Both agencies also receive their entire operational funds exclusively from publicly generated and legislatively appropriated public funds, just as the Saipan Mayor’s Office. Together, all three agencies of local government receive public funds sourced from a single bank checking account, to be known as the Saipan Casino Fund and administered by the Saipan Municipal Treasurer, acting independently of the Saipan Mayor or the office, vested with the unambiguous authority over hiring, spending, budgeting, reprogramming, etc., including having a concurrent authority over the hiring of commission staff and exclusive authority over budget preparation for the Mayor, Treasury, and the Commission for submission to the Saipan and Northern Islands Legislative Delegation.
B. Legislative History
House Bill 17-56 appears to be a postmortem rendition of previously rejected referenda on casino gaming for Saipan and the first preemptive attempt at consolidating the jurisdiction and authority over other forms of gaming activities away from the Department of Commerce and Finance to the Saipan Casino Commission.
It is also noteworthy that HB 17-56 mandates the Saipan and Northern Islands Legislative Delegation to provide the initial funding or seed money for the operations and activities of the Commission [re. article II, section 10(a)] and the Saipan Municipal Treasury [article II, section 16]. The requirement to fund a non-governmental entity, if the commission in fact is, as it is stated in the bill, appears unprecedented.
On the other hand, requiring the commission, a presumed non-government entity, to comply with the Administrative Procedure Act in promulgating rules and regulations is also unprecedented, much less vesting in a non-government entity broad subpoena, investigative hearing, detention and enforcement powers, including taxing authority, much less the right to an independent checking account for publicly generated funds would appear to make the commission a conduit of local or quasi government agency, if it is not entirely an arm of local government, and therefore subject to requirements in Article VI, section 8(a) of the constitution. This is evident, for instance, by the regulatory and quasi-judicial authority vested in the commission in article II, section II (d) on promulgated regulations, which empowers the body to “use such rules and regulations to interpret, enlarge upon, define, further define, or refine any provision of this Act.”
As in the foregoing discussion, the same logic applies to the Saipan Municipal Treasury. Though HB 17-56 claims it not as a new agency of local government within the mayor’s office, its organizational characteristics, power structure, duties and responsibilities, qualification requirement, authority, jurisdiction, and legislative confirmation requirement implicate Article VI, section 8(a) of the constitution as a new agency of local government.
It is noteworthy that neither of the two new agencies has been established in the past by legislative fiat by either the local delegation or municipal council, except through twice failed public referenda, of which section 8(a) would not be an issue if properly executed in a popular initiative or legislative initiative, contrary to the way HB 17-56 is designed by legislation.
C. Evaluation of Proposal/Legislation
As stated in the analysis above, advocates of casino in HB 17-56 propose to rescue the local ailing economy through games involving prize, consideration and chance. The advocates also are optimistic, forecasting the fiscal capacity and multiplier spin-off of casino in infusing needed public funds for improvements in “health care and medical referrals services, education, scholarship programs, public safety, and many other essential government services benefiting the general public, (including)…meeting government payroll,” and even reversing the high incidence of brain drain and unemployment on Saipan.
Yet, the hierarchy of appropriation priority prescribed in article XIV for the local legislative delegation does not comport with the priorities as enumerated above. Without realistic, much less concrete revenue projection, the casino advocates designed a string of activities to be funded by the casino revenues. Categorical funding include:
1. earned income credit, 2. NMD royalty entitlement dividends, 3. retirement fund contribution, and 4. a “local purpose” philanthropy program, consisting specifically of funding field trips to the Northern Islands; commercial loans; home mortgage assistance; housing maintenance and ground transportation for the disabled and the elderly and other disability programs; health care or insurance subsidy; social and cultural programs; youth programs; NMD and U.S. local resident scholarship and training; gambling anonymous program; public safety and law enforcement facilities and equipment; educational facilities and equipment; recreation and sports facilities and infrastructure development and equipment. The appropriation priority and order of needs in the local purpose category is to be determined in the budget submission of the Mayor of Saipan referenced (Article XV), and subject for approval as is or to be modified by the Saipan legislative delegation by resolution.
