Shelly seeks emergency fund

By Marley Shebala
Navajo Times

WINDOW ROCK, Nov. 23, 2011

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President Ben Shelly wants $25 million of the $42 million available this year for supplemental spending to create an "untouchable" emergency trust fund.

Shelly said Tuesday that the $25 million should be considered "untouchable" until the Navajo Nation government has a "clear outlook on what the federal budget will look like."

Erny Zah, public information officer for Shelly, reported Tuesday that the proposed trust fund would alleviate financial fallout from the failure of the congressional Joint Select Committee on Deficit Reduction, nicknamed "the Supercommittee," to agree on a federal deficit reduction plan.

On Monday, the Navajo Nation Washington Office reported that the bipartisan panel had until midnight to reach an agreement. Its failure to do so will trigger automatic spending cuts to domestic and military programs beginning in January 2013.

Shelly told the Navajo Nation Council's Budget and Finance Committee on Tuesday that the Supercommittee continues to look for $1.2 trillion in federal budget cuts.

"I'm worried about what they are going to do next," he said.

Although the 2012 tribal budget was tightened in response to lower expected annual revenues, one-time cash payments from a variety of sources have pumped $89.5 million into the tribal treasury. About $22.5 million of that surplus was used to cure a deficit left by the previous Council, and $17 million has been set aside for the mandatory cash reserve in the Undesignated Unreserved Fund.

On Nov. 9 the controller's office said there is about $42 million left for discretionary spending, and it is from this money that Shelly proposes setting aside $25 million.

In an interview before the committee meeting, Shelly said he is negotiating with the two other branch chiefs, Speaker Johnny Naize and Chief Justice Herb Yazzie, for the $25 million to be separate from the mandatory cash reserve in the Undesignated Unreserved Fund.

Tribal law mandates a minimum reserve equal to 10 percent of the prior year's budget that is funded with tribal revenues.

The tribal revenues for 2011 were about $170 million, which means the UUF this year must have at least $17 million in it at all times.

If Shelly is successful, the additional $25 million would bring that balance to $42 million, leaving $17 million for supplemental appropriations.

Zah said the three branch chiefs, meeting last week in Albuquerque, have decided to request a total of $9.9 million in supplemental funding.

He said the agreement is a draft and needs the approval of the budget committee.

Zah said the $9.9 million would be used as follows:

  • $4.9 million to match federal grants ($3 million Head Start, $1.5 million solid waste, $43,000 air transportation, $390,000 Navajo transit);
  • $1.5 million for Administration Building 1 renovations/lease remittance;
  • $325,000 for judicial administration lease and repairs to the Chinle District Court;
  • $600,000 for legislative complex and Council Chamber repair;
  • $2.3 million to replenish the Personnel Lapse Fund.

Jared King, Washington Office public information officer, said the "lion's share" of federal automatic spending cuts will fall on the Department of Defense, which will lose $600 billion.

King said the Washington Office was working to determine the impact of the automatic cuts on the Navajo Nation and would have the analysis ready late Tuesday. However, at press time Tuesday, no report had been received.

On Nov. 18, the Naa' Bik'iyati Committee questioned Washington Office Director Clara Pratte about the vulnerability of tribal funds to the automatic cuts. Because they are identified as "earmarks," they are considered discretionary and thus tribal leader are worried.

Federal dollars fund about 44.4 percent of the 2012 tribal budget, or $251.3 million of the total $566.7 million, according to Robert Willie, Navajo Nation general accounting supervisor.

Pratte said the Washington Office has been lobbing Congress to exempt the Navajo Nation and Indian Country, which have generally been underfunded, from the automatic budget cuts.

However, former Navajo Times Publisher Mark Trahant, in an online editorial, said that the Indian Health Service and Bureau of Indian Affairs fall under the automatic budget cut because they are "non-exempt programs."

Trahant said IHS is expected to take an automatic 2 percent budget cut and the BIA is looking at a 9.3 percent decrease.

"The Congressional Budget Office says the cuts would be about $109 billion, divided evenly over nine years from 2013 to 2021," Trahant noted.

He added that Senate Indian Affairs Committee Chair Daniel Akaka, D-Hawaii, has asked for exemptions to cover IHS, the BIA and funding to implement the new Tribal Law and Order Act.

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