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LINE-ITEM BUDGETS BEHIND TRANSFER REQUESTS

April 15, 2002 – Last week, the Senate Finance Committee heard testimony on four executive branch departmental requests for appropriation transfers to meet needs not covered in the line-item budgets they have operated under since the start of the 2002 Fiscal Year.
At the end of the day, the committee couldn't vote on the requests for transfers within the Finance Department, the Internal Revenue Bureau and the Personnel Division/Office of Collective Bargaining which totaled $945,581, because it had lost its quorum earlier.
On Tuesday, with no further testimony to be taken, the Finance Committee is to vote on the requests for the three agencies.
Finance Commissioner Bernice Turnbull, who testified at the April 2 hearing, said the line-item budget affects the speed by which she can act on pending issues or purchases. "We are not able to move ahead," she said. "If you have a lump sum, you have the flexibility to manage your budget."
Nothing that she has "been to the Legislature three times" asking for transfers within her department's budget, she described the process as "a deterrent to progress." There are safeguards to address the management of a lump-sum budget, she added.
Last fall, Gov. Charles W. Turnbull requested lump-sum FY 2002 budgets for executive branch agencies. Senate Finance Committee chair Alicia "Chucky" Hansen wanted line-item budgets and had her way. Just a few weeks ago, the governor sent the Legislature another request to change the budgets of 31 departments, boards and agencies to lump sum; the Finance Committee summarily put the bill on permanent hold.
A lump sum budget is for a total dollar amount; it can indicate primary categories to be funded under the allotment but does not specify the actual dollar figure slotted to each category. And if there is a need to move money from, say, "personnel" to "utilities," this can be done by an administrative "request for transfer" to the Office of Management and Budget.
In contrast, a line item budget specifies the categories and subcategories to be funded with detailed dollar amounts.
Bernice Turnbull is currently requesting a transfer of $100,000 for personnel services — $50,000 for an executive assistant, $32,000 for an administrative secretary and $18,000 for fringe benefits. The funds are to be transferred from a budgeted item for vehicles, which are not a priority at this time, she said.
Road to line-item transfers is lengthy
The journey of a line-item transfer request can be arduous. It begins with a written request from the particular department to OMB, where it is analyzed; then it goes on to the governor for his recommendations, then back to OMB for final review, then on to the Senate Finance Committee for a hearing. If it wins the committee's approval, the request then heads back to OMB for a final signature and then is sent back to the initiating department. The Finance Committee has the final say in the Legislature; only if an agency requests additional money beyond its budgeted fiscal year amount is approval needed by the full Senate.
"It adds about six more steps to the process," compared to lump-sum budgeting, said Debra Gottlieb, deputy director of OMB. There can be delays if the Finance Committee doesn't meet weekly, but it's impractical for the committee to meet to deal with just one request. Also, Senate meetings require seven days' notice to witnesses and the media.
Budget managers say the appropriation transfer process can take from three weeks to more than two months. In its written request to the OMB for transfer, the department must state where it wants the money to come from, why that money has not been spent or isn't needed, what category it is to be transferred to and what it will be used for.
Sen. Norma Pickard-Samuel sides with Hansen on the matter. "I don't see why the governor sees it [a lump sum budget] as necessary," she said, adding that she believes the line-item budget "is working well." She said all of the transfer requests have been reasonable and prudent.
Also, Pickard Samuel said, she believes it is the Legislature's role to rein in the purse strings of the government. "We are just doing our job, and I am not going to vote for the lump-sum budget," she said. "We want the government to run smooth, so we are utilizing our oversight ability."
Efforts to reach Hansen for comment were unsuccessful.
Some officials say they can work with that, but they should have the authority to shift funds from one account to another to meet changes in operational requirements. "They should be able to utilize expenditure savings in one account to augment the needs of another account," Gottlieb said. "If you are out there trying to run a department and you need to manage a crisis, it can be difficult to react quickly."
Line-item budgeting as micro-managing
The time-consuming transfer process greatly affects large agencies such as the Education Department, Gottlieb said, calling line-item budgeting a system of micro-management by the Senate with its oversight responsibility. "At the beginning of the year we are only projecting" needs, she said, and unforeseen circumstances can and do change those needs.
Within the executive branch, James O'Bryan Jr., the governor's administrative assistant for public relations, said, "Our posture has been when you are dealing with reduced resources, flexibility allows for the government to operate. Our argument has been that a department should be able to move monies without having to go back to the Legislature."
O'Bryan, like Bernice Turnbull, said there are measures in place to monitor lump-sum expenditures. For agency heads, he said, "The bottom line is they are authorized to spend accordingly, but they cannot spend outside of the specified department budget allotment."
At the end of April, St. Thomas will be visited by some 5,000 Navy crew members from the aircraft carrier USS George Washington as well as by V.I. Carnival revelers from throughout the Caribbean and the mainland. Ensuring their safety will require law-enforcement staffing beyond what is in the FY 2002 Police Department budget, Commissioner Franz Christian told the Senate Government Operations Committee at an April 4 hearing.
The Legislature operates with a lump-sum budget. This fiscal year, the Territorial Court budget was changed from a lump sum to a modified line-item budget. In the administration preceding the present one, Gov. Roy L. Schneider requested a lump-sum budget to have flexibility in managing the territory's crises after Hurricane Marilyn — and he got it.
The annual budget-making process begins months in advance of the Oct. 1 start of a new fiscal year. For FY 2003, "I am very hopeful that … we can get it in lump sums," Gottlieb said. "I believe that the departments need the flexibility and the ability to respond."

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