Govt faces $31M deficit if bailout bills are not passed

The Fitial administration warned Friday of drastic power rate increases and layoff of government workers if certain bailout bills pending in the Legislature are not passed.

Antonio Muna, the governor’s special assistant for management and budget, said lawmakers must pass the proposed legislation to prevent the government from suffering a projected deficit of $31 million at the end of the fiscal year.

He was referring to the Defined Benefit Plan Rescue and Recovery Act, which would require the NMI Retirement Fund to forgive the government’s $123 million debt and to issue a new $40 million loan to the Commonwealth Utilities Corp.

“The Defined Benefit Plan Rescue and Recovery Act is basically our economic lifeline. For our standpoint, there is no other option that will give us the kind of relief that the Retirement Fund option will give us.

Absent any other economic relief, the consequences here are basically dire,” Muna said in press conference Friday.

Without the legislation, he said, the government will have no recourse but to authorize CUC to “drastically and immediately” increase utility rates by at least six cents.

Non-essential, ungraded personnel may also be terminated, while non-essential civil service employees may have to be furloughed no later than Aug. 1, he added.

Furthermore, funding for the government’s scholarship program, the community college and the tourism industry may be deferred or suspended to sustain essential services such as public health, public safety, the prisons and the schools.

“We will need to consider seriously effecting a timeline of events which will drastically, adversely affect a lot of people’s lives, including the retirees,” Muna said.

The retirees strongly oppose the Defined Benefit Plan Rescue and Recovery Act for fear that it might render the Retirement Fund financially incapable to pay for their benefits.

But Muna argued that CUC represents only 10 percent of the Fund’s $459 million assets.

He added that the retirees themselves would feel the impact once the utility rates were raised and government workers terminated or furloughed.

“In protecting their position, the retirees as well as everyone else, will have to pay out more in utility bills. As we mentioned here, it’s possible that the people that will be affected by these furloughs and these terminations would be close to them or related to them in some way,” Muna said.