The actuarially determined rate is 37.39 percent. The administration is proposing 30 percent which will require an additional $6.4 million.
The government is currently paying 20 percent only.
The administration earlier mentioned a $24 million deficit for fiscal year 2010, but it is still unclear whether this includes the “built-in” deficit that accrues as long as the Retirement Fund’s defined benefit plan employer contribution is less than the actuarial rate.
Without paying the full rate, the government will automatically incur a deficit for FY 2011.
This means that the budget bill pending in the Legislature cannot be considered “balanced,” which violates the Constitution.
Variety also learned that there are many government vendors who are not being paid.
These vendors do not make up all of the government’s debt, but they will stop providing services eventually and go to court eventually, and the court has ruled that they can expect payment on judgments they are awarded, a source told this reporter.
During a Writ of Execution, the source added, cash can be seized from government accounts until the judgments are satisfied.
The known judgments outstanding against the CNMI government include judgments in excess of $17 million; Marine Revitalization Corp.’s $8.6 million plus interest; and the over $231 million owed to the Retirement Fund as of April 2009.
“Any combination of the above judgments, if acted on by the holder of the judgment, could literally bring the CNMI government to its knees,” the source said.
