Federal sequestration means $23 million drop in 2014 tribal budget

Navajo Council Budget and Finance Committee Chairperson LoRenzo Bates said that even though the Navajo Nation is facing a $23 million cut in federal funds, the outlook for the tribal government's 2014 budget is not "bleak." Bates presided over the B&F in Window Rock, Ariz., on June 18, 2013.  Photo by Marley Shebala

Budget and Finance Committee Chairperson LoRenzo Bates Photo by Marley Shebala

WINDOW ROCK – The Navajo Nation is looking at an estimated $23 million cut in its 2014 federal funding because of the federal government’s sequestration.

Navajo Nation Budget and Finance Committee Chairperson LoRenzo Bates said on June 18 that his committee was working with an estimated drop in federal funding of $15.9 million but President Ben Shelly is “advocating” for the tribal government to prepare for a $23 million reduction.

Bates said that the official tribal revenue projections for 2014 are $175.9 million, which “is higher than last year.”

The 2013 tribal revenue projections were $170.3 million.

The total 2013 tribal government operating budget of $543.6 million, included $373.3 million in external funds, which primarily came from federal grants and contracts.

According to a June 5 tribal Executive Branch federal sequestration summary report, there are 19 tribal divisions and offices and 12 of them receive federal funds.

The 12 divisions and offices are the Office of the Prosecutor, Division of Community Development, Department of Dine’ Education, Environmental Protection Agency, Division of General Services, Division of Health, Division of Human Resources, Division of Natural Resources, Division of Public Safety, Law Enforcement Patrol, Division of Social Services, and Division of Transportation.

The executive branch federal sequestration report shows that the EPA could be hit the hardest. The EPA could possibly take a 70 percent cut to its federal funds.

In 2013, the tribal government received about $352.3 million in federal dollars and according to June 5 report, it’s anticipating a $15.9 million federal funding reduction.

Bates reiterated Shelly’s decision to use $23 million as the amount that the tribal government should use instead of $15.9 million.

He noted that the $23 million figure would seriously impact the executive branch and increase the possibility of tribal employee layoffs in those programs that receive federal funds.

And Bates said the tribal government must also prepare for other “pending issues” that would negatively impact the 2014 budget.

The pending issues that he identified were a decrease in federal indirect costs reimbursements from $16 million to $10 million, less coal revenues from the Four Corners Power Plant because its shutting down three of its five units, no $8 million bonus from Navajo Generating Station for renewing its lease extension, renovation of two tribal office buildings that were closed due to mold, and a possible debt service of $20.3 million if the Council approves a $550 million bond for capital improvement projects across the Navajo Reservation.

And on June 18, Office of Management and Budgets Director Dominic Beyal added another pending issue.
Beyal reported to the Budget and Finance Committee that the 2014 budget process was a week behind.
Bates said the week delay was because the tribal government’s three branch chiefs – Shelly, Speaker Johnny Naize and Chief Justice Herb Yazzie – had not agreed on the distribution of the 2014 projected revenues of $175.9 million.

He emphasized that the outlook for the 2014 budget was not “bleak” because it’s not about the tribe not having money.

Controller Mark Grant reported to the committee that the Permanent Trust Fund has earned $20 million in interest and has $1.4 billion in principal.

“The bottom line is that the branch chiefs have to make a decision,” Bates noted.

The tribal government started working on its annual 2014 budget on May 8 and has set Sept. 6 as the final day for the Council to approve an annual budget and Sept. 16 for Shelly to take action on the budget.

The budget deadlines are to allow sufficient time for the 2014 budget to be implemented by Oct. 1, which is the start of the tribe’s annual budget year.