THE Senate on Friday unanimously passed an amended version of House Bill 22-102, which would exempt the Commonwealth Ports Authority from the 1% public auditor’s fee. The bill now goes to the governor.
As amended, H.B. 22-102 no longer includes the Commonwealth Utilities Corp. in the proposed exemption. It also removed the sunset provision that would have required the bill to expire five years from its enactment.
There has been much debate among lawmakers, CPA and OPA, regarding CPA’s claim that the fee could be considered revenue diversion by the Federal Aviation Administration.
Public Auditor Kina B. Peter said passing the measure without a definitive answer from the FAA regarding the revenue diversion issue “does not represent good governance.”
CPA, for its part, said the fee is an additional cost that will be passed on to its tenants or the traveling public.
On Friday, prior to the roll-call vote on the bill, Sen. Edith Deleon Guerrero said she had asked an independent auditor, Deloitte, about the revenue diversion issue.
“My goal is primarily to validate if there’s any revenue diversion stated in CPA’s audit report,” she said.
The response she received from the independent auditor was that there was no mention of revenue diversion in the fiscal year 2020 audit, she said.
Additionally, she said the FAA letter dated May 16, 2022 does not provide a definitive finding or decision by the aviation administration that there is indeed a revenue diversion, but added that it may be considered revenue diversion.
“CPA’s booking of the 1% expense but not paying it is not a revenue diversion, but merely a business booking entry of debiting expense and crediting payables, cash, or any other appropriate account to complete the credit entry and down the line with end-of-year adjusting book entries as well,” Deleon Guerrero said.
“I have to agree with the secretary of Finance that having the CNMI serve as a guarantor with its full faith and credit when bonds are floated, whether it’s for CPA or any other independent and autonomous entity, comes with the cost of doing business, and as such, we must tread carefully when putting the entire CNMI as collateral,” she added.
As for indirect costs or IDC, “I understand…from the FAA representative during last week’s June 7th meeting here in this chamber, that IDC is an allowable expense. It would be interesting to know what is the percentage of IDC set aside and whether the IDC is a negotiated CNMI rate or the grantor rate, who keeps the IDC set aside, and if the 1%, more or less, can be considered as part of the IDC set-asides,” she said.
“Lastly, Mr. President and colleagues, I find comfort that H.B. 22-102, HS1, HD1 provides OPA the ability to bill for its services, if any, under the airport operations, while applying in its entirety the OPA 1% on seaport.”
As for a similar bill, S.B. 22-51, which was authored by Deleon Guerrero, the Senate voted to file or shelve it.
“I do not object to the disposal of S.B. 22-51,” she said. “I understand and I agree that I yield…to the House [bill], considering it’s revenue legislation….”
Sen. Karl King-Nabors was excused from the Senate special session on Friday in the Senate chamber.
Senate President Jude U. Hofschneider presided over the session.
Edith Deleon Guerrero
