‘Central govt—not Fund, CHC, CUC—should be placed under state of emergency’

Rep. Frank Dela Cruz (R-Saipan) said it is the CNMI central government that should be placed under a state of emergency instead of the Commonwealth Utilities Corp. and the Commonwealth Healthcare Corp., as well as the NMI Retirement Fund, as the Fitial administration has planned.

Gov. Benigno R. Fitial, as of yesterday, has yet to issue an executive order placing the Fund under a state of emergency, days after U.S. District Court for the NMI’s Bankruptcy Division designated judge Robert J. Faris dismissed the Fund’s Chapter 11 bankruptcy petition.

Faris reiterated that the Fund is a “governmental unit” and not eligible for relief under Chapter 11 of the Bankruptcy Code.

Press secretary Angel Demapan said “it’s certainly sad that the Fund took this route when other options were still available. The intent is to safeguard the assets of the Fund, so the approach should be one that would be least detrimental to the limited funding that exists.”

When asked for specific reasons for placing the Fund under emergency, Demapan said “we should await the EO [executive order].

Also among the Fitial administration’s plans is to place the Fund under the Department of Finance or the Office of Personnel Management, mainly to continue to disburse pensions for retirees, as well as request a five-year buyback into the U.S. Social Security system for active members.

Dela Cruz said the central government and its departments and agencies have not been paying their obligations to CUC, CHC and the Fund, and these unpaid obligations are among the major reasons why these agencies were placed or will be placed under a state of emergency.

The government has some $300 million debt to the Fund, for unpaid employer contributions.

Fitial cited over $8 million in unpaid obligations by the “cash-strapped government, the Public School System and the Commonwealth Healthcare Corp.” as among the reasons for placing CUC under a state of emergency again.

Lt. Gov. Eloy S. Inos said the central government recently made payments to CUC and does not owe much CUC; he said it is PSS and CHC that have more unpaid obligations to the utilities agency.

CHC chief executive officer Juan N. Babauta said the additional $7 million line of credit bill, once signed into law, could help CHC pay its utilities.

Babauta reiterated his call for the government—the Legislature and the Executive Branch—to provide a $10-million subsidy to CHC in fiscal year 2013 and onwards mainly for the hospital to continue to provide services to the indigent population.

Inos said last week that the administration is poised to sign that line of credit bill, but is again checking with the Marianas Public Land Trust if this is still acceptable.