Austerity, furloughs, discontinuing payment of 25% retirees’ pension are all on the table

Gov. Arnold I. Palacios answers a question as Lt. Gov. David M. Apatang listens during a news briefing in the governor’s conference room Wednesday afternoon. (FERDIE DE LA TORRE)

Considering the CNMI government’s dire financial situation, austerity measures such as furloughing some government employees as part of cost-cutting measures, and discontinuing the payment of the additional 25% retirees’ pension benefits are all on the table, according to Gov. Arnold I. Palacios last Wednesday.

He assured though, that, although discontinuing the payment of 25% payment in government retirees’ pension was among the many recommendations of the transition team, that step is not a high priority right now.

Speaking at a news briefing Wednesday to update the public about the state of the government’s finances, the governor said that government downsizing or furloughs is absolutely on the table as painful as it is for him, Lt. Gov. David M. Apatang, and the Legislature to implement.

He disclosed that they have already started some cost-cutting measures: Palacios said he and Apatang will not allow off-island travel unless it is essential. He said acting Finance secretary Tracy B. Norita has already been instructed to cut down the expenditures of the Executive Branch immediately.

“This journey to economic recovery is not going to be easy. It’s [going to] require a lot of hard work, a lot of sacrifices, a lot of thoughts, a lot of humility. But we will come out of this,” he said.

Palacios assured that they can work well with the Legislature, other members of the Executive Branch and even with the Judiciary.

On the transition team’s recommendation to discontinue the payment of 25% to retirees until everything stabilizes, Palacios said the figures that the transition team found and the misappropriation of public funds and the level of abuse are unprecedented. He said to continue spending at the level that they were spending the first quarter of this fiscal year is just not sustainable.

The CNMI government is mandated by a court settlement order to pay only 75% of government retirees’ pensions. The previous Torres administration had been adding into the payment the 25% portion of the pensions to ensure that retirees get 100% of their monthly pensions. Now it looks like that that 25% additional payment may be in jeopardy.

Palacios assured though, that this is something that is at the end of their list. “That’s not going to be the top priority that we want to cut. To the extent that we can retain that part of our pension to our retirees, we will retain that,” he said.

The governor said they will work very hard to make sure that with legislative commitment and everybody’s commitment, they will try to protect that as much as possible.

“But I would not say that we want to take that off the table because, at this point, we are in such a dire situation that nothing should be taken off the table other than the court mandate, which is the 75% payment of pension to retirees and the constitutional mandate, which is the Public School System budget mandate,” he added.

He said they will revisit and reset the financial situation with their Federal Emergency Management Agency partners and Public Assistance Office to expedite all these projects that have been sitting for four and a half years or five years.

“There is absolutely no reason for any more delays and that would help regardless,” he said.

The governor said they will turn every stone or rock that they have to turn to get the Commonwealth back on track economically.

“One never expects to see this kind of disaster. I don’t even know how to describe this. But it is a disaster. And I ask members of our community to be patient with us, to be understanding of the situation,” Palacios said.