Senate passes bill to exempt CPA’s airport revenues from paying 1% OPA fee

The Senate unanimously passed Friday a bill that would exempt the Commonwealth Ports Authority from paying the 1% Office of the Public Auditor fee for airport revenues.

At a Senate special session, with eight senators voting “yes,” House Bill 22-102, HS1, HD1, now goes to the governor’s desk. Sen. Karl King-Nabors (R-Tinian) was absent but was excused from the session.

Last June 13, despite the strong opposition by the Office of the Public Auditor, the House passed House Bill 22-102, HS1, HD1.
House Speaker Edmund S. Villagomez (Ind-Saipan) is the main author of the legislation.

It was only Reps. Christina E. Sablan, Leila F. Staffler, and Edwin K. Propst who voted against the passage of the bill. All are Democrats.

Public Auditor Kina B. Peter asked House members not be pressured into voting for a legislation that is very impactful to a CNMI regulatory agency.

CPA does not object being charged the 1% OPA fee for non-airport revenues.

During the public comments portion of the Senate special session Friday, Commonwealth Ports Authority board member Pete Reyes urged the senators to pass the legislation.

Reyes said since May of this year, CPA management has been having weekly meetings with Federal Aviation Administration officials in order to correct past audit findings and in order to address the OPA 1% fee law.

Reyes said during this meeting, FAA has stated that CPA’s remittance of the 1% OPA fee would be in violation of CPA’s federal grant assurances.

He said the bill before the Senate addresses the issue and that its passage is important in order to clear the way for CPA to receive and continue receiving current and additional federal funding.

Before the voting of the bill, Sen. Edith E. DeLeon Guerrero (D-Saipan) said she took the liberty to make a call on June 15, 2022, with independent auditor Deloitte. DeLeon Guerrero said her call was primarily to validate if there is any revenue diversion stated in CPA’s audit report.

She said the response was that for fiscal year 2020 audit, there was no mention of revenue diversion.

Additionally, the senator said, FAA’s letter dated May 16, 2022, does not provide a definitive finding or decision by FAA that there is indeed a revenue diversion. Instead the FAA letter reads “may be considered revenue diversion,” she said.

DeLeon Guerrero said CPA’s booking of the 1% OPA fee, but not paying it out is not revenue diversion. She said it’s merely a business book 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 the year adjusting book entries as well considering the non-payout of the 1%.

DeLeon Guerrero agreed with Finance Secretary David DLG Atalig that having the CNMI serve as a guarantor with its full faith and credit when bonds are floated, whether it is for CPA or any other independent autonomous entity, comes with a cost for doing business and as such, the government must tread carefully when putting the entire CNMI as collateral and not impose on the cost of doing business.

“I find comfort that House Bill 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,” the senator said.

DeLeon Guerrero also stated she does not object to the disposal of her similar bill to yield to the House’s legislation.

With eight senators voting “yes,” Senate President Jude U. Hofschneider (R-Tinian) said Senate Bill 22-51 that Deleon Guerrero introduced is hereby filed.