The House agenda changed once again on the floor during this week’s sessions on March 26 and March 27. The following items were added:
HOUSE BILLS
HOUSE LEGISLATIVE INITIATIVES
HOUSE COMMUNICATIONS
ACTION TAKEN
COMMENTS
On the confirmation of Ms. King-Hinds to the PUC
The five members who objected to the confirmation of Ms. King-Hinds cited several concerns, all related to questions about whether or not Ms. King-Hinds has a conflict of interest in serving on the PUC. Some believed that private water bottling companies (such as the one that Ms. King-Hinds manages on Tinian) might be subject to regulation by the PUC. I was one of the members who held this view. I submitted my statement (Remarks on Hinds Nomination) and during the discussion on the floor pointed out that private water companies are commonly regulated by public utilities commissions, and the language of our PUC law (as I read it, anyway) did not clearly exclude private water companies from PUC regulation. Members said that two legal counsels had already indicated their view that private water companies are not subject to PUC regulation; I responded that in both instances we had given the legal counsels only a few minutes to glance at the law and give us off-the-cuff opinions. I requested that we give the House legal counsel time to research the issue and give us a written legal opinion about whether or not there is in fact a conflict of interest; another member requested an opinion from the Attorney General’s Office as well.
Other members felt that the conflict of interest stemmed from the fact that Ms. King-Hinds’ water company does business with CUC. They said that her company purchases water from CUC, treats it, and then sells it to the public. One member recalled that the USEPA and CUC had recently given the Legislature a presentation on the stipulated order that is about to be issued to address CUC’s chronic water and wastewater violations, and that this order is likely going to require a raising of the water rates. How would Ms. King-Hinds make a decision involving an increase in rates that will directly affect her cost of doing business? (Moreover, how would any of us know since none of us had ever asked her?)
The majority of members disagreed and felt it would be unnecessary to delay Ms. King-Hinds’ confirmation any longer, while we waited for a written legal opinion, and others pointed out that if in fact a conflict of interest existed, that Ms. King-Hinds could always recuse herself from decisions that could potentially involve her company. I objected and said that it should be important to us to get the PUC off on the right foot — particularly since this would be the regulatory body overseeing a utilities corporation that has been fraught with mismanagement and improprieties for so many years. Why taint the PUC with either the fact or the appearance of a conflict of interest right from the beginning?
Nonetheless, there was a motion to end debate and vote on Ms. King-Hinds’ nomination, and she was confirmed. It should be noted that the five members who voted against her confirmation included the Chair of the House PUTC committee, Rep. Stanley Torres (who resigned from the chairmanship that day in part because of what he perceived as pressure from the leadership to rubberstamp Ms. King-Hinds’ nomination); the Chair of the Saipan delegation PUTC committee (myself); and two former PUTC chairs (Rep. Frank Dela Cruz, who was one of the authors of the law that created the PUC, and Rep. Hofschneider).
On HB 16-79
Of all the co-sponsors of HB 16-79, Speaker Palacios is probably the easiest target for criticism because he was the author of PL 15-94, the public law that rolled back CUC’s rates to 17 cents/kwh. Speaker Palacios has already been accused of pandering for votes and then promptly forgetting the needs of the people once elected. These accusations are extremely unfair and simplistic. We can imagine that the sincerest of intentions were behind PL 15-94 — particularly, the desire to give relief to our community, which has been suffering under exorbitant utility rates and a mismanaged utilities corporation. I think it is fair to say that we all share that desire in the Legislature. The mistake was in passing PL 15-94 without first ensuring that funding would be available to cover the shortfall that it created. Subsequent efforts to identify such funding ultimately failed.
The legislative process is such that Representative Palacios did not act alone and was not solely responsible for the passage of PL 15-94. That law could not have passed without the overwhelming support of the members of both chambers of the 15th Legislature — enough support to override the Governor’s veto, in fact. The failure to identify a subsidy to cover the shortfall created by PL 15-94 was therefore not just one person’s failure, but the failure of all the members of the 15th as well as the 16th legislature.
