Create plan before unlocking trust fund
By Marley Shebala
WINDOW ROCK , October 11, 2012
N avajo Nation Budget and Finance Committee Chairperson LoRenzo Bates is urging the Navajo Nation Council to adhere to tribal law by developing a five-year plan and holding a referendum with the Navajo people before trying to unlock the Permanent Trust Fund to fund nation-building projects.
The Council, on Sept. 21, had approved a ten percent cut from the trust fund 12 percent set aside to divert about $22.8 million for a "Nation Building Fund" to provide money to economic development, community development and capital outlay projects.
But on Sept. 28, President Ben Shelly line-item vetoed their plan to reduce the percentage of annual tribal revenues that is set by law to go into the trust fund.
The permanent trust fund was created in 1985 and has grown to about $1.2 billion.
Shelly had line-item veto power over the Council's plan for the trust fund because they had incorporated it into the 2013 tribal operating budget of $543.6 million.
The tribe's annual revenues are generated by the reservation's coal, oil and gas, leases, rights-of-ways, court fees, investments and taxes.
For 2013, tribal officials estimated that revenues would reach about $228.7 million, which meant that if Shelly had not used his line-item veto power, only $5.7 million would have been deposited into the trust fund instead of $28.5 million.
Bates, who represents the chapters of Nenahnezad, Newcomb, San Juan, T'iistoh Sikaaad, Tse'Daa'Kaan and Upper Fruitland, said that the people's involvement in the five-year plan would provide support for the plan and perhaps increase the chances of its approval when it goes before them in a future referendum.
On Sept. 16, the Northern Navajo Agency Council, which consists of local elected representatives from the 20 chapters, called for a 50-year ban on the withdrawal money from the permanent trust fund. The vote was 48 in favor, 4 opposed and 3 abstaining.
The Northern Navajo Agency Council also called for the continuation of the legal restrictions on the use and withdrawal of money from the trust fund.
Bates was present when the Northern Agency Council approved the trust fund resolution and he also was a presenter at the Resources and Development Committee's Nation Building Summit in August.
He strongly recommended that before officials of the three branches of the government begin working out a plan, priorities need to be developed because each administration has its own priorities.
A lot of times, he added, those priorities are not long term and so they don't include long range plans.
He said that power-lines and water lines to homes are generally recognized as priorities but does the tribal government and people really want to spend the limited tribal revenues or permanent trust fund interest or principal on projects that don't generate a continual stream of revenues for other needs?
Anything that is developed must also include a financial plan, he said, adding that the plan should also include input from tribal enterprises such as Navajo Tribal Utility Authority and Navajo Engineering and Construction Authority.
"There needs to be a way to utilize those resources in combination with the money that the tribe has," he said. "I'm not saying to pull down the permanent trust fund principal. There are other options."
Those options involve using the trust fund as collateral to borrow money for projects that are needed.
One example Bates gave was several years ago when the tribe borrowed $60 million to fund the construction of jail and courts. The Public Safety Judiciary Trust Fund principal was used as collateral and the interest generated by the principal was used to service or pay back the debt.
It would not be prudent for the tribe to use tribal revenues to service the debt because that would put additional strain on it, he noted.
Bates emphasized again that the plan must have projects that generate revenues to service the loan debt.
"What can we do with what we have?" he asked. "How can we accomplish these initiatives, such as electricity and water to people? How can we develop economy and industrial zones so business open and pay taxes? But if the plan is to concentrate on industrial zones then the focus also needs to be on building infrastructure."
And he said, if the tribe decided to build business and tribal government buildings, then the question of maintenance and operational costs must be addressed. Otherwise the tribe could end up in the same situation that the administration building number one is in.
For over a year now, Administration Building No. 1, which housed the tribe's financial operations, personnel, design and engineering, insurance, and other departments, has been shut down because of serious health hazards to tribal employees created by mold.
"My point is we need to look at alternative way to accomplish nation building and initiatives and look at other resources that we have in our nation," Bates said.