GOVERNOR Arnold I. Palacios is not submitting a revised budget proposal for fiscal year 2026.
In his letter to Speaker Edmund S. Villagomez and Senate President Dennis James Mendiola on Monday, the governor said his April 1, 2025, budget submission — which identified $179.7 million in total revenue, or over $20 million more than the current fiscal year’s budget — “will remain as the official proposal for the upcoming year.”
The governor is allowed to submit a revised budget proposal by July 1, 2025.
He told Villagomez and Mendiola that his decision not to submit a revised budget is based on confirmation from Finance Secretary Tracy B. Norita that “there are no changes to the revenue projections for FY2026.”
House Ways and Means Committee Chair John Paul Sablan said last month that, amid T’Way Air’s cancelation of flights and Jeju Air’s reduction of air services, he expected the governor to submit a “realistic” budget revision.
According to the governor, his administration, through the Commonwealth Economic Development Authority, “is actively engaged in discussions” with the Marianas Public Land Trust to secure a $29 million pension obligation interim bond, as authorized by Public Law 18-12 and its subsequent amendments. These funds, he said, “are critical to meeting the minimum annual payment obligation to the NMI Settlement Fund retirees for FY2026.”
He said the budget proposal he submitted on April 1, 2025, “assumes successful execution of the bond by Oct. 1, 2025, and includes a $5.45 million anticipated debt service payment.”
The governor said recent discussions with MPLT “reflect strong interest in legislative collaboration, specifically concerning authority interest withholding.”
“My administration is fully committed to working with you to move this initiative forward and prevent significant cuts to vital services in the new fiscal year,” the governor told the House speaker and the Senate president.
On April 22, 2025, the governor wrote a letter to MPLT requesting a $29 million pension obligation bond. MPLT, whose members are gubernatorial appointees, then communicated with the presiding officers of the Legislature, saying it agrees with the governor’s proposal — but only with the consent of the 24th Legislature.
In an interview on Thursday, Mendiola said he has forwarded MPLT’s letter to the Senate Fiscal Affairs Committee, which he understands is currently deliberating the governor’s proposed bond with MPLT.
In a separate letter to the governor, MPLT Administrator Barbara Reyes said the trustees approved consideration of the low-interest $29 million “investment proposal” during their meeting on June 30, 2025. This, she said, “requires the full faith and credit of the CNMI government, through legislation to authorize MPLT to withhold 100% of distributable net income as payment toward the debt service of an approved investment.”
Reyes said the MPLT trustees have set a deadline of 90 days for the passage of the required withholding legislation and for the due diligence review process.
She said the low-interest investment “is the only option the trustees have decided to consider.”
