To be sure, adjustments were made by the Legislature and the administration two years ago to eliminate and restructure the benefits package, and cut back on the benefits now offered by the government pension program to new employees.
But very few of the commonwealth’s governors paid into the Fund each year, putting the Fund at risk, although not nearly the kind of risk claimed by the current Retirement Fund chairman if prudent investment practices are adopted to safeguard existing assets. Unfortunately, this litigation was fueled by a retired politician who used the Fund as a platform to re-launch a political career. An appointee of the governor, the Fund chairman should have resigned after announcing his gubernatorial candidacy early this year to avoid the appearance of a conflict of interest.
For his part, the governor’s response was muted compared with the heady and purposeful court and public challenge offered by the Fund chairman in this election year. The court order, however, doesn’t change the fact that this government cannot afford to pay its debt to the Retirement Fund. Ask Tony Pellegrino who successfully sued the government in 2004. The government back then owed him $5.9 million of which he has yet to see a single penny. With interest, how much is the government’s debt now — $8 million? What about the land compensation payments? What about the government vendors? The bonds? What about CUC?
The biggest question, of course, is this: What about government payroll?
Meanwhile, certain eligible government employees cannot retire because the Fund won’t allow them.
In Pellegrino’s case, the court has advised him “to seek relief, including the garnishing of federal funds…and portions of DLNR’s budget.”
Now we ask current government employees: What if the court also allows the Fund to garnish government revenues? What do you think will happen to your positions and salary levels?
The Fund chairman earned brownie points from the retirees, but at what cost to this government, the local people’s main employer? The Fund chairman, who in February expressed confidence in his victory this November, said he, as governor, would ensure that the government pays its contributions to the Fund. Really? How? And if that is such an easy task, then how come the government has been unable to do so for well over a decade now?
The CNMI stands on the threshold of calamity. There is hardly a government service that isn’t terribly compromised by poor decisions and smaller budgets. Government employment rolls must be cut in order to provide government services at acceptable levels, but this is a difficult thing for leaders to do. How can you lay off people you promised to serve in an economy like this? Even the Retirement Fund, which is campaigning hard to ensure payments to the Fund, presumably to ensure its survivability, has done little to whittle its staff or to pare its legal representation to a reasonable number of lawyers.
All kinds of consequences are possible when there are multiple efforts to compel certain actions from this bankrupt government. This is why a measured response is critical because panic creates its own set of problems. Specific and well-timed actions are necessary to ensure the continuation of government services no matter how shoddy they are right now. Massive job losses should be prevented at a time when the private sector is in no condition to absorb them. Otherwise, the social and economic consequences would be catastrophic for this small community.
And so now, the Fund and the government will return to the negotiating table, and the Legislature must find the money to pay the Fund. They are, in other words, where they could have and should have been even without a lawsuit whose cost to taxpayers, incidentally, has yet to be disclosed by the Retirement Fund.
