Variety learned that the Marianas Visitors Authority stopped paying its contributions two years ago and has a total arrears of $800,000.
Recently retired Secretary of Finance Bob Schrack described to the court the CNMI government’s poor financial state, saying that it is living paycheck to paycheck and has had difficulty making payroll.
He said the administration’s number one priority is payroll. “There are a lot of hard decisions to be made and I don’t see them being made at this point,” he told the court.
Judge Kenneth Govendo noted that there seemed to be no solutions in sight, but the government’s lawyer, Meaghan Hassel-Shearer, suggested that it might be time to start looking at reducing benefits.
Govendo replied that this would be impossible and could result in too many lawsuits.
Alepuyo said she agreed that there is a need to reduce benefits, adding that legislation needs to be passed to reduce the cost of living allowance and eliminate the $1,000 death benefit.
She noted that instead of eliminating the death benefit as the Fund requested, the legislators want to increase the amount to $2,000 and call it a loan.
Alepuyo repeatedly asked the judge to order the Fund to disregard existing law regarding how the COLA for retirees should be calculated.
But Govendo pointed out that such action on his part would constitute a clear violation of separation of powers.
The hearing did not discuss the possible funding sources that could be tapped to satisfy the court’s April 2009 judgment.
Govendo said he expects the pension obligation bond initiative, which voters recently rejected, to be on the ballot every year for some time into the future.
The next hearing will be on Wednesday, Feb. 9. The government and the Fund are supposed to come up with a dollar amount to be appropriated by the Legislature to cover employer contributions for the year.
The government has been unable to pay the Fund the actuarially determined rate of employer’s contributions which is 37.39 percent. The current budget law allows the government to pay 20 percent only even though Govendo, last August, ordered the government to pay 30 percent.
In April last year, the court ruled that the government owed the Fund $231 million.
A separate lawsuit in federal court remains pending. Those who are interested in adding their names to the lawsuit or obtaining more information may contact attorney Bruce Jorgensen at [email protected].
