Atalig: IPI talks may be key

Finance Secretary David DLG Atalig is hopeful that the outcome of talks with the new investor of Imperial Pacific International (CNMI) LLC may be the answer to the funding source for the 25% pension of government retirees in 2023 fiscal year.

At the House of Representatives Ways and Means Committee hearing Wednesday for the Department of Finance’s budget for fiscal year 2023, Atalig also disclosed that of the $481.8 million that the CNMI received from the American Rescue Plan Act, they have already committed about $348 million to different projects.

On the unfunded 25% retirees’ pensions this upcoming fiscal year, Atalig said he is hoping that they can generate casino Business Gross Revenue Tax to cover this need, which is estimated at $13 million, but he added that he cannot bank on the result of the negotiations with the new IPI investor until that is inked and blessed by the Commonwealth Casino Commission.

“I’ve been informed about the negotiations. And so that’s hopeful for the 25%. Other than that, we don’t have a funding source [for the retirees 25%],” said Atalig said, without elaborating on the IPI discussions.

Under a settlement agreement in Betty Johnson’s class action against the CNMI government and the NMI Retirement Fund a few years ago, the CNMI government agreed to make annual payments sufficient to enable the Settlement Fund to pay no less than 75% of the retirees’ pension benefits. The 25% benefit payment and bonus payment are voluntary from the CNMI government, and are not required under the Johnson settlement agreement.
For this year, Atalig said, he used the Community Disaster Loan to set aside the $14 million for the retirees’ 25%. “Unless the Legislature gives me flexibility to utilize funds to help in the 25% or give the governor that authority, then I will do my best to continue that,” he said.

In the meantime, Atalig said, he does not have the authority to pay the 25% without any funding source.

The CNMI received the Community Disaster Loan from the Federal Emergency Management Agency. The Finance secretary had previously stated that the use of that loan to cover the 25% shortfall in the CNMI retirees’ pension is allowable and is part of the CNMI’s spending plan for that loan.

In response to questions from Ways and Means Committee chair Rep. Donald Manglona (Ind-Rota), Atalig said they are still working on the details of the availability of ARPA regarding requests from different departments and agencies.

He said the main budget submission last April was to cover and make sure that 20% of all government employees’ salaries were covered through ARPA to tide the government over while local revenues get back to pre-pandemic levels.

Atalig said what has been spent since half the year of fiscal year 2021 was ARPA, as well as the full fiscal year this year for all staff across the government to ensure that the Commonwealth gets out of austerity.

The only major change in terms of the ARPA spending plan actually were two items—the capital projects fund section 604 and the unallowable matching fund for Medicaid, he added.

On capital projects fund section 604, Atalig said they thought it would all go to water, sewer, and broadband projects. But as the U.S. Treasury put out its final interim rule and the final rule of the guidelines for ARPA, section 604 became strictly 100% for broadband. “So our plan with these funds shifted,” said Atalig, adding that they are now working on a major broadband master plan for the whole Commonwealth, including broadband and communications going toward the Northern Islands.

For section 604, the total ARPA funding was $14,285,714.

On Medicaid matching issue, the Finance secretary said the major component that was unallowable that they included in their ARPA spending plan was the Medicaid match.

“We are not able to use ARPA for local Medicaid match. And so that put some funds available for ARPA in the different pockets of the spending plan,” he said.