$15.6 million short
Navajo controller proposes options to address shortfall

Copyright © 2009
Gallup Independent
By Kathy Helms
Diné Bureau

WINDOW ROCK — Chief Justice Herb Yazzie and representatives of the other two branches of the Navajo Nation government met Wednesday with the Budget and Finance Committee to address options for dealing with the projected Fiscal Year 2009 budget shortfall.

In a report Tuesday to Budget and Finance, Controller Mark Grant said that after looking at four months of revenue since the new budget year went into effect Oct. 1, the Nation will be faced with a shortfall of approximately $15.6 million, “a much better number than that $33 million we were looking at previously.”

He then outlined a variety of options for making up the shortfall.

“The first one is to reduce the set-asides. That just means that we would stop setting money aside for the different funds, such as capital outlay, land acquisitions, water rights claims, historical preservation, things like that,” he said.

The second option would be to reduce the budget for the three branches. The executive budget would be cut 78 percent of the shortfall. Legislative would be cut 12 percent and judicial would be 9 percent.

Other possibilities include a hiring freeze or possibly a budget freeze, which is very similar to a budget reduction except not as effective, Grant said.

Another option is cash-basis spending, “so that we only spend the amount that we have on hand,” he said. Or the Nation could impose a selective hiring freeze, or use gaming revenues to supplement general fund revenues, or in the case of gasoline hedges, lock in the price of gasoline.

One option that would take some time would be to approve a five-year expenditure plan for the Permanent Trust Fund.

“We could have reduced work hours so that everybody would work four days a week. That would be one way to do it. The other one is we could use the fuel excise money that goes into the road fund, or we could release funds from the Tax Administrative Suspense Fund.

“We could do an early retirement and buy out some of our long-term employees that are at the top of the pay scale,” Grant said.

According to the way the FY09 budget was allocated, 65.59 percent went to executive, 10 percent to legislative, 7.77 to judicial, along with 9.70 percent to fixed costs, and 6.94 percent to capital improvements. Grant said he arrived at the proposed percentage for branch cuts by looking at the percentages allocated in the FY 2009 budget, then figured out each ratio those comprised of the total.

“So if we have a $15 million shortfall and we want to cut the budget by $15 million, we multiply it by those percentages and executive would cut $11.8 million, legislative $1.7 million, and judicial about $1.3 million. Those numbers were revised slightly for Wednesday to reflect $11.5 million for executive, $2.3 million for legislative and $1.1 million for judicial.

“If we wanted to do a $20 million budget cut, we would go through the same process as we did before. Executive branch would be cut approximately $15.7 million, legislative $2.3 million, and judicial, $1.8 million,” he said. Those numbers also were revised to reflect $15.3 million for executive, $3 million for legislative, and $1.5 million for judicial.

The original FY09 budget projection was $226.4 million. The projected 12 months revenue is now $210.7 million. “If we take that and subtract it from the remaining budget, then that shows a deficit of $15.6 million,” Grant said.

The Nation has collected a total of $20.8 million in set-asides, leaving $32.5 million still to be collected to meet the budget projection of $53 million, for a shortfall of $3 million, which would be cut from the budgets of the three branches.