MVA: Senate version of budget is unconstitutional

The Marianas Visitors Authority is once again being asked to sacrifice a portion of its fiscal year 2016 budget.

Tenorio

In fiscal year 2015, MVA lost $1.16 million of its budget after the 18th Legislature moved it to the Public School System. At that time, MVA wasn’t too happy about the budget cut.

This fiscal year, the Senate is thinking of touching MVA’s earmarked funds again but this time, MVA is out to defend its purse, this time with the help of the Hotel Association of the Northern Mariana Islands.

A subsection of House Bill 19-86, the Budget and Appropriations Authority Act of 2016, proposes to reallocate $530,000 that is earmarked for the MVA to fund the Division of Customs’ planned purchase of x-ray machines for the airports and seaports. Another subsection proposes to allocate $2 million of MVA money to the Commonwealth Healthcare Corp. for its utilities.

During a House of Representative session last Aug. 25, 2015, MVA officials expressed concern with these two subsections of HB 19-86.

“Per the projected entitlements from the hotel occupancy and container taxes, the proposed funding level for the MVA for fiscal year 2016 is $12.16 million. With the proposed reallocation of subsection D, 2 and 3, the Legislature is proposing an operational budget of $10.07 million for the MVA for fiscal year 2016,” MVA managing director Perry Tenorio said.

“As our approved funding for fiscal year 2015 is $12.72 million, the current version of the fiscal year 2016 budget in essence proposes to reduce MVA’s operating budget by 16 percent,” he said.

He noted that from fiscal years 2011 through 2015, the CNMI travel industry has seen arrivals grow just under 44 percent. Fiscal year 2015 alone is expected to generate an estimated $1.13 billion in economic activity and $70 million in taxes to the government.

Intent of Public Law 18-1
Tenorio pointed out that Public Law 18-1 mandates that MVA would receive 20 percent of taxes under the container tax and 80 percent of taxes from the hotel occupancy tax.

“Its intent was to enhance recreational and tourism opportunities for the economic welfare of the Commonwealth. This was supported by our offshore travel industry partners as well as the members of the Hotel Association of the Northern Marianas Islands,” Tenorio said.

“They did so knowing that it would raise the cost of travel packages to the CNMI but understood the need to invest into our tourism product and increase promotions in our key markets in order to drive this growth,” he added.

Tenorio said the Senate’s version of the budget for fiscal 2016 is contrary to the intent of Public Law 18-1 “and the implied promise made to our partners in China, Korea, Japan, Russia, Taiwan, and here in the CNMI, that the proceeds of Public Law 18-1 will be used to ensure the continued growth of CNMI’s travel industry.”

MVA requested that the subsections be removed.

In a Sept. 4, 2015, email to Rep. Antonio Sablan (Ind-Saipan) and Sen. Jude Hofschneider (R-Tinian), Tenorio reminded the two lawmakers of the House’s decision on Aug. 25 to reject the Senate version of the budget bill, citing the illegality of overriding MVA’s earmark of funds.

“MVA would like to reiterate this concern for its record…MVA believes that the Senate’s proposal violates the NMI Constitution,” Tenorio said.

“[T]he removal or disregard of earmarking is not a matter properly to be included in an appropriation bill. …If this bill disregards the earmark, it is violating 4 CMC § 1803. If it attempts to remove the earmark, it is amending the Code. Amendment of the Code is not a ‘subject of appropriation’ and cannot be accomplished through an appropriations bill,” Tenorio noted in his email.

“Additionally, MVA is also concerned that the use of a ‘notwithstanding clause’ to ignore provisions of the Code threatens other provisions of the Planning and Budgeting Act. If the Legislature had the authority to ignore portions of the Commonwealth Code in an appropriations bill, then virtually any law passed to control the budget process would be meaningless,” he later added.

HANMI backs MVA
HANMI has also come to the defense of MVA’s budget, saying it is not surprised at this latest attempt to touch the earmarked funds.

“We are always concerned that we might forget the reasoning for the creation of this fund. Three years ago, tourism, our only real economy, was is dire straits. Our ability to promote our CNMI was limited to an underfunded MVA,” HANMI president Gloria Cavanagh said. “Although MVA was budgeted, these monies were slow to trickle in. At first, the Legislature tried collecting at the airport. When that failed they tried to collect at the hotel level by implementing the environmental tax. This also had proven impossible to enforce. Finally it was HANMI that pushed the increase of the hotel occupancy tax from 10 percent to 15 percent,” she added.

“This obviously worked. Already, more than $1.6 million has been taken for PSS. Then about $3-plus million was taken by not funding the operations of MVA except for one dollar. We have to work harder in promoting the CNMI especially after the fiber optic problem in July and the destruction of the typhoon this August. Now the funds are again in danger of being transferred. I realize that the budget process cannot transfer earmarked funds but it will just take an amendment to PL 18-1 for yet another transfer to happen. I am not sure, though, how the $1.6 million was done without amendment to the law,” Cavanagh said.