ON THE BUDGET

We don’t have a budget yet, and frankly I think that everything else that we’re doing in the Legislature should be put on hold until we pass a balanced budget.  Passing the budget is the single most important responsibility of the House of Representatives.   

Part of the difficulty we are having in passing a budget is that the government has not followed the Planning and Budgeting Act.  This includes both the Executive and Legislative branches, and goes back to the 15^th Legislature.  Under the Planning and Budgeting Act, the proposed budget should include: 

• A balanced budget, meaning revenues should have been equal to outlays;
• A detailed, current estimate of all the anticipated financial resources of the Commonwealth, including Covenant funds, unobligated balances, federal loans, grants, and other monies, a breakdown by type, and whether or not they are available to be appropriated;
• A statement of the basis for all estimates of financial resources, including a comparative analysis of available data for the two complete past years and the current year;
• Schedules of amounts obligated in the two complete past years, the amounts appropriated in the current year, and the amounts proposed to be appropriated for the budget year;
• Etc.

  A proposed balanced budget was supposed to have been prepared and submitted no later than six months before the beginning of the fiscal year.  Any adjustments or amendments should have been submitted no later than three months before the beginning of the fiscal year.  This means that a balanced budget should have been submitted in April 2007, and adjustments should have been submitted in July, and the Legislature should have taken final action on the budget within 30 days.   

The proposed budget wasn’t submitted, however, until September 2007, just weeks before the end of the fiscal year.  It was also an unbalanced budget because it makes several problematic assumptions, including a Retirement Fund employer contribution of 11% (it is actually 18%), and the enactment of the unpaid holiday bill which has yet to pass in the Legislature, among other things.  Moreover, not all of the information that we need (for example, actual expenditures for the past two years, or even just the past year) has been provided in the proposed budget plan.       

There has been discussion among the legislators about passing a continuing resolution, since we are already in the second quarter of FY 2008, and focusing instead on a budget for FY 2009.  Another suggestion has been to pass a balanced budget that corrects the Governor’s previous assumptions, which would very likely mean more job cuts, or another across-the-board salary decrease (either a flat rate or proportional), or a tax increase, or a year-long suspension of rebates, or a combination of these measures.  It has also been proposed that the Governor should be granted the same unlimited reprogramming authority he had from the 15th legislature to provide for critical services, such as public health, public schools, and public safety.      

I think it would be absolutely irresponsible of us to pass a continuing resolution and allow this government to operate on the same spending level as it did last year.  A continuing resolution is a guaranteed ticket to more government inefficiency and ineffectiveness.  It means even more uncertainty in this already-uncertain time.  When regular appropriations are delayed, agencies don’t know how much money they truly have to spend, and may try to hoard funds, not obtain the resources they need to do their jobs, or end up overspending.  We simply cannot afford to pass a continuing resolution.     

Most of us would agree that the responsible thing to do would be to pass a balanced budget as soon as possible.  If we don’t have the information that we need to pass a balanced budget now, then we return the unbalanced budget to the Administration and go back to the table with them to agree upon the measures we would take to cut costs, generate revenue, or both, in order to realize a balanced budget. 

I further disagree with the proposal to give the Governor unlimited reprogramming authority.  It would certainly be easier to blame him if anything goes wrong, but I truly believe we would be shirking our own responsibility to be fiscally prudent and to provide oversight in the expenditure of public funds.   Why not follow the guidelines for reprogramming that are provided in the Planning and Budgeting Act?   

The Planning and Budgeting Act already gives the Governor reprogramming authority for the operations and activities of the Executive Branch, including all those critical services that fall under his jurisdiction – up to 25%.  He certainly has the power to reprogram more if he declares a state of emergency.  Otherwise, to reprogram more than 25%, the Governor must submit his request to the Ways and Means Committee and the Senate Committee on Fiscal Affairs, and his request would be considered approved unless either Committee disapproves the request within 20 calendar days.   If the reprogramming request is truly to provide for critical services, why in the world would either committee disapprove?  This way, we all share responsibility for providing for those critical services, and the burden does not fall on only one person to decide what is critical and what is not.   

Looking ahead to Fiscal Year 2009 – we should be thinking now about ways to avoid repeating the problems with which we struggle in this fiscal year.  It would not be a waste of time or money to begin government-wide desk audits and performance evaluations, overhauling our personnel management policies and pay scales, and eliminating duplications between agencies.  It would be an investment.  I also think we should implement meaningful penalties for failing to meet the deadlines stipulated in the Planning and Budget Act.  At a minimum, legislators and the governor and lieutenant governor should not get paid until a balanced budget has been passed.       

