Finance told to produce missing tobacco money

The absence of available money due to the missing tobacco settlement funds yesterday forced lawmakers to delay action on the proposed creation of the Tobacco Prevention and Control Advisory Board.

The finance department came under fire during the public hearing at the Senate Committee on Health and Welfare following the discovery that the initial $815,000 tobacco settlement was diverted to CNMI general funds.

Assistant to Finance Secretary Robert Schrack received barrage of inquiries on why payments were deposited and co-mingled to the general funds when appropriations of tobacco settlement were already identified and recommendations were received by the upper house.

“Where is the money that has been allotted? We’re being taken as a fool. If there is a money, it should be identified and it is restricted for tobacco-related programs only,” committee chair Sen. Ricardo Atalig told the public hearing.

But the finance official explained that in the absence of legislation to govern the appropriation of money, the Legislature failed to identify first hand where the settlement funds should be deposited.

Automatically, funding are co-mingled to the general funds, said Mr. Schrack. But since the government is working on a continuing budget resolution and cash deficits, the initial payments were diverted to the general funds to operate various government machinery.

He said there is an existing $800,000 cash deposits but the government has to utilize the money for government employees’ salary and other government programs.

Even the Attorney General’s Office advised that there will be no technical and legal problem should the finance department deposit the amount into the general fund, Mr. Schrack added.

“Can we take a break and call finance if they can identify where the money is, don’t tell me we have the funds but we have to pay the workers, that money should be for tobacco purposes only,” Sen. Ramon Guerrero interjected during the deliberation.

NMI Retirement Fund Administration Juan S. Torres came to the aid of the finance official explaining that the money should have been deposited where it belongs had the Legislature established the trust fund in the first place.

The absence of the trust fund even before the settlement money was made payable to the CNMI forced government officials to utilize it. This should not, on the other hand, restrict the Legislature from setting up a special fund to handle remittances in the future.

Despite the absence of funds, the Senate body ordered NMIRF and the Department of Public Health to sit down and iron out a mechanism that will govern the proper disbursement of the $30 million tobacco settlement in the next 25 years.

Under Section 3 of House Bill 12-290, all returns from the investment of the Master Settlement Agreement funds, 30 percent will be utilized by the Group Health and Life Insurance Trust Fund to exclusively pay for its obligations to on and off-island health providers; 40 percent will be for the funding of DPH’s operations of government health centers, including public schools on Saipan, Tinian and Rota, and the implementation of a Youth Tobacco Education and Prevention Program.

DPH official Norma Ada told committee members that there is a need to implement a comprehensive tobacco prevention program with supplemental budget from cigarette excise tax.

In addition, she said a collaborative effort from all agencies involved should be exhausted to effectively implement all recommendations.

The implementation of all these programs will be delayed until the finance department identifies where to get the missing funds.

Since December 1999, the CNMI government has received about $815,254.94 in five separate payments. The Commonwealth’s share from the settlement totals to $30 million. Payment of this will be spread in 25 years.

This is part of the $206 billion master tobacco settlement agreement with giant US cigarette manufacturers in exchange for dropping of the lawsuit over health costs on treating sick smokers. (EGA)