Up to $300M POB hinges on revenue-generating bills

Five months have passed since the signing of a law authorizing the Commonwealth Development Authority to issue pension obligation bonds of “up to $300 million,” but the administration and the Legislature have yet to firm up which revenue-generating bills would be the prime source of repayment for any such bonds to be floated. This is among the topics in today’s leadership meeting between the governor and lawmakers.

Gov. Eloy S. Inos yesterday called for a leadership meeting with the Legislature set for 1:30pm today in the governor’s conference room on Capital Hill.

The governor said the “pressing matters that must be addressed immediately” include the pension obligation bond, health insurance for government employees, and revenue-generating measures.

The administration initially said it expects only $70 million to $100 million to be floated, to help repay the government’s over $300 million unpaid obligations to the Retirement Fund.

With the approval of the Fund’s global settlement agreement, there may be some adjustments in the initial expectations.

The idea of floating the maximum $300 million has been tossed around, which some said could make it easier for the CNMI to meet the settlement agreement requirements, but the final decision rests with the governor and CDA.

But as of yesterday, press secretary Angel Demapan said “the amount is yet to be finalized until the whole process of floating a bond goes through the necessary stages for approval.”

Demapan said the governor would like to consult with the Legislature on the whole issue of the POB “as the Legislature’s support will be needed for revenue generating bills aimed at repaying the bond.”

House Speaker Joseph Deleon Guerrero (Ind-Saipan) said the more revenue-generating measures identified, passed, and signed into law, the better for the CNMI in terms of repayment ability.

The House has passed most of the revenue-generating bills it introduced since early this year and most of them are either still pending or defeated in the Senate.

The video lottery bill is now law but a request for proposals has yet to be issued. The Senate moved to essentially kill anew a House bill legalizing casinos on Saipan, while the electronic gaming bill has yet to clear the Senate.

CDA executive director Manny Sablan separately said yesterday there’s no decision yet on the amount to be floated. He said CDA has been working with its bond underwriter Barclays and bond counsel Orrick Herrington & Sutcliffe LLP on this.

“Hopefully we will have something in the next couple of weeks,” he said.

The initial bond float is dependent on the CNMI government’s credit rating and other factors.

The press secretary also said the governor called for today’s leadership meeting “because there is a need for our leaders to continue efforts to address current and pressing matters for the Commonwealth.”

“There’s still a great deal of work to do and the governor would like to ensure that all our leaders stay focused on getting things done for the betterment of our community and our people,” Demapan added.

Not all 29 lawmakers will be able to make it to the leadership meeting because they are either off-island or have previous commitments.

Rep. Ray Tebuteb (Ind-Saipan), meanwhile, said there needs to be clarification whether all proceeds from a pension obligation bond should go to the NMI Retirement Fund as stated in the POB initiative that voters ratified, or to the Settlement Fund.

“The Retirement Fund is still alive, and there are over a dozen who opted out of the settlement agreement, meaning they are still members of the Retirement Fund, which is supposed to be helped by the POB. But the settlement agreement says opt-outs cannot get more than the class members. The government will have more problem, will need to raise more revenues to restore the 25 percent for settlement members,” Tebuteb told Saipan Tribune.

Rep. Mario Taitano (Ind-Saipan), chairman of the House Committee on Retirement Issues, separately said he would like to ask the governor “when and how much” can the CNMI borrow at this time.

He said restoring the 25 percent pension cut among retirees could also be a key topic.

Senate President Ralph Torres (R-Saipan) called on senators to attend the leadership meeting.

The speaker said he would also like to bring up other issues during the meeting, including those related to the Commonwealth Utilities Corp. and the supplemental funding.