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Senators debate lump-sum annual leave payouts and government liquidity during budget hearing
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Summary
During the Senate Fiscal Affairs Committee's Sept. 15 hearing on the FY2026 budget, senators discussed a House provision that would permit lump-sum payouts for separating law enforcement officers and debated whether to extend such payouts more broadly amid concerns about government liquidity and unpaid overtime.
Saipan, Sept. 15 — The Senate Fiscal Affairs Committee spent part of its Sept. 15 hearing on a House budget provision that would authorize lump-sum annual-leave payouts for law enforcement officers upon separation, and senators and finance officials debated expanding the payout to all government employees and the fiscal implications of doing so.
Senator Donald M. Magona asked Finance whether the government has funds to cover a lump-sum payout provision included in the House version of the budget. Finance staff said they did not have immediate information about the provision’s cost or funding source and agreed to provide follow-up details to the committee.
OGM official Mr. Cabrera urged broader eligibility. “Typically, after talking to Treasury, it's about a $5,500,000 across the board for all government employees if we were to pay out 160 hours,” Cabrera told the committee, arguing a widened policy could stimulate economic activity and reduce the government's long-term leave liability.
Senators raised liquidity and prioritization concerns. The committee chair and other members described outstanding obligations and payroll problems — including unpaid overtime for police officers and hazard-pay backlogs for solid waste employees — and stressed that the government’s immediate cash position must be considered before expanding lump-sum payouts.
Key points from the discussion
- Scope of the House provision: Committee members said the House version applies to law enforcement separations; senators debated whether similar access should be opened to other employees. - Estimated fiscal impact: Mr. Cabrera estimated a total payout across all government employees at roughly $5.5 million for a specified payout level (160 hours), pending Treasury reconciliation. He advised the committee that past practice and available CIP or special allocations for enforcement could affect implementation. - Liquidity constraints: Senators noted outstanding weekly or biweekly operational liabilities — including unpaid overtime and delayed hazardous-pay and that liquidity is the primary constraint in determining whether a one-time payout is practicable this budget cycle.
Next steps
Finance did not provide an immediate funding source for the lump-sum provision and agreed to follow up. The committee flagged the issue for deliberation during budget finalization and said it would consult Treasury and OPM to assess the one-time cost, possible funding offsets from CIP or special appropriations, and liquidity impacts before taking action.