 

UPDATES ON CUC

Legislators met with CUC, EPA, and several CUC consultants yesterday for a briefing on the stipulated order that is still being negotiated between CUC, EPA, and the Department of Justice to address CUC’s on-going water and wastewater violations.  EPA described

Saipan’s water and wastewater utility services as among the worst in the nation, with 44 health violations posted since 2001.   

The power crisis has directly contributed to the deterioration of our water and wastewater utilities, of course.  The three utilities commingle finances, and resources have been diverted away from water and wastewater to pay for fuel.   

Although the CUC and EPA representatives were unable to discuss specifics of the stipulated order, it was encouraging to hear that a long-range strategy is being developed to not only address the specific and critical public health concerns that are raised by the water and wastewater violations, but to improve the overall utility system by addressing the root causes of the violations, which are 1) chronic underfunding for capital improvements and operations and maintenance; and 2) a lack of technical expertise – not enough skilled personnel.   

A similar enforcement action took place in

Guam in 2003, also for water and wastewater violations, with very successful results.  Utility management and financing experts and engineers came in and worked with existing staff to develop short-term and long-term strategies for improving the utilities.  Wastewater violations are now down by 99% and water quality has improved dramatically.  The utility’s credit rating has also greatly improved, and in 2006 a $160 million bond was obtained at an interest rate that was much lower than it would have been in previous years when the utility was in dire straits.     

The stipulated order will ultimately result in a long-range plan for the water and wastewater system, and it should be finalized in the next few months.  It is not clear exactly how this plan will affect the power system, although there was mention yesterday of providing assistance in the form of information exchanges, grants, and technical expertise to help the CNMI also develop a long-range plan for energy security.   

If the initiatives proposed by Rep. Hofschneider pass (House Legislative Initiatives 16-5 and 16-6), the CNMI will be able to avail itself of the funding that is desperately needed to overhaul our utility system.  But that funding must be accompanied by a plan, and it must be a plan that all the leaders of the CNMI will agree to honor.  Without a plan, and without a commitment to honor that plan and not exercise adverse political interference in the implementation of that plan (in other words, we must allow competent people to do their jobs), we would be squandering an opportunity that may never come again.       

ON THE LEGISLATIVE BUREAU

The fight between the House and the Senate over who should be the next Legislative Bureau director helped bring to light some serious and deeply-rooted problems in the bureau.  The first has been discussed quite publicly and extensively, and that is nepotism.  I agree with the House leadership’s position that the Senate’s choice for Legislative Bureau director would be highly unethical and improper.   

The second problem has hardly been discussed at all – and that is, there is no legitimate process for selecting a qualified and competent Legislative Bureau Director.  There are essentially no required qualifications, no formal evaluation of candidates, and no formal process for selecting and hiring the best candidate for the job.  This year, the position was not even announced.  Four applicants expressed interest, but the Senate apparently did not even know that.  I have no idea if formal interviews were conducted, or if resumes were even submitted. 

Senator Pangelinan touched on this problem in her memo to the legislators, when she noted that the Legislative Bureau is far more political than it should be, and especially in the selection of the Legislative Bureau director, which changes every time the leadership changes.  The Legislative Bureau is likelier to be the nonpartisan, independent body that it was intended to be if there were formal, legitimate processes in place for selecting the Director.  Senator Pangelinan presented five options but she did not include the one option that would have been most obvious to me: to audit the position of director, come up with a better position description that includes minimum qualifications, announce the position, and develop a formalized process for selecting and hiring the best candidate for the job.  

Much depends on the Legislative Bureau director – the maintenance of legislative records, the quality of professional services provided to legislators, the morale and productivity of the staff, the maintenance of office grounds, capital equipment, supplies, and vehicles, proper procurement and inventory management, standard operating procedures for the office, personnel management policies, etc.  We should not take this position lightly, and the recent deadlock between the houses has presented us with an opportunity to improve, formalize, and legitimize the way the director is selected, and thereby improve the services of the Legislative Bureau in the long run.   

ON THE LEGISLATIVE PROCESS

In an email I sent out the other day, I touched on my concerns about the process in which the Legislature prioritizes, drafts, discusses, and adopts legislative action.  I plan to write more about this issue shortly, but in a nutshell, I firmly believe we need to slow the legislative process down, and increase transparency in the Legislature.  Legislators should have the benefit of timely notice and adequate information so they can exercise due diligence in reviewing and acting on bills.  Citizens should have the same so they can be more informed about how they are being served by their elected officials, and so they can get involved in if they choose.   I have drafted proposed amendments to the rules that govern the House that would help slow down the legislative process and encourage all of us legislators to be more careful, deliberative, and responsible when taking any action.  I am also working on legislation to update, clarify, and strengthen the Open Government Act, and apply it to the Legislature.  If anyone would like to assist in drafting and/or reviewing and commenting on these amendments, they can contact me at 664-8931 or 483-3935, or email me at tinasablan@gmail.com .  I would welcome the help.