Friday, September 24, 2010

2010-Government Shutdown?

After several days of grey skies and rain, it's finally clearing. Hot and humid, as expected.

Although the weather is clearing from the dark skies, there is no light in the forecast for the political atmosphere.

The CNMI is facing a looming disaster--the shutdown of the government.

How did this happen?
Last November 2009, the voters passed an initiative HLI 16-11 to amend the Constitution. You can read some information about the original initiative at the MLSC Day In Court Blog. The pros and cons that were provided for voter education at the time are here.

But the best information is to read the actual HLI 16-11initiative that was approved by the voters. This shows the relevant language that was adopted into our Constitution, the language that is now the governing law of the CNMI.

This amendment requires a balanced budget by October 1 and, in its absence, prohibits funding government operations by continuing resolution. Rather, only "essential services" are to be funded until a balanced budget is passed. Those "essential services" are to be determined "by law." And the most telling provision is that the Legislators' salaries are to be suspended starting October 1 until they pass a balanced budget.

Who is responsible for this fiasco?
The initiative to amend the CNMI Constitution was introduced by Congressmen Diego T. Benavente, Joseph P. Deleon Guerrero, Edward T. Salas, and Ray Yumul.

I don't know who in the House voted for it, but it was passed by the House.
I don't know who in the Senate voted for it, but it was passed by the Senate.

And then it went to the people for a vote in the general election.
I don't know who voted for it among the general population; I only know I didn't vote for it. But it passed.

Why didn't our Legislators pass a balanced budget?
This of course is the big question.
The Legislative highlights on the Senate page was last updated 4/16/2010 (as of this writing) and it shows that Senator Pete Reyes had, by then, introduced a resolution SR 17-12 asking the Governor to convene an economic summit to avoid a government shut-down come October. I have no idea what happened to that resolution.

Other action at the time included a resolution to honor Bishop Tomas Camacho and opposing a proposed casino in Saipan.

The House website hasn't been updated since March 26, 2010 (as of this writing). Nothing on it even mentions budget concerns. There was, however, a standing committee report on a bill to amend the CNMI law about immigration. The report was adopted by the House.

On August 18, the House finally passed a budget bill--one that increased their discretionary spending while dishing out a 16 hour/payday cut to most other government workers. HB 17-96.

There was an instant uproar and silent protests. House Speaker Froilan Tenorio told the Senate it would be okay to change the budget if they increased his leadership account. He also urged them to pass the casino legislation.

On September 6, the Senate voted a budget that amended the House version--cutting discretionary spending and restoring 8 hours of the regular workday to government employees.

On September 14, the House rejected the Senate's amendments of the budget bill.

The House and Senate picked their respective teams for a conference committee, with just 10 days left to resolve the budget crisis. But the Senate walked out of the conference committee efforts because the House negotiating team is insisting on using the need for a budget to get the Senate to approve the casino legislation. They Senate is willing to reconvene, with 5 days left before October 1, provided the House returns in good faith, takes casino legislation off the table, and agrees to open the sessions to the public.

From all of this, I conclude:
1. The House delayed passing a bill until it was very late. The fact that the budget bill is the 96th bill introduced, instead of the first, shows that the House does not have its priorities in order.

2. The House leadership is pushing for casinos in Saipan. They don't care about a balanced budget. They don't care if the people suffer. Someone wants to get some graft and kickback into their pocket. Even the provision to up their discretionary funds and the demand to increase the leadership account are plain abuse of fiscal responsibility. It's all about corruption and greed.

3. The Senate is trying to do the right thing. They have been paying attention, even though appropriation bills must originate in the House. But they can't do it alone.

We're not going to have a budget anytime soon.

So what happens now?

The government operations can only pay for "essential services" as those have been determined by law. Although the Governor wants to be "the law" it seems that the Constitution actually calls for law in the usual sense. So the bill passed by the Senate defining what is "essential services" is another step in the right direction. A House bill has also been introduced, but no action taken on it. Given how irresponsible the House has been in the budget process, it doesn't seem likely it will be be enacted. The Speaker Lang Tenorio is noncommital on the proposals about "essential services", meaning nothing is going to happen.

Another thing about the effect of the constitution, neither the House nor the Senate members should get any salary at all after October 1 until a budget is passed. The Constitution suspends payment to them. Even if they declare themselves "essential services" they can't override the Constitution. It is clear:

"...if the Legislature does not pass a balanced budget by October 1st, the Legislators' salaries shall be suspended until such time that a balanced budget is passed by the Legislature."

This is small comfort to all of the people who will be out of work and without pay. The House and Senate members deserve the lack of payment; no one else does.

What can we do?
It's not too late for the people to do something. We can't write and pass the budget ourselves, but we can demand that our representatives do their jobs.

It is far more responsible to have only 8 hour cuts for workers and reduced discretionary funds for the Legislators than to have 16 hour cuts for workers and an INCREASE in discretionary funds for these politicians.

So: Tell your House members to come to their senses and agree to the Senate amendments. Call them at work; call them at home; visit them personally. Put the pressure on.

Or else, come October 1, it will be a difficult start to FY 2012 for all of us.


The Saipan Blogger said...

1. Half the guys in the Legislature are retired. They don't receive a government paycheck; they get a retirement paycheck. This shutdown won't affect them one bit.

2. Cutting government spending would be good for the economy and would create jobs. Where do you think the money to pay those government workers comes from? With no garment industry and a failing tourism sector, there is no economy to support government jobs. Government jobs are a drain on the economy, not a boon.

