By Emmanuel T. Erediano
emmanuel@mvariety.com
Variety News Staff
THE CNMI government cannot afford to pay the 25% of retirees’ pensions, Finance Secretary Tracy B. Norita told lawmakers last week.
During a joint meeting of the bicameral House Ways and Means and Senate Fiscal Affairs Committee on Thursday, Norita fielded questions regarding Gov. David M. Apatang’s proposed budget, including allocations for group health and life insurance for retirees and active government employees.
The joint committee’s co-chair, Rep. John Paul Sablan, also asked the Finance secretary about the administration’s plan for paying the 25% of retirees’ pension.
Special Assistant for Management and Budget Villagomez told the committee that the administration has submitted a request to the U.S. Department of the Interior’s Office of Insular Affairs to allow the CNMI government to allocate a portion of the $5.7 million technical assistance grant it received two months ago for retirees. If approved, the CNMI government would receive $2.1 million from the OIA fund.
In October, the governor announced that the CNMI received a $5.7 million grant for the first quarter of the fiscal year, as part of a federal commitment made during Section 902 discussions in Washington, D.C. in September.
To date, Villagomez said, the CNMI has received $2.7 million of the OIA funds. Of the remaining $2.9 million, the administration plans to dedicate $2.1 million toward funding the retirees’ 25% benefit.
Sablan asked again what the administration’s plan would be to pay the 25% once outside sources like the OIA grant run out.
Norita replied, “It’s time to be honest with the retirees. At this point, the retirees deserve honesty from the leadership. The truth is, it is very hard to fund the 25% when we are already in austerity, with current government employees at 70 hours and the Public School System at 64 hours. It is just very hard right now.”
The Finance secretary acknowledged the issue is sensitive and difficult, adding that the administration continues to “fight” for federal funding. “We are getting the $2.1 million from OIA because we communicated just how important that 25% is,” she said.
She added, “But like you said, if no federal funds come through, what else do we have? There are simply no funds available for the retirees’ 25%.”
Norita also noted that the governor’s revised budget requests 100% reprogramming authority to respond to unforeseen emergencies. However, she emphasized, “there has been an unrealistic expectation that the governor’s reprogramming authority will allow him to cover the entire 25% for retirees. That authority is for emergencies.” The CNMI government does not expect sufficient lapsed funds to cover the $9 million needed for the retirees’ 25%, she added.
Paying the 25% requires new revenue, Norita said. “The CNMI needs to identify new industries and revenue sources that will allow the government to pay retirees their full pension benefit. All our efforts so far are to secure the 75% of the retirees’ pension. It has taken many months just to get the $29 million MPLT loan. For the 25%, we went to the federal government for help, which we are receiving, but that help will not last long. We need to generate our own revenue.”
Another alternative, which she called a “nuclear bomb” option, would be to impose deeper austerity on current government employees. “Are we willing to go down to 64 hours? Or even 50 hours to fund the 25%? That is a very painful decision, and it is not one I support. I have not made a recommendation to the governor because we must operate the government, complete the single audit, and provide services,” she said.
Should the government have lapsed funds, she said, “we will prioritize the 25%; that is why there is 100% reprogramming authority in the revised budget proposal.”
In an interview, Commonwealth Retirees Association Vice President Mario Taitano said the 25% payment is a commitment the government must uphold because it failed to pay its share into the now-defunct NMI Retirement Fund’s defined benefit plan.
“It’s not voluntary; the government must pay us the 25%,” he said.
The federal court-approved 2013 settlement agreement requires the CNMI government to make annual payments to the NMI Settlement Fund, which covers 75% of retirees’ full benefits. Under the agreement, the 25% benefit payments are not mandatory.
Emmanuel “Arnold” Erediano has a bachelor of science degree in Journalism. He started his career as police beat reporter. Loves to cook. Eats death threats for breakfast.
