I suggest that in the future, any legislation that affects the Retirement Fund, please provide the CRA advance copy of the legislation for its members to comment. If the livelihood of the retirees and active employees on the Defined Benefit Plan are affected, they should be accorded opportunity to comment on the legislation.
Thank you for passing House Initiative 17-1, Pension Obligation Bond to be included this November election. We need to convince the voting public that there are sources of funds to pay the government obligations on the bonds. Both, the CRA and maybe the Board of Trustees of the Retirement Fund identified the sources of funds from the government/employees contributions/poker taxes to pay for the Pension Obligation Bond that the government is now remitting to the Retirement Fund. These sources of revenues might be sufficient to repay the Pension Obligation Bond.
Should Senate Bill 17-29, SD1, is passed and become a law, there is very limited sources of fund to repay the Pension Obligation Bond. I am certain that majority of the government employees who are eligible to retire would take this opportunity because of the financial dilemma of the Retirement Fund. They will take their pension NOW, instead of later. It is estimated that more than 700 individuals and millions of dollars of pension payments every year to new retirees will be disbursed by the Retirement Fund.
It is very clear that the intend of Senate Bill 17-29, SD1 is similar with Senate Bill 17-27 to transfer government payroll to the Retirement Fund. Both bills do not have actuarial study to determine the financial viability for the Retirement Fund. In other words, Senate Bill 17-29 and Senate Bill 17-27 will not improve the financial conditions of the Retirement Fund. Both bills will accelerate the demise (DEATH) of the Retirement Fund.
This section is entirely my personal opinion and not coming from the Commonwealth Retirement Association.
What the legislature needs to do IMMEDIATELY is to pass the Casino Bill, House Bill 17-55, and assign the proceeds from the Casino revenues to the Retirement Fund to reduce the government liabilities and over 600 MILLIONS OF DOLLARS of UNFUNDED LIABILITIES. The Legislature also needs to revisit the law that was overwritten the governor’s veto on the pozzolan in Pagan. Pozzolan minerals continue to wash out to the open ocean, decreasing their viability for investment. We need to harvest the minerals NOW not later; our government needs every DOLLAR to provide vital services to our people. In addition, we need to revisit the Qualifying Certificates, in providing tax abatement/rebate up to 25 years on investments made by big corporation. Are we getting new investments or new corporations operating a business in the CNMI as a result of the Qualifying Certificates? Is Qualifying Certificate really working, in creating employment to our local people, providing infrastructure (water, power, road and sewer) to outlying areas. Are Qualifying Certificates increasing other tax bases? Are these taxes, if any, are large enough to justify the continuance of the Qualifying Certificate Program? I recommend that a professional independent party should make this assessment.
Small and medium businesses are hard hit with taxes. The House of Representatives recently passed a bill to increase fees for business licenses! Even regular wage earners eventually will see a reduction or complete elimination of their tax rebates. Members of the Legislature are debating to introduce legislation to reduce or completely eliminate tax rebates.
Is it equitable and fair for big corporations to be free from paying taxes some for 25 years while small and medium businesses pay taxes every quarter? Is it fair for individuals like you and me to be paying taxes, while the big guys are exempt from paying taxes for some for 25 years? Eventually, our government will declare bankruptcy because it does not have funds to pay its mountain of obligations.
In closing, I hope the Legislature will study carefully before any bill is introduced if it will benefit the Retirement Fund and the CNMI government. Over the years, the Legislature passed 20 laws that added benefits to government employees and retirees without identifying and appropriating funds to provide for such benefits. This is exactly why the 16th Legislature passed House Legislative Initiative 16-13, which will prohibit the Legislature to pass any law to increase the benefits until all government obligations to the Retirement Fund have been satisfied or the Retirement Fund is fully funded. In addition, the initiative will disallow re-computation of income on reemployment. House Legislative Initiative 16-13 will be on the ballot this coming election in November. Before any law is ever introduced for the Retirement Fund, please perform actuarial studies by a profession actuary whether such bill if introduced will benefit the Retirement Fund. If such study said that it will not benefit the Retirement Fund, please do not introduce the bill. Senate Bill 17-29 is definitely not good for the Retirement Fund, large numbers of employees will take this opportunity and the CNMI Government will not be able to repay the Pension Obligation Bond.
JUAN M. SABLAN
Chairman
Commonwealth Retirement
Association
