House approves POB initiative

“We are working against the clock here,” House minority leader Joseph Deleon Guerrero (R-Saipan) told Saipan Tribune after the session.

Any initiative has to be with the Commonwealth Election Commission by Aug. 8 in order to make it to the Nov. 6 midterm elections.

If House Legislative Initiative 17-5 also passes the Senate next week, then the pension obligation bond initiative will be placed on the Nov. 6 ballot.

Deleon Guerrero said he’s grateful for the House’s passage of the initiative and hopes that the Senate will also favorably act on it at the earliest possible time.

He said the House passage of the initiative is just one of the many steps that need to be taken to “correct the wrongs” made to the Fund, retirees, and active members for years.

HLI 17-5 seeks to add a new Section 10 to Article 10 of the NMI Constitution to authorize the CNMI to issue pension obligation bonds.

How they voted

Of the 15 of 20 House members present in yesterday’s session, only Rep. Edmund Villagomez (Cov-Saipan) voted against the pension obligation bond initiative.

“Just like what Rep. [Ray] Basa said, I don’t want to mortgage the future generations, the young people, into paying for it. Where will the government get the money? Can we afford the interest rate? And even one of the consultants of the Retirement Fund advised against a pension obligation bond,” Villagomez said later.

The 14 who voted “yes” to HLI 17-5, in order of voting, were, Rep. Ray Basa (Cov-Saipan), Rep. Trenton Conner (R-Tinian), Rep. Frank Dela Cruz (R-Saipan), minority leader Joe Deleon Guerrero (R-Saipan), Rep. Ralph Demapan (Cov-Saipan), Rep. Sylvester Iguel (Cov-Saipan), acting Speaker Felicidad Ogumoro (Cov-Saipan), Rep. Ray Palacios (Cov-Saipan), Rep. Tony Sablan (R-Saipan), Rep. Teresita Santos (Ind-Rota), Rep. Ray Tebuteb (R-Saipan), Rep. Stanley Torres (Ind-Saipan), floor leader George Camacho (Ind-Saipan), and Rep. Joe Palacios (R-Saipan).

Five members were absent during the session, and most of them were off island.

Basa said if the POB initiative passes the Legislature, it could mean 30 to 50 years of obligations.

“The young ones will be the one to pay for it,” he said.

Fund administrator Richard Villagomez said the Fund supports the pension obligation bond initiative, and hopes that it will be placed on the ballot. Villagomez attended the House session.

Larry Cabrera, chairman of the Commonwealth Retirees Association, testified in favor of a pension obligation bond initiative during the public comment period of the House session.

“The government has defaulted on its obligations to the Fund. .The pension obligation bond will be able to give the government the ability to pay that obligation. But passing the POB doesn’t necessarily mean we’re having $300 million tomorrow. It has to be prepared and sold to the market,” Cabrera told House members. He said the success of the process also depends on the underwriter hired.

Cabrera urged lawmakers to pass the initiative now “so we can get the ball rolling.” He said he remains “optimistic” about the initiative.

The CRA chair also reiterated that the government should not abolish the Fund’s defined benefit plan and instead should strengthen it.

All eyes on Senate

Senate President Paul Manglona (Ind-Rota) called for special Senate sessions on Monday and Wednesday. There’s no telling yet whether the POB initiative will be acted on.

So far, Sen. Jovita Taimanao (Ind-Rota) is the only one with a definitive “yes” vote should HLI 17-5 is taken up by the Senate either on Monday or Wednesday.

Senate Vice President Jude Hofschneider (R-Tinian) and Sen. Ralph Torres (R-Saipan) separately said they have yet to see the initiative that the House passed.

Deleon Guerrero introduced HLI 17-5 in April 2011. The House didn’t make any changes to the initiative.

Educational campaign

A similar pension obligation bond legislative initiative was rejected when it was placed on the ballot in November 2010, but its proponents, including Deleon Guerrero, said that that was because of the lack of public education.

Deleon Guerrero said the sooner the POB initiative is submitted to the Election Commission, the better for the educational campaign.

In the 2010 elections, 11,436 total registered voters participated in the voting process for HLI 17-1, HS1, the POB initiative.

Only 4,200 voted to ratify the POB initiative, while 5,611 voted against it. A total of 1,599 voters left their ballots blank with respect to the initiative.

Deleon Guerrero said there was insufficient time to fully educate voters at the time about the mechanics of the POB initiative and its benefits to the Fund’s defined benefit plan members.

“As such, a reintroduction of this initiative is proper and beneficial so as to provide our voters another opportunity to be more educated about pension obligation bonds and to participate in [the] process of sustaining the retirement fund program,” the new initiative says.

Deleon Guerrero hopes the CRA, as well as lawmakers who support the initiative, will do their part in educating the public about the POB initiative.

“I will also go out and help educate the public about it. There are still people who have concerns about it, or are still objecting to it but I haven’t heard anything substantive. I have been telling them that there are still a lot of factors to consider. If it’s determined for example that our ability to float bond is limited to $100 million, then that’s the only amount we can float. We have to find different ways to salvage the solvency of the Retirement Fund,” he said.

Deleon Guerrero also said this unfunded liability was committed by the administration and the Legislature-past and present-and the POB initiative is an opportunity to correct those wrongs.

Because of its mounting financial problems, the Fund filed for Chapter 11 bankruptcy, the first public pension agency on American soil to seek bankruptcy protection. But a federal judge said he will dismiss the Fund’s bankruptcy petition. Days later, Gov. Benigno R. Fitial placed the Fund under a state of emergency but that executive order is still being contested in the Legislature.