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CPA considers cut in pay and benefits
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Posted on Jan 29 1999
The Commonwealth Ports Authority board is looking at the possibility of reducing the salaries and benefits of employees as a way to cut down on expenditures of the cash-strapped agency.
“We are studying everything that would benefit everybody and still maintain the present number of employees,” according to Roman Tudela, chairman of the finance committee.
Almost 60 percent of the $11 million budget for fiscal year 1999 goes to salaries and wages of the ports authority.
Saddled with a $53 million debt, the ports authority is seeking an increase in airport fees so that it can pay for its financial obligation. This include a 64 percent increase in landing rates from $.085 to $1.40 per 1,000 pounds and a 38 percent hike in departure facility charge.
The planned rate increase was part of a condition imposed by the two rating agencies before giving an investment grade rating to the $53 million bond it issued in March 1998. CPA last raised its airport fees 10 years ago.
Without any increase by March 15, 1999, the bond interest rate will go up from 6.25 percent to 6.70 percent. Failure to get an investment grade rating will affect the CNMI’s respectability in the U.S. bond market and its credibility to float successive bonds.
If the ports authority will not raise its fees, Tudela said officials must be given alternatives to ensure that CPA will remain in operation. “However, if the bottom line still shows that it has to raise fees, then the board would have to make that decision,” he added.
The Marianas Visitors Authority has opposed the planned rate increase because it will discourage airlines from providing service to the Northern Marianas and make the island an expensive destination since it will be passed on to consumers.
But the ports authority emphasized that without any increase, MVA must guarantee additional enplanements and visitor arrivals of 74,276. The bond indenture requires CPA to generate 125 percent of debt service.
