Reserve fund sought for the CNMI’s ‘future needs’

As the Commonwealth economy booms, House Speaker Rafael S. Demapan (R-Saipan) wants to create a reserve fund to conserve portions of the Commonwealth’s revenue.

He proposes to establish the Commonwealth Reserve Fund, which would be separate from the general fund, for appropriation and expenditure only after 10 years or during emergencies.

The fund would comprise 5 percent of the annual tax revenue, or the business gross revenue tax. The casino tax is separate from this.

Effective on the fiscal year immediately after its passage, Demapan’s House Bill 20-100 would create the Commonwealth Reserve Fund Investment board, consisting of five gubernatorial appointees, with the consent of the Senate. Three would represent Saipan while Tinian and Rota would have one representative each. Members of this board will serve for six years and will invest and manage the fund and would report to the “people of the Commonwealth” annually.

At the most recent House Ways and Means Committee meeting, Rep. Joseph Deleon Guerrero (R-Saipan) raised a concern about reporting to the “people of the Commonwealth” annually.

He pointed out that since the governor would be able to tap into the funds and, if the appropriation authority comes from the Legislature, he believes both branches should receive the annual reports as well.

Rep. Donald Barcinas (R-Saipan) asked the committee how much BGRT was collected in fiscal year 2017. According to Ways and Means Committee chair Rep. Angel Demapan (R-Saipan), the collected BGRT was about $70 million, 5 percent of which amount to $3.5 million.

In addition, Deleon Guerrero wants the term “emergency situation” clarified, saying a declaration of a state of emergency is ambiguous. He argued that a state of emergency might be declared as an aftermath of a natural or man-made calamity, economic disturbances, or others.

After much discussion, Rep. Angel Demapan agreed with Deleon Guerrero, adding that comments from other government agencies must be sought first.

“The committee has opted to defer action pending comments from government agencies,” he said.

Comments from the Department of Finance, Commonwealth Healthcare Corp., Commonwealth Utilities Corp., Department of Public Works, Department of Commerce, Marianas Visitors Authority, Saipan Chamber of Commerce, and the Office of the Attorney General would be solicited first before the committee would further deliberate.