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Bond eyed to settle govt debt with Fund
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Posted on Mar 30 2008
Two separate proposals have been introduced in the House of Representatives to allow the CNMI government to borrow money to pay its multimillion-dollar debt to the NMI Retirement Fund.
One version proposed by Rep. Heinz Hofschneider will permit the issuance of a $200-million pension obligation bond. Another proposal sponsored by Rep. Joseph Deleon Guerrero does not set a dollar amount, saying only that the bond must not exceed what the government owes the pension program.
According to the Fund, as of Sept. 30, 2007, employer contributions receivable from the CNMI government exceed $132 million, excluding penalties and interest.
Hofschneider said the liabilities are now approximately $193 million.
In addition to allowing for the bond flotation, Hofschneider’s initiative proposes to prohibit the Legislature from adding on benefits until the pension program is fully funded.
Moreover, the initiative will mandate the government to reduce personnel costs until the budget allocation for payroll is down to 60 percent or less of the general revenues.
Currently, personnel costs comprise about 75-80 percent of the government’s total budget.
“We need to shirt the allocation of resources to providing services to the public, rather than allowing the government to go on unrestricting hiring,” Hofschneider said.
Legislative initiatives have to be passed by the affirmative vote of three-fourths of the members of each house present and voting. The governor cannot veto legislative initiatives, which are proposals to amend the Constitution.
Once passed by the Legislature, initiatives will be subject to voter ratification.
