Legislative leaders frustrated with last-minute budget veto

House Speaker Arnold Palacios and Senate President Pete Reyes say they are upset Gov. Benigno Fitial “waited until the eleventh hour” to veto the fiscal year 2009 budget.

In a letter to Fitial, the two lawmakers said they were extremely disappointed to hear the governor vetoed the $165.4 million budget on Dec. 24. Fitial cited a drop of $8.7 million in projected revenue to justify the veto action.

“It is obvious that we have reached an impasse in the budget process, notwithstanding the Legislature’s efforts to work with your administration,” the letter states.

Presiding officers of the Legislature asked Fitial and the Finance Department to transmit revised revenue projections on several occasions, something that did not happen prior to the Legislature passing the budget on Dec. 4, Palacios and Reyes said.

“Subsequent to the passage of the Budget Act, the Secretary of Finance conveniently executes a memorandum revising the FY 2009 estimated resources on Dec. 19, 2008, which is the main basis of your decision to veto the Budget Act. Why wasn’t the revised revenue estimate transmitted to the Legislature during the budget deliberations, where the Secretary of Finance was invited to participate in on several occasions?” they asked.

Also, they said, most of Fitial’s concerns could have been dealt with without vetoing the entire Budget Act, and, according to the lawmakers, some of the governor’s concerns originated from his own FY 2009 budget proposal. One of the examples they listed is the governor’s concern that the Northern Marianas College was not appropriated a separate amount for utilities.

“The Budget Act provided that the utilities shall be paid from the ‘all others’ account of NMC because the governor’s proposed budget failed to indicate a separate line item for NMC utilities,” the legislators wrote.

Such concerns could have been alleviated using the governor’s line item veto power, Palacios and Reyes wrote.

Without the Budget Act, they continue, government expenditures will continue using continuing appropriations, which with declining tax revenues usually means overspending and deficits.

The lawmakers also took umbrage at the recent FY 2008 budget revision. Initial numbers showed an $18 million deficit, but the Secretary of Finance revised those numbers after receiving cover-over taxes from the U.S. Treasury, thereby giving the CNMI a budget surplus of $110,000, “even though CNMI government lags far behind in its employer contributions to the NMI Retirement Fund.”

Notwithstanding the cover-over funds, there was a $4.5 million revenue shortfall and $13.5 million overspending for FY 2008—something, they said, that is unacceptable for the Commonwealth.

“For that reason, the Legislature remains adamant and committed to enacting a budget for FY 2009. Expenditures must be controlled and such expenditures can only truly be controlled and monitored by enacting a Budget Act for FY 2009 and every year thereafter,” Palacios and Reyes said.

Lastly, the two lawmakers said they were disappointed by the veto because “you constantly request for assistance and cooperation of the Legislature…[h]owever, when the Legislature passes legislation to address such problems, it appears that you do not approve of the proposed legislative action.”