Ironically, at the top of the appropriation chain of priority, subject to Chapter 3, Title 4 taxes for deposit in the Saipan Casino Fund and appropriation by SNILD, and presumably to benefit 1. NMD, 2. the people of Saipan, and 3. the islands north of Saipan), is funding the Commission’s debt-cost payment not to exceed $600,000 for its initial operational cost with the Saipan Municipal Treasury, to be sourced by either government institutions or private equity or lending institutions (banks) if and when the local delegation fails to appropriate money for the expenses of the commission and the municipal treasury, presumably in conformity with applicable laws and regulations especially on local procurement. The amount of $600,000 is the upper limit that could be levied and funded from two casino application fees ($250,000 per license) to be assessed on two (2) foreign investors and one (1) NMD license fee pegged at $100,000. However, the actual amount levied on the single NMDIC license and the two foreign investors may be lower. The commission is vested with the authority on the actual fee structure in Article XI of the bill.
While HB 17-56 claims the initial debt-cost authorization is not a public debt, the act of lawfully authorizing this option by statute inherently makes it a public debt! Common sense dictates that when due for repayment and no investor applies for the foreign license or the NMD license, the statutory loan guarantor would obviously be the bank of last resort — the local government through an appropriation by the local delegation!
HB 17-56 also purports to echo the voices of a “majority of our people (who) are strongly against poker establishment in the villages and …want them out”. But, instead of reminding the people of Saipan have overwhelmingly rejected casino gaming in past referenda, section 2 of this proposal used the so-called “majority” opposition to poker arcades in the inner villages, near schools and churches to take away the statutory authority of the Department of Commerce and the Department of Finance and give the commission the regulatory power and authority over the licensing of all existing and new poker, pachinko slot machine and related games already addressed in existing statutes henceforth. The same provision also takes away the ability of foreign investors to invest in these amusement machines, as only persons of NMD or U.S. local residents are qualified to be issued license to own and operate these amusement machines or establishment as referenced in Article XXI of HB 17-56. Presumably, this is an effort to centralize all video poker arcades, panchinko slot machines and related games referenced in Article XXI in the single “Mini Casino” arcade at La Fiesta or in areas or properties approved by the commission and the Saipan zoning board, as expressly authorized only for NMDIC in article III, section 2 (b) of this Act.
Moreover, the same article obligates future legislature and the Third Senatorial District legislative delegation to enact an omnibus legislation to vest all regulatory authority to the Saipan Casino Commission within a year or 12 months after the effective date of this Act.
Another peculiar provision limiting amendments to HB 17-56 upon it becoming law is referenced in article XXII, section 3, which states:” Unless otherwise authorize by this Act, any proposed amendment to “Saipan Casino Act” shall be approved or disapproved by the registered voters only in the Third Senatorial District through local initiative.” In essence, this provision conceivably gives the gaming commission de facto rulemaking, enforcement and judicial power and authority as an agency of government beyond casino gaming in the Third Senatorial District, and way beyond the policymaking arm or reach of the local legislative delegation, the Saipan municipal council, or even the mayor’s office!
The provision above is especially telling given the ubiquitous power and authority the commission would have amassed and exercised in regulating, enforcing, interpreting and ruling on provisions of law, for instance. In this multifaceted role, it is expected the commission would be entitled to a substantial sum and percentage of the levies (fee and tax) collected as local revenue pursuant to 4 CMC 1304(a)(b) and 1 CMC 1402(c)(1), among others, consisting of casino application fee, casino license fee, casino operators permit fees, casino key employee and casino employee license fees, casino service providers and industries license fees, casino taxes and all other permit fee(s), fines, penalties and taxes (e.g., Saipan gaming tax, annual gross revenue surtax, and casino revenue tax).
To be continued
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