Hofschneider: We need to be very careful

Senate vice president Sen. Jude Hofschneider (R-Tinian) stressed yesterday that support for the casino industry is needed in the Commonwealth, considering that CNMI retirees, senatorial districts, hospitals, and schools all depend on the funds generated from either the annual casino license fee or the casino gross revenue tax.

In an interview with Saipan Tribune, Hofschneider highlighted the need to support policies that could revive the casino operations, which has been gravely affected by the COVID-19 pandemic.

“We need to support the industry. Right now, it’s a taller task for us to do because there’s no telling how this pandemic is going to restrict our borders from the potential customers coming in. We need to figure it out which areas or conditions in our laws need updating or changing, so that the casino industry here in the CNMI can reopen or strike some interests,” he said.

Despite controversies, interest for the casino remains high, given its benefits to the community, among which is the allocation of the casino gross revenue tax to fund 25% of retirees’ pension.

Originally intended to be funded through the casino licensing fee under Public Law 18-56, allocation for the 25% of the retiree pension is now extracted from the gross revenue tax, through Public Law 20-10.

The $15-million casino license fee, based on the law, is currently allocated for the senatorial districts to use, with $2 million each for Tinian and Rota, and $11 million for Saipan and the Northern Islands, with $1.5 million going to the Saipan Higher Education Financial Assistance, and $9.5 million going to Saipan and the Northern Islands.

With inconsistent revenue coming from the CNMI’s lone casino, Imperial Pacific International (CNMI) LLC, House Bill 21-76, HS1 was introduced to secure the retirees’ 25%, by reallocating the entire $15 million casino license fee to it. The bill unanimously passed the House in April, and is now with the Senate Fiscal Affairs Committee for review.

“The bill is currently in the committee and we’re waiting for comments from the respective senatorial districts and other entities,” Hofschneider said.

‘We need to be very careful’

In compliance with Gov. Ralph DLG Torres’ directive to close casinos and gaming-related businesses due to COVID-19, IPI shut down its casino last March 17, which led to loss of income and the furlough of hundreds of its employees.

With lack of revenue from the casino, the government, according to Hofschneider, has been getting money from the general fund to provide for the retirees’ 25% pension.

“Everyone knows that the casino right now is not in operation. That means there’s no revenue. But the retirees are still getting paid their full pension. So despite not having that revenue, the retirees are still getting their 25%,” he said. “The administration and the Legislature are committed to the retirees to get their full pension. At the same time, we have people that are terminated, furloughed, and people are getting paid their 64-hour per pay period but the retirees are getting their full pension.”

As for the passage of H.B. 21-76, HS1, the Senate vice president stressed the need to be very careful. “We’re taking it a step at a time because everyone knows the situation with IPI. Is there really going to be $15 million in August? That is the big question. We hope that it comes back around, for the operations of the casino to materialize again, to reopen, so that we can generate some funds.”

“But of course,” he added, “the elephant in the room here is the situation with the pandemic. We don’t know how long this thing’s going to last. We’re all hoping that it’s going to be over soon but it’s not the case.”

Reviving the casino industry

The Senate vice president also stressed that everyone in the Senate supports the retirement fund for the retirees, and that that there is no urgency to the bill, because Public Law 20-10 already mandates that the first $22 million of the casino gross revenue tax are to be appropriated to the pension.

What the CNMI needs to figure out, he said, is how to get back to having a vibrant economy.

“Everything here is contingent upon the availability of funds. We should be looking for ways to try and revive the casino industry because, obviously, it generated a lot of revenue over the last three, four years,” he said.

According to Hofschneider, the CNMI, through the industry, was able to settle a lot of its debts, pay people their bonuses, provide funds for the retirees, schools, and public hospital, among others.

“We need to find an alternative revenue source. We need to be looking at other options that would be able to match or come close to the kind of revenue output that this exclusive licensee operator was able to produce. We all need to figure out a way to assist the casino industry come back to its feet,” he added.