The House version of Senate Legislative Initiative 16-10 aims to reduce the size of government and float $200 million in pension obligation bonds to pay the government’s obligations to the Retirement Fund.
Palacios, R-Saipan, noted that even though the CNMI’s bond rating went down, passing and ratifying the legislative initiative will only authorize a bond flotation.
“It doesn’t mean we’re going to do it immediately,” he said. “We will wait until conditions are favorable. In the meantime, we want to take this issue to the voters so there will be more discussions about the problems of the Retirement Fund and the other options that will solve these problems.”
Introduced by Sen. Maria T. Pangelinan, D-Saipan, S.L.I. 16-10 was amended by the House Ways and Means Committee to incorporate a similar proposal introduced by Saipan Republican Rep. Heinz S. Hofschneider, H.L.I. 16-12.
A legislative initiative is a proposal to amend the CNMI Constitution and must be approved by at least three-fourths of the members of each house of the Legislature present and voting. It doesn’t require the governor’s signature and, once passed by lawmakers, will be placed on the ballot to allow voters to either ratify or reject it.
Palacios said the governor, in his State of the Commonwealth Address last week, blamed the lawmakers’ failure to pass a budget on time and the federalization law for the downgrading of the CNMI’s bond rating.
“We’re not meeting our current obligations, including the employer’s contributions to the Retirement Fund, and that’s the biggest reason why our bond rating went down,” he said.
Pangelinan, the chairwoman of the Senate Fiscal Affairs Committee, found the governor’s statements regarding the CNMI bond rating “surprising.”
“He blamed the Legislature for not passing the budget on time. But he vetoed the budget bill twice. He didn’t want a new one. He also blamed federalization for our credit rating. I can’t agree wholeheartedly. [The downgrade] was caused by our large debt and accumulated deficit. In fiscal year 2008, for example, we had a $27 million deficit — why?”
