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By Jayvee Vallejera Assistant Editor

SAIPAN, Northern Mariana Islands (August 5, 2002 – Saipan Tribune)---Faced with a projected $18 million deficit, acting Gov. Diego T. Benavente has invoked his emergency powers under the Planning and Budgeting Act to freeze and impound all government funds, including that of the Legislature, the Judiciary and municipalities.

Benavente said this decision stems from the refusal of the House of Representatives to grant the Babauta administration’s request to allow it to go beyond the $193 million budget level set for Fiscal Year 2002.

The acting Governor clarified, though, that the emergency impoundment of government monies will only be until September 30, the end of the fiscal year, and will not apply to autonomous government agencies that do not receive funds from the CNMI Treasury.

The impoundment action has to be approved, however, by the Legislature and Benavente said he will await the House of Representatives’ decision whether it will grant, disapprove or modify the emergency impoundment action.

"I have already informed all the lawmakers, the different agencies and the courts and municipal offices about this action. No, I have not heard anything yet from the Legislature and I am still awaiting their response. The Governor will be here on Monday and that’s the first thing we intend to discuss with them," said Benavente.

Benavente explained in a letter addressed to each lawmakers that he is compelled to take this action to satisfy outstanding obligations and impose extreme fiscal controls throughout the CNMI government, regardless of the branch of government.

"Inasmuch as the Legislature has seen fit not to provide assistance to the Executive Branch in these fiscally trying times, I can only respect that policy decision. The consequences of that decision, however, will follow from the actions I have been compelled to take as I faithfully execute the laws of the Commonwealth and comply with the Act," he said.

That action will effectively result in the suspension and freezing of the CNMI Scholarship Fund, the CNMI Medical Referral Program, the operational and payroll funds of the Public School System, all Man Amko and Aging program accounts, and the operational and payroll accounts of the three branches of government, among others.

To ensure that the government goes back to normal operations after September 30, Benavente urged the Legislature to pass a balanced budget to the Office of the Governor on or before October 1. "To operate under continuing resolution only shirks our mutual obligations to act with fiscal prudence and avoid the current situation," he said.

The Planning and Budgeting Act prohibits the government from going beyond the budget level set for a given fiscal year. However, Finance Secretary Frankie Villanueva had told the Babauta administration that the departments of Public Health and Public Safety will face a $9.4 million and $5.4 million shortfall by the end of September 30. The CNMI central government will also incur an additional $3.3 million shortfall to the Commonwealth Utilities Corporation for utilities, while the Northern Marianas College had projected a $1 million dollar deficit.

All these means that, at the current rate of expenditures, the CNMI government will reach the $193 million ceiling on or about August 30 and will go beyond the limit by an estimated $18 million by September 30. With the Planning and Budgeting Act prohibiting deficit spending, the Babauta administration asked the Legislature last July 29 to suspend the penalty provisions of the Act so it could spend beyond the $193 million limit.

The House of Representatives, however, refused to grant the request, saying the Constitution requires the administration and the Legislature to exercise due diligence. House Speaker Heinz S. Hofschneider had asserted that the current fiscal crisis was anticipated since 1997 and could have been avoided.

"As the Speaker so aptly put it, the Act mandates fiscal integrity and prohibits deficit spending. Neither I nor the Governor will allow deficit spending [without] Legislative concurrence and approval. Having failed Legislative approval, I wish to be clear about the basis for exercising emergency impoundment: the Act prohibits a deficit. There will be no deficit for FY 2002," Benavente stressed.

This means the CNMI government will have to cut and not spend a total of $18 million dollars between now and September 30, 2002.

To achieve this, all monies allocated to all non-federally funded programs and branches of government will not only be frozen but more stringent fiscal controls would be set in place. These include moratorium on use of all government vehicles, no travels after August 5, freeze on all hiring effective August 5, disconnection of all streetlights, termination of all commercial building leases.

Benavente conceded that the Legislature may disapprove any proposed deferral but the disapproved amount shall be made available for obligation.

At the same time, he clarified that the amount that would be frozen in the Legislature and the Judiciary will be at a percentage that will not exceed the percentage of the total amount that would be deferred in the non-capital accounts of the General Fund.

Benavente managed to take a dig at the Legislature for refusing to grant the waiver request, saying he questions the wisdom of imposing the cost-cutting measures, which he described as painful, merely to satisfy a statutory mandate and at the expense of the government’s Constitutional, ethical, and moral obligation to work for the best interest of our people.

"Please assist me to explain to our college students and graduate students that their financial assistance checks are not forthcoming. Please assist me explain to our ailing residents needing medicine, supplies, hemodialysis treatment and medical referral that they must do with what we have here. Please assist me to explain to our thousands of PSS students why their constitutional right to a compulsory education is at risk. Please assist me to explain to our community and victims of crime why DPS is unable to investigate cases, can't patrol our streets, and can't respond to calls for assistance," he said.

For additional reports from the Marianas Variety, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/ Marianas Variety.

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