Leadership is not about never making any mistakes, but about recognizing when mistakes have been made, when even the best of intentions fall short of feasibility — and then being willing to take corrective action. Nearly all the members of the House recognized that PL 15-94 needed to be repealed in the absence of any subsidy to cover the full cost of fuel; few seemed willing to take the initiative to introduce the repealer. (Indeed, I heard more than one member in the House say that they would be willing to support the repealer, but would not put their names on it because that would be “political suicide.”) The Speaker took that initiative and introduced a bill to repeal a law that he himself had authored. It was not an easy decision, and the humility and courage of that decision demonstrates his capacity for leadership — the kind of leadership we need more of in the CNMI.
On another note, the Legislature has deservedly received a great deal of flak for passing and repealing laws with astonishing rapidity. I have objected to that practice myself, and have also objected to the chronic suspensions of rules that permit bills to be fast-tracked. And so it was a difficult thing for me, just on principle, to be one of the main authors of a bill to quickly repeal a law that had been passed just months before when a) the bill had not been prefiled and there was no public notice of when it would be officially introduced (with the exception of an email I had sent out that day when my co-authors and I were ready to introduce it); and b) I knew that the bill was going to be placed on calendar that day and would likely pass on first and final reading.
Although the Open Government Act does not currently apply to the Legislature, I try to act as if it does. And it is worth noting that the Open Government Act permits the waiving of public notice requirements in emergency situations when delays caused by such notice would increase the likelihood of injury to life or property. I strongly believed that the $1million dollars/month shortfall created by PL 15-94, and the resulting inability of CUC to purchase sufficient supplies of fuel for the month, which in turn exacerbated its already failing ability to provide utility services, created an emergency situation, and warranted the waiving of public notice for the bill to repeal PL 15-94.
Finally, as I stated on the floor this week, I think that most people recognize the necessity of repealing Pl 15-94, and would be resigned to continuing to pay rates that reflect the true cost of fuel if they could be assured that there was some light at the end of the tunnel. And there are some signs of that light as we are all seriously considering concrete measures to provide relief and reliable utilities to the people of the CNMI — most notably in the initiatives introduced by Rep. Hofschneider to allow borrowing for the overhaul of utilities and his bill that sets down guidelines for the privatization of CUC, including requirements for renewable energy; in the bill introduced by Rep. Ralph Torres and others that would provide some measure of relief to low-income households and families with members having debilitating illnesses; in the introduction of a bill by Rep. Joseph Camacho that would improve transparency at CUC by mandating the ready availability of all pertinent statutes, rules and regulations for customers; in the establishment of a quorum for the Public Utilities Commission; in the long-term energy plan initiated by the Saipan delegation’s PUTC; and in the shift in public sentiment towards privatization of CUC and improvements in the management of our utilities.
ANNOUNCEMENTS
Reminder: all bills and initiatives introduced in the House can be accessed at the Floor Leader’s website, www.camachocnmi.com .
Thank you and have a good week.
This is to announce that the Senate has called for an emergency session at 3:00pm today, Friday, March 28.
The power is out right now and I am unable to find out if there is an official agenda yet, but I am told that the purpose of the session is to entertain (and likely reject) HB 16-51, the House budget bill.
This is to announce that there will be a House session tomorrow, March 26 @ 10am in the House chamber.
Click here for the draft agenda
This is to announce that the House session scheduled for Thursday, March 20 has been postponed until further notice due to Holy Week. The Senate session is still scheduled for today at 10am.
Also, the following meetings will be taking place today, Wednesday, March 19:
Finally, the usual Wednesday hour with the press will be held today at 10am in my office.
The House and the Senate will both be holding sessions tomorrow, Tuesday, March 18 @ 10am in their respective chambers.