3. This fiasco started when the 15th Legislature passed a law that stopped all payments to the retirement fund. The government has been paying salaries only, but not benefits and definitely not for equipment that is needed for government workers to do their jobs. This was a ship heading for an iceberg years ago, and the captain still hasn't turned the rudder.

Anonymous said...

I voted yes for gov shutdown if they don't pass a budget... no regrets.

If they pass a budget before Oct.1 then they should have learned by now how the CNMI must live within its means each and every fiscal year hereafter.

If they don't pass a budget and govt shutdown happens, then voters will know these fools can't do their job and hopefully elect someone who understands what "live within your means" means.

Saipan Writer said...

Anon 6:21 PM.
I can respect that. You knew what you wanted and were voting for. You're prepared for the consequences, and it's not necessarily a bad decision.

But I doubt that most people were as informed as you.

I'm not sure it ensures a "balanced budget" --only some kind of budget. Nothing protects against unrealistic budget projections.

And I also wonder what happens if the Legislature passes a budget but the Governor vetoes it.

I'm not convinced that the Constitutional amendment achieves the purpose or is a good choice.

Saipan Writer said...

Your first point is pretty scary.

I completely agree with point two--but I think cutting government spending should be done by intentional budget choices, not a complete "fail" by the Legislature to do its job of setting a budget.

Point 3-another good one.

Will we sink when we hit the iceberg?

The Saipan Blogger said...

Did you see today's news? There is no government shutdown. If the government shutdown goes forward, only about 15% of the government workforce will will be told to go home, and that number does not include the hundreds or thousands of people on contract. This shutdown will be hard on the 700 or so families who will lose some income, but it will hardly save any money. In fact, the government shutdown saves less money than the 16 hour reduction in hours.

Saipan Writer said...

Hi Angelo,
I saw your comment to this effect in the Marianas Variety. You are right.

People are freaking out about not much of anything.

The hardest hit, though, will be the Judiciary. One Judge and one clerk at the Superior Court level cannot possibly keep things managed. Statutes of limitations, the need for summonses, domestic TROs, and basic justice are "essential services" imho.

OTOH, I've also heard from some local political pundits that the "shutdown" will only last a few days to a week. I'm not as convinced about this assessment, however. Hope they are right.

Anonymous said...

This looks to be the language of the Legislative initiative that passed (It was amended. Do you have the final version?) :

It is too bad that this was the bill that became the initiative. Heinz had introduced a different one earlier that same year. It gave a Sept. 1 deadline to the legislature and it was much more specific on what essential services would be allowed to continue drawing from the general fund if a budget was not passed.

A government shut down seems drastic but keep in mind not passing a budget in the years 2000, 2001, 2002, 2004, 2005, 2006, 2007, 2008, 2010 was unacceptable.

Not passing a budget prior to this initiative allowed the governor (under the constitution) to singlehandedly reallocate funds as he saw fit. This crap masked many issues and has caused the CNMI to enter into the largest deficit in our history.

Anonymous said...

Found a link from Tina Sablan's website ( )

Anonymous said...

Remember that when the legislature passed this initiative in 2008 the current deficit had ballooned to $170 million dollars (a violation of the CNMI constitution)under Fitial's watch.

We now stand at ...

... $300.8 million CNMI deficit as of September 2009.

33% increase in 1 year!

That had to be stopped.

What failed policies!

Anonymous said...

CNMI Constitution
Article X:

"Section 6: Liquidation of Deficits. Before October 1, 1985, the legislature shall adopt a seven-year plan in which the government operations deficit through fiscal year 1985 shall be retired in equal shares. If the legislature fails to adopt or adhere to the plan, any person may bring an action to require the government to reallocate its expenditures in accordance with a deficit reduction plan. If an operating deficit is incurred in future fiscal years, the government shall retire the deficit during the second consecutive fiscal year following the year."

So we have to retire at least $170 million deficit in this budget? And an additional $130.8 million in the following year?

What good is a Constitution if it is not upheld?

What occurs if it is?

Anonymous said...

If I sued in order to uphold the "retiring of the deficit" as stated in the Constitution and I won, would they be forced to shut down our CNMI Government? What would happen?

We are projecting $132 million and we need to retire at least $170 million of our current deficit.

Receivership for the entire CNMI Government?

Label us a failed state?


Anonymous said...

Let us also remember that the last time a balanced budget was passed it was done so without Fitial's help.

It took the House 3 tries to override the Fitial Veto of the FY09 budget.

I also recall the governor using similar tactics to keep that one from passing. He stated that he would lay off 350 people if it was passed.

That threat never materialized.


I also heard the same games are still being played as back then when the reporters covered this

"The House of Representatives yesterday deferred voting to override Gov. Benigno R. Fitial's veto of the $156.76 million budget bill for Fiscal Year 2009, but not before Rep. Tina Sablan raised concerns about alleged favors offered in exchange for not supporting an override.

“There's concern about the kind of gamesmanship going on. My office received word that favors are being offered in exchange for not voting for an override. Jobs are being offered to relatives of politicians, releases of allotments. The little favors, concessions here and there. Naturally, that presents a challenge,” said Sablan."

Saipan Writer said...

all great comments.

I think the most effective and persuasive one is the one where you point out all of the years in which the CNMI Legislature has failed to pass a budget.

Is it any wonder they have not passed one this year? They are out of practice!

rashid1891 said...

I also recall the governor using similar tactics to keep that one from passing. He stated that he would lay off 350 people if it was passed.