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SIX years ago, its proponents said the legalization of casino gambling on Saipan would allow the CNMI government to pay 100% of the retirees’ pensions.

At that time, the Retirement Fund was on the brink of insolvency. (In April 2012, it filed for bankruptcy, but the federal court dismissed its application.) 

The Saipan casino measure was then passed by both houses of the Legislature — twice — and signed into law by Gov. Eloy S. Inos who was seeking another term in an election year. He and his party won convincingly. Opponents claimed, and they still do, that legalization was “rammed down the people’s throats.” If true then the “people” should have “disgorged” it already like what they did a year after the first casino legalization law was enacted in Nov. 1978. In fact, voters or their elected representatives can still repeal the current casino law. So where is the referendum petition or bill?

The Saipan casino, then known as Best Sunshine, opened in Nov. 2015. Around the same time, tourism arrivals were steadily increasing, thanks to the Chinese market which the CNMI had been pursuing since 2004 under Gov. Juan N. Babauta’s administration.

In Sept. 2017, the Settlement Fund trustee informed the federal court that the CNMI government was complying with the settlement agreement and had been making regular payments of $1 million per week. “The regular weekly payments,” the trustee said, “have allowed  the Settlement Fund to avoid draw downs on investments and extended the Settlement Fund’s  investment horizon.” As promised by Governor Inos, moreover, the retirees received 100% of their pensions and not just the required 75%. Bonuses for the retirees were likewise approved by the governor and the Legislature.

“The Government,” the Settlement Fund trustee said, “is able to make the weekly $1 million payments, in part, because of the increased Casino GRT revenue collected in 2016 and 2017.  The Casino GRT has developed into  a primary source of revenue for the Government.”

We’re quoting not IPI nor the CNMI government, but the trustee appointed by the federal court.

In Dec. 2019, the trustee was more emphatic. “When I was appointed, the forecast was that the Fund would run out of money in 2017. Through the good work and contributions of many people, we avoided this catastrophe and today, although we are far from out of the woods, the Fund is no longer in imminent danger of collapse.”

In her report to the federal court, she said “it is important for the Court and retirees to know that the NMI Government…has been diligent in honoring its agreement to pay the Minimum Annual Payment  in allotments of $1,000,000 per week.  Governor Ralph DLG Torres and Lieutenant Governor  Arnold I. Palacios, together with the members of the House and the Senate, have persevered  through the natural disaster of Yutu and ongoing financial difficulties, which have left the  Government with chronic cash shortages.  They have worked with the Trustee to give the  Settlement Fund the priority required to avoid significant draw downs on investments, and it is  their commitment to the CNMI Government’s obligations, which has reversed the negative trajectory of the investment trend and allowed the Settlement Fund to accumulate reserves to cover benefit payments for a two-year period.   The Trustee appreciates the dedication and  commitment shown by the leadership of the CNMI Government.”

The federal judge herself had to acknowledge  the “miraculous turnabout of the retirement system that was already running out of money” but now had reserves “to cover benefit payments for a two-year period.”

Because of the improving economy, which was made possible by a new major investment and the arrival of more tourists, the CNMI government was finally meeting its obligations to retirees, paying its other debts, and providing more funding for critical agencies, services and programs.

But then three of the CNMI’s major islands were hit by typhoons in Sept.-Oct. 2018.   A month later, the Bureau of Economic Analysis of the U.S. Department of Commerce reported that the CNMI’s Gross Domestic Product in fiscal year 2018 dropped by nearly 20%. “Revenues from casino gambling dropped over 50%. The number of visitors to the CNMI decreased 21.5%, reflecting the effects of Super Typhoon Yutu….”

Again, that assessment came not from the CNMI administration nor IPI, but from a report of a federal agency.

And then Covid-19 happened.

With the tourism industry at a standstill and in light of the rapidly worsening financial condition  of the casino investor, today’s most urgent issue is the pressing need to identify the budgetary adjustments that the CNMI government must make to, at least, meet its most pressing obligations in the next year or two.

Thanks to the Fiscal Response Summit and its able organizers, a set of general policy proposals has already been drawn up (http://cnmi.pitiviti.org/uploads/CNMI_FiscalResponse_BriefingPaper_Final.pdf). But who will (dare) introduce specific, cost-cutting, tax/fee hike proposals among the politicians seeking office five months from now?

Meanwhile, expect to hear many of them echoing whatever is the current “popular sentiment” out there while waiting (and hoping) for more federal assistance — and for someone else to walk the talk and make the tough decisions.