The agenda for the House session on Wednesday, March 12 was amended once again on the floor. The following items were added to the agenda:
INTRODUCTION OF BILLS
STANDING COMMITTEE REPORTS
BILL CALENDAR
ACTION TAKEN
1. Two standing committee reports were adopted:
2. Four bills were passed on First and Final Reading:
***
ON THE BILLS THAT PASSED
I voted yes on all four bills that were passed on Wednesday. Most of these bills struck me as relatively innocuous and straightforward. There was some contention on the floor about HB 16-30, and some members argued that it would be wrong to add to the list of professional categories exempted from the salary cap, and moreover, to raise the salary cap that applies to professionals within the legislature and judiciary, especially in light of the CNMI’s fiscal situation. Part of the argument against the bill was that the claim that it was drafted specifically for one person (the pharmacist at CHC). This claim was disputed by other members, and it was noted that that the bill was drafted for the institution of the hospital, not for any one particular person, and not only for the position of pharmacist, but also other positions (psychiatrists, psychologists, clinical social workers, etc.) that are difficult to recruit for, and retain. It was also noted that professionals within the legislature and judiciary (legal counsels, clerks, etc.) have been, and continue to be, paid within the proposed $60k salary cap (and in the case of the legislature’s professionals, above the salaries of legislators), and that this has been allowed under prior appropriation acts.
It was further stated on the floor, however, that there will continue to be a need to reexamine and update the payscales for the government, to ensure that salaries are commensurate with qualifications and position descriptions, and that there is parity within the branches of government with respect to salaries paid to qualified professionals holding similar positions.
On another note, the frequency with which we suspend the rules in the House (early recalls of bills from committee, placing bills on calendar the day they are introduced, passing on first and final reading, etc.) continues to disturb me. I have asked, and will continue to ask, for justification as to the necessity of fast-tracking particular bills rather than allowing them to go through the process that is in place to allow for careful deliberation of bills. Rules are only good insofar as they are actually enforced. I continue to believe that honoring and enforcing the rules that we have adopted in the House would improve, and not impede, the legislative process.
ON THE PUC CONFIRMATION PROCESS
The nomination of Ms. Kimberlyn King-Hinds to the Public Utilities Commission was a topic of discussion during the session. The JGO committee presented a report recommending that she be confirmed. Documentation was also provided that day that indicated that her drug test results had been received. Although the results were not disclosed on the floor for obvious confidentiality reasons, it was said that members who wanted to review the results could meet with the committee chairs.
There was then a motion on the floor to adopt the committee report. I requested that the members consider calling Ms. King-Hinds in for a hearing before adopting the committee report and accepting her nomination. It was clarified that the motion was to adopt the report, not to accept Ms. King-Hinds’ nomination, and it was further stated that Ms. King-Hinds could not be confirmed anyway until the PUTC committee had also reported out. The JGO report was adopted and the PUTC committee was then ordered to submit its report by Monday, March 17. I asked again if there could at least be an opportunity for members to meet with Ms. King-Hinds and interview her to determine that she would indeed be suitable for the position; it was said that that decision would be left to the two committees, JGO and PUTC, that had been assigned to review her nomination. The JGO committee chair said that she and the majority of the committee members were satisfied that Ms. King-Hinds’ nomination papers were complete and legally sufficient, but said that this did not preclude the PUTC committee from doing a more extensive review of her nomination. The PUTC committee chair was not present at the session at the time, but the vice-chair said the committee would likely request to file its report recommending confirmation jointly with JGO.
It seemed to me that there was a rather perplexing reluctance among my colleagues to schedule a confirmation hearing for Ms. King-Hinds. I do not believe the other two already-confirmed PUC members were called in for hearings either. I understand that Ms. King Hinds was confirmed by the Senate before she even took her drug test. The House JGO committee came out with a report recommending her nomination after she took her drug test, but before the results had been received, and there was no committee meeting to discuss her nomination. As far as I know, the House PUTC committee has also not met to discuss Ms. King-Hinds’ nomination.
I understand the urgency that members feel in appointing a third member to the PUC in a timely manner. I feel the same urgency. A third member means that there would then be a quorum and the commission can finally get to work. However, considering the dire straits into which our public utilities have fallen, it would seem to me that carefully considering the backgrounds, qualifications, and capabilities of all nominees would be just as important to ensuring the integrity and effectiveness of the Public Utilities Commission as establishing a quorum. Resumes, statements of financial interest, and drug test results are only part of the picture we should be considering.
I would like to stress that I have absolutely no axe to grind with Ms. King-Hinds. For me, this is simply about taking our jobs as legislators and the job of a public utilities commissioner seriously enough to care about exercising due diligence in the review of any PUC nomination. After the session, I called Ms. King-Hinds to request that she come in for a meeting this week, and she agreed. A date and time should be confirmed by Monday. All members will be invited to attend. I have also requested that we hold off on taking a vote to confirm Ms. King-Hinds until members have had at least the opportunity to exercise due diligence in reviewing her nomination.
