Past political concessions wrangle efforts to ease pension shortfall

The House minority bloc’s Reps. Edwin K. Propst (Ind-Saipan) and Ramon Tebuteb (Ind-Saipan) at a Saipan and Northern Islands Legislature Delegation session on Tuesday. (Dennis B. Chan)

The House of Representatives majority bloc voted down a bill yesterday that would have dedicated the entire Saipan casino annual license fee to fund payments for CNMI retirees’ 25 percent pension payments.

House leaders warned that passing the bill would renege on commitments made to Rota and Tinian lawmakers who were essential in getting the casino law to pass.

House Bill 19-21, authored by Rep. Jonathan Blas Attao (Ind-Saipan), sought to redistribute the current split of the $15 million license fee, split now as $2 million each to Tinian and Rota, $1 million to Saipan, and the $10 million to the 25 percent pension payment.

This was an unpopular proposal among Rota and Tinian leaders, as well as the Saipan mayor who is a recipient of the $1 million split.

But Attao and the House minority bloc believes a funding shortfall in the future is guaranteed and would jeopardize—just as the current delay in the 25 percent pension payment—the livelihoods of the retirees.

Attao argued, during session yesterday, that a full $15 million to this pension payment plus e-gaming appropriations, 60 percent of which are dedicated to these pensioners, would have taken the issue off lawmakers’ hands as opposed to “Band-Aid” legislation to manage the funding in the future.

Attao argued that the casino law rode on the understanding that retirees would be taken cared of. Attao, referring to other House bills passed that day to prevent another delay of 25 percent pension payment, called these “temporary.”

“We shouldn’t continue to react,” Attao said, referring to the most recent retirement fund scare and similar issues over the past decades.

“We should act and move on,” Attao told Saipan Tribune. “I want the problem removed.”

Attao’s bill, however, was found unpopular among municipal mayors, and effectively killed yesterday largely along party lines.

The 10 no votes came from the House majority, with nine yes votes from the minority bloc.

Rep. Antonio Sablan (Ind-Saipan), chairman of the ways and means committee that has entertained the bill since March 2015, summarized comments the committee had received from the Saipan and Rota mayors who argued that the bill would “unplug the machine” of needed services.

“Many people depend on what we do,” Sablan said, reading from Saipan Mayor David Apatang’s letter. The mayor’s office “needs fund to accomplish duties to the public,” he said.

Tinian Mayor Joey Patrick San Nicolas has yet to respond, Sablan said.

Sablan drew concern to the “spirit of cooperation” among the three senatorial districts not seen in years past. “This one bill would go a long way to dissolve the strong coalition between the three legislative districts,” Sablan said.

He argued that there were other remedies to address the 25 percent pension payments, noting that “we have yet to tap the funds” from the Saipan casino’s business gross tax revenues.

“I voted for [the Saipan casino law] understanding that without the support of the first and second senatorial districts,” there “would be no casino, no revenue, no 25 percent [pension funding], no $15 million” license fee. “And for that, I cannot support” the bill, Sablan said.

Vice Speaker Joseph Deleon Guerrero (Ind-Saipan), for his part, noted he has not supported the casino over the last 10 years and his support in the 18th Legislature was “a big sacrifice” on his part but that “the biggest sacrifice” came from Tinian and Rota.

Island leaders knew that a casino on Saipan “would kill the industry on Tinian,” Deleon Guerrero said. But despite that, Deleon Guerrero said, Tinian and Rota lawmakers, like now Senate President Francisco Borja (Ind-Tinian) and now acting governor Victor Hocog, came out to support and explain “why this industry” was needed.

“There would be no public law 18-56 [the Saipan casino law] without their support,” Deleon Guerrero said.

A passage of the bill would be “reneging on what was” committed to, he said, “and for that reason alone,” he could not go back and “change the terms” on what was agreed to.

Rep. Edwin Aldan (Ind-Tinian), for his part, said Tinian heavily relies on the “leftovers” of the casino license fee. “We’ve used these funds for scholarships, medical referrals” and the 25 percent pension payments for Tinian, he said.

“We do not generate revenue from our casino,” he said, referring to the Tinian Dynasty casino closure last year. “We are lucky we have [the Saipan casino law] to support pensioners.”

Rep. Glenn Maratita (R-Rota) also said the bill you have a “significant impact” on Rota. “We are at a very disadvantaged position” economically, he said.

The bill would “definitely have an adverse affect” the on operations of the municipal government, its employees, pending obligations, and medical referrals, Maratita added.

Deleon Guerrero also attempted to address the accusations of the government’s continued “Band-Aid” or “piecemeal” solutions.

He argued, pruning the terms the minority bloc used, that “all these bandages” would support the 25 percent payments.

The so-called “permanent solution” of Attao’s bill—if they “added it all up”—would be some $2 million “not heading” to retirees’ payments.

“19-21 would be a net gain of $2.2 million,” Deleon Guerrero said.

“All these bandages put together will more than make up the $2.2 million shortfall.”

The vice speaker also attempted to hand lawmakers a “reality check.”

He said that even if the bill passed the House, that “the sacrifices of Tinian and Rota” would “not be forgotten in the Senate,” meaning it would not pass the Senate and not make it to the governor for signature.

“There is a lot of history behind here that cannot be tossed aside,” Deleon Guerrero said.

For his part, minority leader Rep. Ramon Tebuteb (Ind-Saipan) told reporters before he left the Legislature yesterday that he could not seem to find the “spirit of cooperation” that the House majority sought to defend in the law.

“This ‘spirit of cooperation’ is not in the law,” Tebuteb said, acknowledging that the House yesterday made political concessions over solutions.

‘Constitutional obligations’

In an interview at his office, after his bill was effectively killed, Attao assured retirees he would “keep fighting.”

“We will continue to fight and find ways that the retirees’ issue is solved, done, that we get rid of it and that we move on to the future,” Attao said.

“The future deserves a lot better than we are going to present them,” he said.

Attao called the three bills passed yesterday a “Band-Aid” and largely depending on tax collections to help the pension payments.

“The only thing permanent was the $15 million” over 40 years, he said.

Attao disclosed that $15.78 million is needed to fulfill the entire 25 percent payments.

He believes retirees would “rather bite a shortage of $780,000, than a shortage of a couple of million.”

That would mean a total “cut” of the 25 percent pension payment.

“The constitution says you cannot cut retirees’ pension. You cannot diminish them, Attao said. But, he said, the settlement agreement between the government and courts did exactly that, leaving the government to fork up this reduction, or the 25 percent, through the casino law and the rest through appropriations.

“The Secretary of Finance today is the Retirement Fund. She is the board, she is the administrator, she is everybody, which is not fair for her,” Attao said. “She is obligated to take care of the retirees.”

“And by not doing so,” Attao warning against another fund shortfall or delay, “some retiree might decide to file a lawsuit.”

Attao said he is sure that a pension delay would rear in the future. “It might not be the next the year or the year after that,” but “do that math” and note that “in 2019 [the casino law sets] zero fees collected” because they took the first and fifth year annual fees upfront.

“19-21 had the difference” to close this hole, Attao said.

House leaders argued that changing the law to pay out the Year 40 of the fee, instead of Year 5, a possible “contractual issue” with the casino.

Attao said that was fine but “why didn’t you find out? Why didn’t you get the comments from the proper entities?”

“The three senatorial districts are obviously going to say no. But how about the 3,000 retirees? Zero comments,” Attao said.

Attao, during the session, had asked committee chair Sablan if he had sought comments from the Retiree Association of the CNMI. Sablan said no.