PRESIDENTIAL STATEMENT ON THE SIGNING OF CONGRESSIONAL ACT NO. 16-48

PRESIDENTIAL STATEMENT ON THE SIGNING OF CONGRESSIONAL ACT NO. 16-48

“AN ACT TO APPROPRIATE $39,041,803 FROM THE GENERAL FUND OF THE FEDERATED STATES OF MICRONESIA FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2011, TO PROVIDE FUNDING FOR THE OPERATIONS OF ALL BRANCHES OF THE NATIONAL GOVERNMENT OF THE FEDERATED STATES OF MICRONESIA, ITS AGENCIES, VARIOUS PROGRAMS, GRANTS, SUBSIDIES AND CONTRIBUTIONS; AND FOR OTHER PURPOSES.”

This statement conveys on record the President’s analyses of the FY2011 annual budget for the operation, projects and programs of the national government.

At the outset, the Executive Branch is gravely concerned about the delay in the transmittal of the approved FY2011 budget to the Executive. The President submitted the FY2011 proposed budget in April 2010 in the amount of $ 53,044,445 and subsequently a recommended adjustment on the expense side of the budget on September 16, 2010. After having held budget hearings in the May and the current sessions, Congress only approved $39,042,920. The budget session began on September 13, 2010, and Congress unfortunately waited until the evening of September 29th before presenting the approved budget to the Executive. The drastic reduction in the budget would require the President and his staff to carefully review the budget and to solicit comments from the various departments and agencies, particularly on how to deal with the budget cuts. The late presentment of the budget put the Executive in a difficult dilemma. In as much as the President and his staff must thoroughly review the budget, the President has no choice but hastily gives his approval, otherwise, a potential shutdown of operation faces the national government at the beginning of a new fiscal year. This must not constitute a precedent because this impinges upon the duty of the national government to provide improved government service. Moreover, the late transmittal of budget from Congress undermines the effectiveness of the budget process.

In the approved budget, Congress eliminated Federal Program expenditures from the bill and thereby reduced the total expenditures by $4,686,201. Unfortunately, there still remains a reduction of $9,934,642 from the original proposed budget. Much of this reduction has been made from proposed programs that were targeted at improving the financial position of the nation, to spur the development of the FSM’s private sector and to strengthen the Public Sector’s Infrastructure.

Specifically, the Congress has reduced funding for National Scholarships by $700,000, Social Security by $800,000, the Pension Plan by $500,000, Infrastructure contributions by approximately $2.75 million, the FSM Trust Fund by $500,000, the FSM Development Bank by $1 million and the Capital Integrated Information System by $300,000 These investments in human resource development, infrastructure and capital formation are critical to the Nation’s blueprint in bringing the Nation out from the economic malaise. For example, the underfunding of the social security program could adversely impact more than six thousand beneficiaries throughout the country and could also have destabilizing effect on the economy.

Because the approved budget does not carefully consider the above ramifications, it leads the Nation to a potential crisis. The national government’s budget sets a stage for fiscal policy and general economic direction for the whole Nation. But the way the budget is processed and approved, it does not appear to fulfill this objective. The process must improve, particularly in the area of consultation between the branches of government. The Executive being the implementing branch of government must be afforded ample opportunity, aside from public hearings, to engage in the budget consultation. This has not been the case and certainly has not been fulfilled in the budget process.

Moreover, being delegated with the authority to appropriate public funds, Congress has the constitutional obligation to fund the operation of the national government at such level as necessary and sufficient to accomplish the objectives of government. In the current fiscal year, the Division of National Police incurred overtime costs due to unplanned trips, but which are necessary for the national government to perform its duties on law enforcement. The Division of Immigration also incurred additional costs due to overtime works that the officers are required by law to perform at the ports of entry of the Nation. Moreover, cost of law enforcement will further increase due to P.L. No. 15-81 whereby four more ports of entry are designated but not budgeted.

The above are obligations of the national government to provide funding. Unfortunately, Congress has approved a budget that is insufficient to cover the full costs of operation. Hence, FY2011 starts with insufficient appropriated funds that resulted from drastic cuts in the proposed budget which have not been explained and which defeat the objective of the Executive in avoiding supplemental budget. Supplemental appropriation must be limited only to unplanned and unanticipated expenditures; it is not a mechanism by which to re-submit unapproved budget items. Our past experiences must be changed because it indicates a weak and ineffective fiscal policy. For example, the deficiency in the FY 2010 budget resulted in non-payment of services of several employees of the national government.

Failure on the part of the national government to provide adequate funding for personnel constitutes a seeming violation of constitutional guarantees of due process and equal protection under the law. This violation exposes the national government to potential liability for civil rights lawsuit. Congress is put on notice that this type of liability is an obligation that the national government must address and not avoid. The legal obligations between the national government and its employees are mutual in nature, meaning, the employees render services and the government pays compensation for services rendered. This obligation is entered into at the commencement of the employment. The government cannot unilaterally avoid its legal obligation by not approving enough funding for salary. It is not only a breach of obligation, but a violation of the constitution as well. The recent, and continuing, non-payment of salary of employees in the Department of Justice and the Department of Education is a scenario created by failure to fulfill a constitutional duty to appropriate funds for the operation of the national government.

Based on the foregoing, I grudgingly signed Congressional Act No. 16-48, to become Public Law No. 16-43, out of necessity and to prevent a shutdown of government operation at the beginning of fiscal year, which is three hours away. It is my understanding that hereafter Congress will revisit the budget act, particularly as a result of the apparent misunderstanding as to the correct interpretation of 54 FSMC 226 as I had explained in my letter of September 25, 2010. I therefore invite Congress to engage the Executive branch in this review process at the earliest opportunity, to ensure that the budget act is properly aligned with the constitutional mandate of the national government.

I thank you and your colleagues for the time spent in approving the act.

With warm personal regards, I remain,

/s/
Manny Mori
President