. Victor Hocog, co-chairman of the House Ways and Means Committee, said the expenditures increased because the conference committee considers it important to pay the Retirement Fund at the actuarially recommended rate and, thereby, ensure that eligible employees are able to retire. The committee also tried to accommodate the House’s desire to get rid of cost-cutting measures such as austerity Fridays and unpaid holidays.

The Fitial administration on Tuesday expressed its objection to the proposed budget. “Political liability is placed entirely on the governor’s shoulders,” press secretary Charles P. Reyes Jr. said. “The legislators need to identify those cuts and the governor will either approve them or reject them. But it’s a delicate political problem. Again, our position has always been to balance the budget.”