***
As always, I welcome comments and questions. I can be reached at this email, or by phone at 664-8931 or 483-3935.
There will be a House session today, Thursday, March 12 @ 2pm in the House Chamber. The call for session was sent out a couple of days ago, but a final agenda was not available until this morning. CLICK HERE for the Agenda.
Also, the following committees have scheduled meetings this week and next week thus far:
Saipan and Northern Islands Delegation, PUTC: Friday, March 14 @ 1pm, to begin developing a long-range energy plan for Saipan. Contact myself, Tina Sablan, at 664-8931, 483-3935, or tinasablan@gmail.com for more information.
House Commerce and Tourism: Wednesday, March 19 @ 1:30pm in the Speaker’s Conference Room, to review HB 16-12 (establishing a nonimmigrant entry permit category to attract “silver club” market); and HB 16-21 to amend 4 CMC Section 0204 to cap tax benefits of qualifying certificates
Finally, Rep. Hofschneider will be at the Sabalu Market this Saturday, from 6:30am-8:30am, with an informational display of the five initiatives that he has introduced, which pertain to the downsizing of the Legislature, amendments to Article XII, and a proposal to allow the government to borrow money for operations to address the CNMI’s power crisis. Copies of the initiatives will be made available to the public, and Rep. Hofschneider will also be conducting a survey to help assess public opinion on the proposals. His office can be reached at 664-8830 for more information.
On Monday, March 3, six months into Fiscal Year 2008, the House deliberated on both the House Concurrent Resolution, which identified the budget resources for the year, and the draft budget bill, House Bill 16-51. The Concurrent Resolution passed, 19-1, and so did the budget bill, 14-6. I voted no on both the resolution and the budget bill; the other five members who voted no on the budget bill included Rep. Heinz Hofschneider, Rep. Justo Quitugua, Rep. Rosemond Santos, Rep. Ed Salas, and Rep. Edwin Aldan.
I voted no on the Concurrent Resolution for two reasons. First, the Resolution was incomplete and not in compliance with the requirements of the Planning and Budgeting Act. The Act clearly states that both estimated resources and expenditures must be identified in the Concurrent Resolution; the Resolution that was passed on Monday only identified estimated resources. It was said that identifying the budget ceiling was the equivalent of identifying the expenditures, but I disagreed. We do not have to appropriate every penny of what we expect to earn – and in fact, it would be more fiscally responsible to appropriate less. In any case, the Act requires that we should at least indicate estimated expenditures as well, and we did not do that in the Concurrent Resolution.
Second, it was unclear whether or not the resources identified in the Resolution equaled the outlays established in the budget bill, which raised the question of whether or not the budget was even balanced. The Resolution did not take into account Compact-Impact funds in the estimate of available resources. However, the budget bill identified the use of those Compact-Impact funds in the outlays. The bill proposed to cut the budgets for certain critical agencies (the Department of Public Health, the Department of Public Safety, the Public School System, the Northern Marianas College, the Division of Youth Services, the Department of Correction, and the Public Defender) by hundreds of thousands, and in some cases millions, of dollars, and to replenish those accounts through Compact-Impact funding.
I was concerned that the above-mentioned critical agencies would be severely shortchanged if, for whatever reason, the Governor chose not to replenish their accounts in the amounts identified in HB 16-51. Compact-Impact funds are considered grants to the government, and the Governor has authority to distribute those funds according to the terms of the grant agreement, and also to reprogram. It was not at all clear to me that there would be anything binding the Governor to follow the recommendations of the House for the distribution of these funds.
I voted no on the budget bill for several reasons, including my concerns about the funding for critical agencies, mentioned above. Related to that, I felt that essential public services had not been properly prioritized and adequately funded. It seemed to me that we should have ensured that at least the critical services received adequate funding, and that all remaining resources would be distributed to other agencies and programs in order of agreed-upon priorities. That did not happen – and, of course, it did not help that we did not have all the information that we needed from the Administration in order to make rational decisions about what agencies actually needed in order to operate.
