3.5-hour executive session results in tabling of new budget
By Marley Shebala
WINDOW ROCK, September 13, 20122
Council Delegate Katherine Benally (Chilchinbeto/Dennehotso/Kayenta) asked for the executive session to discuss the delegates' legislative district assistants at about 2:38 p.m.
The Council vote on her request was 14-2 in favor.
When the Council came out of executive session at about 6:10 p.m., Council Delegate Edmund Yazzie immediately called for the tabling of the proposed 2013 budget with a brief statement that set a six-month tabling time limit.
Delegate LoRenzo Bates (Nenahnezad/Newcomb/San Juan/T'iistoh Sikaaad/Tse'Daa'Kaan/Upper Fruitland), who sponsored the proposed 2013 budget, told the Council that he supported the tabling motion for reasons discussed during the Council's executive session.
Among those reasons was that the six-month delay would allow a legally required audit of the 2011 budget to be completed by financial advisors and a five-year Capital Improvement Projects plan to also be completed by the Council.
Acting Chief Legislative Counsel Edward McCool noted in an interview with the Navajo Times after the Council adjourned that the Council's amended rules of order allowed them to go into executive session for reasons other than personnel and litigation matters.
McCool pointed at rule 22, which stated that the Council could go into executive session for any item on their agenda that they identify as confidential and, or sensitive.
Bates, who serves as the Council's Budget and Finance Committee chairperson, noted that the annual audit is the cornerstone for the tribe to obtain loans and possibly get its first bond financing.
"One question that financial institutions always ask for is the most recent audit," he said. "We would have to say we don't have one. That would obviously raise eyebrows."
The proposed 2013 budget that the B&F Committee developed, adopted and recommended to the Council included waivers of the tribal laws mandating that the Council review and accept the audit of the previous annual operating budget and a five-year CIP plan.
Bates noted when the proposed 2013 budget returned to the Council at the end of the six months that the Council could delete the two waivers for the law regarding the audit and five-year CIP plan.
He added that during the six months that the B&F Committee would continue to keep the Council updated on the tribe's financial situation, which he said would change but not for the better.
"There's a lot of (financial) uncertainty out there," Bates said.
He was referring to the yet unknown financial impact of a surprise announcement by Arizona Public Service Company in August that they would be shutting down three of five coal-powered energy-producing units at the Four Corners Power Plant this year instead of next year.
Bates informed the Council when he was introducing the proposed 2013 budget that the committee and others involved with the annual budget learned about the shutdown from the President Ben Shelly's staff during an Aug. 2 meeting in Flagstaff.
Shelly had invited a select group of delegates to the meeting in Flagstaff to discuss his proposed energy policy.
An immediate result of the shutdown of the three units at the Four Corners Power Plant was the recalculation of expected tribal revenues from coal royalties.
The Four Corners Power Plant buys all of its coal to feed its five units from Navajo Mine, which is located entirely on the reservation.
On Aug. 15, the B&F Committee held a special meeting and reduced the funding of the proposed 2013 budget with $173.8 million in tribal revenues to $170.9 million, which set back the 2013 budget process by about a month and resulted in the Council holding a one-day annual budget session instead of the usual five-day session to deliberate on the annual budget.
In following the annual budget process, the B&F Committee approved a 2013 budget calendar in July that set the tribal revenue projections at $173.8 million and laid out budget meetings with the government's three branch chiefs to set branch budget allocations, hearings by the Council's standing committees with their respective oversight divisions, the drafting of legislation for budget recommendations from the committees for public comment, and the drafting of the proposed 2013 budget legislation for public comment by Aug. 13.
The Council had been scheduled to meet on the proposed 2013 budget from Sept. 4 to 7.
Another financial impact to the funding of the proposed 2013 budget was a $9.5 million drop in the funding that the tribe receives from the federal government for administering federal contracts and grants, which is called indirect costs or IDC.
In 2012, the tribe received $19.5 million in IDC funds but in 2013, the expected IDC amount was $10 million.
The B&F Committee was able to cover the $9.5 million budget cut with budget savings from taking an initial conservation budget base amount.
Bates explained that the initial tribal revenues projections came in at $190.1 million but the committee decided to go with $173.8 million, which provided savings of about $16.3 million, which was deposited into the Undesignated Unreserved Fund.
Delegate Mel Begay (Bahastl'ah/Coyote Canyon/Mexican Springs/Naschitti/Tohatchi), who was among the five delegates opposing the tabling of the proposed 2013 budget, said that a lot of time and money had been invested in the proposed 2013 budget.
Begay, who also is a member of the B&F Committee, noted that the waivers of the laws for the audit and five-year CIP plan were justified.
"It's the obligation of the Navajo Nation Council to have an annual budget in place," he said. "The proposed 2013 budget was in line with the economic times and had been adjusted to deal with economic issues, such as APS and Navajo Generating Station."
But what really bothered Begay about the Council tabling the proposed 2013 budget was the uncertainty again for the 27 tribal employees that Shelly identified to lose their jobs.
Begay said that the B&F Committee had approved a condition of appropriation for the Division of Human Resources' Department of Personnel Management to use vacant personnel positions to prevent any layoffs.
A COA is used in the legislative process during the annual budget session only. It's attached to a specific budget and indicates conditions put on expenditure of funds that must occur within a certain timeframe.
In most cases the enforcer of the COA becomes the Office of the Controller, which has the authority to freeze the specific budget if the conditions are not met. And once the conditions are met, the budget is unfrozen.
According to the personnel department's COA, if they have not placed laid off employees into vacant positions by the end of the second quarter, Division of Human Resources Director Tom Ranger and all program managers would not be compensated for travel outside the reservation until their assigned task is completed.
Delegate Russell Begaye (Shiprock), who also was among the five delegates opposing the tabling of the proposed 2013 budget, said that the completion of the audit of the 2011 budget would not to change the amount of the proposed 2013 budget.
"I believe we're moving into difficult financial times," Begaye said. "We need to make decisions that help the Navajo Nation stay afloat. The larger issue is protecting the nation financially."
He strongly urged everyone to spend their money wisely.
"To me, the tribal government needs to cut down on its travel, use of tribal vehicles, and spend less on conferences, especially off the reservation," Begay said.