Casino amendments now law

A bill to amend the casino law became law on Friday to finally provide a funding mechanism for Saipan casino regulators but it did not leave the desk of acting governor Ralph DLG Torres without some vetoes. The vetoes fall in line with recent clamor from the House of Representatives minority bloc over provisions to provide tax breaks to the casino, among others.

Saipan casino regulators, who had been threatened in their ability to oversee the casino’s proposed $7-billion casino resort investment without these funds, will now be funded through an annual casino license fee with Public Law 19-24.

Administration officials understood the bill as an appropriations bill, and therefore one that could be line-item vetoed, with inessential or unrelated policy calls left on the cutting room floor, Saipan Tribune learned yesterday.

“I agree with the fundamental purpose of this legislation—to appropriate money so that the Commonwealth Casino Commission is funded by the licensee to do the all-important work of regulating the gaming industry on Saipan. House Bill 19-95…accomplishes this goal,” Torres said in a letter Friday to both chambers of the Legislature.

“However, there are several issues with which I disapprove and additional legislative work is required on other matters,” Torres added.

In reviewing the bill, Torres’ office flagged three concerns. Provisions to allow legislative veto over a potential casino license revocation; mandate that casino employees be declared essential in case of austerity or government shutdown; and allow tax credits for the Saipan casino if they passed a certain tax threshold—all three were dropped from the final bill.

“We are thankful that they listened to our concerns and agreed with our views,” said Rep. Ed Propst (Ind-Saipan) yesterday. He added that Torres had met with House minority leader Rep. Ramon Tebuteb (Ind-Saipan), who had expressed his concerns.

“I appreciate our acting governor for listening and reaching out across the partisanship that we so often have in the House,” added Propst, a member the House minority bloc, over the phone yesterday.

Tax credits

Torres vetoed the provision to provide for a nonrefundable tax credit.

This tax credit, which would be applied against the CNMI’s Gross Revenue Tax in the amount of the casino regulator fee of $3 million per year, was disapproved.

“As originally envisioned in the enabling statute, the cost of regulating casino gaming activities on Saipan are to be paid in full by the licensee and I am not convinced there are good reasons to grant tax relief for this expense,” Torres said.

Without these vetoes, the bill would have allowed Best Sunshine International, Ltd. to deduct $3 million from tax liabilities going forward—if—they first met and paid out $20 million in BGRT after a given year, a figure deducted from an estimated $400 million earnings.

That means the $3 million annual fee would be counted as credit for their tax liabilities if they reached this $20 million threshold, moving forward.

Legislative oversight

Torres vetoed parts of section in the bill that provides that “any decision of the commission to revoke the exclusive casino license shall be submitted to the Legislature for approval by a majority of the members of each house through joint resolution.”

Torres disapproved of this provision as an “unconstitutional legislative veto,” in conflict with the separation of powers doctrine.

“If the Legislature wishes to enhance oversight over the important decision to revoke the exclusive casino license, I suggest that a set of criteria be put into legislation which would outline the process and procedure for the revocation that [the casino commission] shall follow in a manner consistent with the Constitution,” Torres said.

Essential employees

A provision to deem commission employees as “essential,” in case of fiscal crisis or closure of nonessential government agencies was vetoed in its entirety.

Commission members and its employees “are not to be construed as employees of the Commonwealth,” Torres said.

Torres said the provision conflicts with Section 13 of the bill, which deemed commission employees “not employees of the Commonwealth but shall be indemnified and defended as if they were.”

If the provision were made law, it would be first time in local statutory history that the CNMI defined and declared employees as essential in case of government shutdown, Saipan Tribune learned. In previous budget meltdowns, the government issued memorandums declaring which employees were essential.

18-year-old handling of alcohol

While not vetoing the provision, Torres encouraged the Legislature to revisit the amendment that allows people within the ages of 18 and 21 to serve alcoholic beverages on the casino floor.

“The CNMI government should think through whether an employee—older than 18 years of age—is a more appropriate age delineation to permit the service [of] alcohol beverages,” Torres said.

That amendment was tailored to allow casino employees licensed by commission to serve alcohol at the casino, provided they do not consume it during their employment.

The commission has said the amendment is a recommendation of the Northern Marianas College, whose students have reportedly expressed interest in working on the casino floor but cannot because of these age limitations.