Second, I voted no on the budget bill because it provided no relief measures whatsoever for the residents and businesses that have long been suffering under exorbitant power rates. The original draft of the bill had proposed to subsidize fuel through funds freed up by cutting government salaries (cuts of three percent, and then seven percent, had been proposed; I had favored a proportional cut). We knew that the CUC state of emergency that the governor had declared would be expiring soon, which meant that power rates would roll back to approximately 17 cents/kwh, in accordance with Public Law 15-94. We also knew that implementing PL 15-94 would mean that CUC would face a serious shortfall in the millions to pay for fuel if a subsidy were not identified soon to cover the true cost of power.
The provision to cut salaries in order to create a fuel subsidy was removed from the budget bill because some members deemed it unfair to government employees, but it was replaced with nothing to address the shortfall created by PL 15-94. I asked about this omission on the floor, and also asked if there would then be a move to repeal the law to allow CUC to charge for the full cost of power. Both the Speaker and Rep. Dave Apatang said that they were working on a repealer that would be prefiled later in the week. I was glad to hear that, but it has yet to happen.
I have always thought that it was a mistake to artificially lower the power rates through legislation, not only because funding was never identified to cover the shortfall, but also because of the effect that such political interventions have on CUC’s credit rating (which is admittedly shot anyway, but it does not need to be made worse). Moreover, in the event of a future privatization effort, government meddling in the corporation’s ability to recover costs would raise an enormous red flag for potential legitimate bidders.
The third reason I voted no on the budget bill was because of the effect that it would have on the Retirement Fund. The Fund has long been treated like a cash cow by past – and present – legislators. The government’s abysmally low financial performance rating stems largely from debts owed to the Fund. Actuarial studies have indicated that the government’s contribution to the Retirement Fund should be approximately 36%. The 15th legislature passed a law that required only an 18% contribution, which is less than ideal, but at least still more than the Governor’s proposal of 11%. The 16th House, however, proposed to allow the government to reduce contributions to the Retirement Fund by any amount in which appropriations authorized under the budget Act exceeded available funding for the fiscal year. It was stated on the floor that this would allow the government to withhold payments to the Retirement Fund in order to avoid painful personnel cuts. If the Fund itself came up against any cash shortfall, the budget bill would allow the Fund’s Trustees to draw upon investment earnings and liquidate assets.
Some members were uncomfortable with this provision and began to brainstorm amendments that ultimately did not make it into the bill. These members said that they would attempt to make these amendments through separate legislation. Until that happens, however, hemorrhaging of the Retirement Fund will continue.
The fourth reason I voted no on the budget bill was because we did not have a remotely clear picture of the impact that this budget would have on government services and on people’s lives. In addition to the earmarks that the Governor had proposed to suspend in his budget, the House sought to suspend the Tobacco Control Fund, the Solid Waste Revolving Fund, and the Deportation Fund, and it was not clear to me what effects these suspensions would have on critical programs dependent on those funds, such as those related to public health, the operations of the landfill, and vocational training.
Moreover, the budget bill did not take into account actual expenditures made by the government to date, which means that it is quite likely that some agencies have already overspent, and will have to make further cuts in personnel and operations in the remaining six months of the fiscal year in order to live within their means. If public services are threatened as a result, we have no idea how, and if more people will have to be let go, we have no idea who, or how many, or from which agencies, or when. It is clear, however, that as a result of this budget, at least 397 people will be out of a job by the end of March, and more are likely to follow in the remaining months of the fiscal year.
Finally, I voted no on the budget bill because I did not feel that it was ready to be passed to the Senate on First and Final Reading. Under the House Rules, any bill that is amended more than twice on the floor should be sent back to committee, the assumption being that it is clearly not ready for passage. However, the rules were suspended and about half a dozen amendments were made on the floor to address errors in the bill, some technical and some rather substantial. The passage of at least two other pieces of legislation (the repeal of PL 15-94, and another one related to Retirement Fund contributions, both previously mentioned) would also be required in order address significant problems identified in the budget bill. Although commitments were made on the floor to introduce bills related to both those subjects, there is no guarantee that those bills would actually be enacted, or how soon. Quite a few members voted “yes, with reservations” to the bill for that reason, and trusted that their concerns would be addressed in future legislation. I personally felt that it would be better to vote no and send the bill back to the committee and address the other concerns first, than to vote yes to a bill that is seriously flawed in its present form.
