But says it’s not unconstitutional
Rep. Leila Haveia Fleming C. Staffler (D-Saipan) acknowledged Friday that incorporating taxes provisions in a budget bill has not been done before in the CNMI, but that it does not mean it’s unconstitutional or illegal.
At a press conference in the House of Representatives chamber, Staffler said it is very clear in the Planning, Budgeting and Auditing Act that the House can appropriate money, including taxation, if it’s part of the budget.
Staffler said one only has to read Title 1 CMC 7204 (b) number one of the Planning, Budgeting and Auditing Act to show that annual budget appropriations acts shall not appropriate funds in excess of the total Commonwealth financial resources established by the House concurrent resolution unless the legislature approves additional taxation.
She pointed out that the House unanimously voted to approve additional taxation for this budget bill.
During a KKMP press briefing last Sept. 9, Gov. Ralph DLG Torres and Gilbert Birnbrich, who is the legal counsel for the Office of the Governor, both stated that including tax legislation in the House of Representatives’ version of the budget bill for the government’s operations for Fiscal Year 2023, is unconstitutional.
Torres said he asked the Legislature to create revenue-generating bills and an incentive for new money to come in, but that he never asked to go and increase taxes.
Birnbrich said regarding the tobacco tax and sugar sweetened beverages tax that the House included in the budget, they were a little surprised that they put that in there because that is unconstitutional.
“The constitution is pretty clear. We believe that the appropriation budgets are only meant to be for appropriations. You’re not supposed to put in anything substantive like amendments to laws, creating a whole new set of laws,” Birnbrich said.
House Ways and Means Committee chair Rep. Donald M. Manglona (Ind-Rota) disclosed in discussing the budget bill during a session when they passed the legislation, that the committee had decided to add two provisions that would increase taxes just for the fiscal year 2023 to address the funding shortfall for healthcare particularly the medical referral.
Manglona, who is the author of the budget bill, said the committee proposed to increase taxes on tobacco and sugar sweetened beverages for the fiscal year.
In addressing Torres and Birnbrich’ allegations, Staffler said Friday that attached in the administration’s proposed budget for fiscal year 2023 that was submitted to the Legislature last April 1, was a letter to governor’s own Finance Secretary David DLG Atalig addressed to Nadine Benjamin, the acting special assistant to the Management and Budget Office.
Staffler said Atalig refers to the Governor’s Council of Economic Advisers 2021 annual report that includes information from the Fiscal Response Summit of 2020 that recommended this very solution as a revenue generating measure to raise taxes on sugar sweetened beverages tax and tobacco tax.
She said Atalig noted that this would raise an estimated $6.3 million in local funds that they allocated directly to the Commonwealth Healthcare Corp. to support the growing programs and needs.
Staffler said although in the governor’s graphic it shows the House took money away from CHCC, what they actually did was give them a bigger amount.
“And we took their local funds so that we can fund the other parts that I talked about earlier…. retirees benefits and Medicaid match,” she said.
Staffler said that what Torres and Birnbrich were saying that this is illegal is wrong.
“It’s never been done before. Incorporating taxation legislation in a budget has not been done in the CNMI. But it doesn’t mean that it cannot be done. Our code allows for it. And it’s part of a code that’s been there ever since,” she said.
Staffler said it is part of their role as policymakers who have authority as the fiduciary duty to initiate those revenue generating bills.
Staffler is running for lieutenant governor in the Nov. 8 general elections under the Democratic Party, with Rep. Christina E. Sablan (D-Saipan) as her running mate as governor.
Rep. Celina R. Babauta (D-Saipan) said at the same press briefing that she wanted to make it clear that part of what Birnbrich stated is true that they cannot introduce multiple subject bills.
Babauta said however, the annual appropriations bill is considered an omnibus bill so it has multiple subjects in it so they included provisions raising taxes.
She said as chair Manglona alluded to, the tobacco, and sugar sweetened beverages taxes have sunset provision that it will end at the next fiscal year, or Sept. of 2023.
“It was a test to see if we could and maybe future legislators could make it a permanent statute. But we decided to just add a sunset provision and only put it into effect for one year,” Babauta said.