Council rejects fiscal 2027 budget, turns to stopgap

WINDOW ROCK

The Navajo Nation Council rejected the $562 million fiscal 2027 comprehensive budget Wednesday, leaving the Nation without a spending plan three weeks before Oct. 1 and shifting attention to a three-month continuing resolution introduced the same day.

The budget needed 16 votes to pass and fell short.

Speaker Crystalyne Curley recessed the Council for 30 minutes after the vote so delegates could discuss what to do next. Delegate Carl Slater, the vice chair of the Budget and Finance Committee, said another budget discussion may take place Friday.

The rejected bill, Legislation 0192-26, would have appropriated $562 million among the Nation’s three branches. It included no general wage adjustment for Navajo Nation employees.

“We simply cannot afford a general wage adjustment this year,” Delegate Shaandiin Parrish, the chair of the BFC, told delegates in presenting the budget, adding that the Nation also could not fund the president’s request to move employee salaries toward federal levels.

Legislation 0203-26, an emergency continuing resolution sponsored by Delegate Danny Simpson, would fund every division, department, program and chapter at one quarter of last year’s levels from Oct. 1 through Dec. 31. It carries no dollar figure and was not on this week’s approved agenda, so the Council cannot act on it until it is added.

Funding dispute

Most of Wednesday’s debate centered on a single amendment after delegates discovered an error in a BFC report.

Delegate Andy Nez sought $773,916 for the Office of Diné Accountability and Compliance and the five agency offices of the Office of Diné Youth. He said the money would keep utilities on at youth facilities and strengthen oversight of tribal-controlled schools.

Nez said he wrote the amendment over the weekend using language in the BFC report that made $7.9 million from the Personnel Lapse Savings Fund available for unmet needs. He later learned the fund was empty and restricted to personnel costs.

Nez switched the funding source on the Council floor to the Unreserved, Undesignated Fund Balance, the Nation’s savings account.

That change triggered hours of challenges over Council rules because delegates had received a version of the amendment drawing on different money. Three recesses followed.

Parrish disputed the language that remained in the BFC report.

“The Budget and Finance Committee did not take a vote with their knowledge regarding any language utilizing the UUFB,” Parrish said. “I was there and I asked for that modification.”

Legislative staff reviewed a recording of the BFC meeting and confirmed the funding source had been removed. Related provisions attached to it had not been removed and remained in the report the Office of Legislative Counsel used in drafting.

The dispute then shifted to whether the Council needed to use its savings at all.

Simpson asked Dominic Beyal, the executive director of the Office of Management and Budget, how much of the general fund revenue projection remained unbudgeted.

Beyal said the BFC set branch planning allocations totaling roughly $201 million without allocating the full projection, leaving about $16.7 million unassigned. The BFC also removed about $5 million for litigation and $1.5 million for a transmission project from fixed costs, he said, putting roughly $6 million more within reach.

“There’s about $20 million available, and we’re dipping into the UUFB,” Delegate Amber Crotty said. “That doesn’t make sense. So who’s providing that advisement?”

Crotty also questioned whether the agency offices could spend the amounts requested. Based on a four-year average, she said, the requests from the Shiprock Agency and Western Agency in the amendment were more than double what those offices historically spent.

“If we’re going to tap into the UUFB, it should be for funding that actually can be expended,” she said.

Beyal said delegates who seek his office’s help with amendments generally ask about business units and object codes, not whether money is available.

Slater then asked whether the Council could appropriate one year’s savings into the next year’s budget and whether doing so required a higher vote threshold. Chief Legislative Counsel Michelle Espino said she could not answer without researching it.

“There’s a significant amount of funding in the UUFB,” Slater said. “And if you look around here, I can probably name about four or five projects from each of my colleagues that they just want to throw in immediately into the budget. So we are creating an incentive structure for us to turn this into a massive Christmas tree instead of a disciplined set of supplemental appropriations.”

The Department of Justice ultimately advised that past comprehensive budgets have used the savings account when the Council waived restrictions on it. Espino said no higher threshold was required.

The amendment passed 15-3.

Delegate Brenda Jesus, the chair of the Resources and Development Committee, said she could not support the budget for several reasons.

She objected to the removal of $1.5 million the Nation had agreed to pay annually under an agreement with the Bureau of Reclamation and the Western Area Power Administration for a 500-kilovolt transmission line. The money was not replaced.

Jesus also questioned whether more than $39 million in forest carbon credit revenue received by the general fund over three quarters was reflected in figures given to the branch chiefs. She cited information from the Office of the Controller.

Removing the wage adjustment also forced divisions to absorb the cost and created operating shortfalls, she said.

Her main objection was the budget process. Navajo Nation law requires the BFC to consult and negotiate with oversight committees before making final recommendations to the Council, Jesus said, and she maintained that did not happen.

Jesus said the bill that reached the floor was the BFC’s budget rather than one developed by the full Council. She said members of the Health, Education and Human Services Committee and the Law and Order Committee shared her concern.

Jesus said she supports a continuing resolution for fiscal reasons, not political ones.

“We don’t know the true revenue that has come into Navajo Nation,” she said, “and what is the dollar amount that is floating out there that hasn’t been obligated for anything.”

With employees watching the Oct. 1 funding deadline approach, Jesus added, “This is not an intentional roadblock.”

Crotty challenged Jesus, saying she had not attended every budget hearing and asking that sign-in sheets be produced. Crotty also said a breach of contract could not occur while the Council retained the power to appropriate and asked that Jesus’ remarks be stricken.

Jesus moved to end debate and suggested the Council consider a continuing resolution instead. The motion carried 14-5.

Minutes later, the budget failed.

What the stopgap does not do

Slater, who presided over the BFC meeting that produced the budget, criticized the vote in a statement after the session.

“I was very displeased on how the vote threw away all the hard work completed by Navajo Nation staff working late nights to support the council’s deliberations,” he said after the council session.

Slater also criticized Simpson’s continuing resolution.

“A CR is unnecessary and only harms veterans, scholarship recipients, elders, and people with disabilities, not to mention employees who may become laid off,” Slater said.

He said only three current delegates, including him, have worked on a successful continuing resolution. The difficult part, he said, is determining what income and calculations drive payments to veterans, scholarship recipients and elder and handicap trust fund recipients.

Slater also warned about employees paid with federal pandemic relief money.

“We have dozens of ARPA FRF employees who need to be transferred over in the new fiscal year to the Navajo Nation general fund,” he said. “They will probably all lose their jobs.”

Controller Sean McCabe pointed to another consequence of returning to last year’s funding.

“With the CR, it goes back to last year’s funding,” McCabe said. “That doesn’t have a wage increase in it either.”

McCabe said divisions in all three branches submitted close to $70 million in unmet needs on a budget that had already grown by roughly $18 million, while the Nation is on pace to spend only about 80% of this year’s appropriation.

“Just as a numbers guy, it doesn’t make sense to me,” he said.

McCabe, who has served four years, said this would be the Nation’s second continuing resolution under the current administration and described the breakdown as larger than any one dispute.

“At some point, it’s not political, it’s just broken,” he said.

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