I could not, in good conscience, endorse a budget that I am convinced is not balanced, that does not clearly prioritize essential services, that lacks any relief measures to address the power crisis, and for which I have no clear understanding of what the full impacts would be. Moreover, I certainly could not endorse any bill with that many problems on First and Final Reading.
I have been asked a number of times if this budget is “better” than no budget. An irresponsible budget is as bad as no budget. It is my hope that the Senate will scrutinize this bill with extreme care, and improve upon the budget that the House has just handed them. Perhaps then the two chambers will finally work jointly – as we should have been doing from the beginning — to pass a more acceptable budget.
Looking ahead now to Fiscal Year 2009: we will have learned some very hard lessons from this 2008 budget, and I hope we do not repeat history with the next budget. The deadline for the 2009 budget proposal from the Governor is fast approaching — April 1. We should hold him to that, and hold ourselves to a much higher standard of fiscal responsibility with the 2009 budget than we have demonstrated with the budget for 2008.
The Senate will be holding a session Friday at 10am in the Senate Chamber. Click here for the Agenda.
Also, the House Judiciary and Governmental Operations Committee will be meeting on Monday, March 10 at 10:00am in the Speaker’s Conference Room. The following bills and initiatives have been referred to this committee, and will be discussed at the meeting, along with comments that have been submitted thus far:
HOUSE BILLS
HOUSE LEGISLATIVE INITIATIVES
The chair of the Judiciary and Governmental Operations Committee is Rep. Rosemond Santos. Her office may be reached at 664-8965 for more information, or to submit comments.
CLICK HERE the agenda for the House session scheduled for today, March 3 @ 10am in the House Chamber.
This is to announce that the House session, which began on Friday at 9:30am and recessed at noon, will resume on Monday, March 3 at 10am in the House Chamber.
The agenda for Friday’s House session (attached) was amended again on the floor. The following items were added:
HOUSE BILLS
HOUSE LEGISLATIVE INITIATIVES
HOUSE STANDING COMMITTEE REPORTS
ACTION TAKEN
After the session, House members were invited to receive a presentation from Mr. Steven Potts of the USDA Graduate School, titled, “Does Fiduciary Irresponsibility Foil Economic Development?” It was an excellent, as well as sobering, presentation, and our thanks to the Department of Interior, the USDA Graduate School, and the Office of the Public Auditor for coordinating the event.
Mr. Potts proposed that both economic opportunity and fiduciary responsibility are necessary conditions for economic development. A fiduciary duty is the highest standard of care imposed at either equity or law, and government is the ultimate fiduciary in democracies. Fiduciary irresponsibility includes corruption (i.e., bribes), unethical conduct (i.e., nepotism and steering contract source selection), financial irresponsibility (i.e., consistently spending more than we earn, failing to tie government budgets to results, inconsistent taxation practices, waste of public assets and resources), lack of accountability, failure to enforce, and failure to inform the public.
Mr. Potts distinguished between “rational investors,” who invest for the long-term and require economic opportunity, foreseeable outcomes, and manageable risk, and “skimmers,” the short-term investors who take advantage of niche markets and opportunities to make a quick profit and then leave. Rational investors do not invest for charitable or humanitarian reasons, nor do they accept unpredictable risks. They also do not trust irresponsible governments, and seek out instead responsible, ethical governments that spend within their means, tie budgets to results, have reasonable and predictable tax burdens, limit waste and abuse, hold officials accountable, enforce the laws, and inform the public.
Mr. Potts’ presentation followed another presentation, also provided by the USDA Graduate School and given earlier this week by Mr. Frank Crawford on the CNMI’s Performeter Rating — that is the rating of our financial health and performance on a scale of 1-10, 10 being the highest score, and based on data provided by our financial audits. The CNMI scored just slightly above a 2.
I am hopeful that we will get to the budget on Monday — and that we will pass a responsible one, at that.
Bad Behavior has blocked 632 access attempts in the last 7 days.