Voters will once again vote on a pension obligation bond measure some three months from now, following the Senate's passage yesterday of House Legislative Initiative 17-5 that, if ratified, could help the government pay a portion of its estimated $325 million debt to the cash-strapped NMI Retirement Fund.
SLI 17-5 passed the Senate by a vote of 8-0 with Sen. Ralph Torres (R-Saipan) as the only one absent. Torres has been off-island since last week.
Within hours, the Legislature transmitted the initiative to the Commonwealth Election Commission.
The Senate passed the measure on the last day of filing all legislative initiatives with the Election Commission, to be placed on the Nov. 6 ballot.
The pension obligation initiative is the third initiative that will be placed on the Nov. 6 ballot-the other two are the elected attorney general initiative, and one that changes the Northern Marianas College mission statement.
House minority leader Joseph Deleon Guerrero (R-Saipan), author of SLI 17-5, said he's glad that the initiative “passed the first hurdle” and more still needs to be done “to correct the mistakes of the past for the future.”
Deleon Guerrero was referring to the government's decision years back to suspend remitting employer contribution to the Retirement Fund, until the debt grew to some $325 million.
Most senators had reservations about floating a bond to help pay off the government's debt but in the end, they supported the initiative, saying it is one of the major options to prolong the Fund's lifespan beyond two years.
Sen. Juan Ayuyu (Ind-Rota) repeatedly said it's “very shameful” that the government will now have to ask the public to help pay its debt to the Retirement Fund when the government didn't consult the public when it suspended remittance to the pension agency.
“It's very shameful but the government needs to pay its obligation to help the retirees,” Ayuyu said.
Deleon Guerrero, in answering questions from senators during yesterday's session, said if voters ratify SLI 17-5, it will only authorize-not force-the CNMI to float a bond “specifically” to help pay the government's debt to the cash-strapped NMI Retirement Fund.
That debt is now some $325 million in unpaid employer contribution to the Fund plus interest.
Senate Vice President Jude Hofschneider (R-Tinian) said this proposed constitutional amendment is just an “alternative” to help the government's debt to the pension fund.
“Even if we don't have this, we still have to pay the obligation to the Retirement Fund. This is just one way to hopefully ease the burden on future retirees
Deleon Guerrero, in addressing senators, said even if voters ratify the initiative, the government still needs to look at how much it can borrow, its credit rating, its repayment ability, and the interest rate, among other things.
“We can't float the entire $300 million bond. But at least we can create a mechanism to float a bond. Hopefully, if the economy rebounds, we could see how much we can float and repay. It may not even be $100 million, if only to extend the lifespan of the Fund for a year or two,” he said.
The House minority leader said the government is liable if the Fund collapses, unless something is done.
He said some $64 million is paid annually by the Fund to pensioners.
Deleon Guerrero said the court could order the government to pay that amount every year for retirees' pension, and that will be some 60 percent of the government's annual budget.
He said $64 million to be appropriated to the Retirement Fund, as may be ordered by the court, will mean curtailing other essential public services such as health and public safety.
But he said if the pension obligation bond moves forward for an annual payment of $10 million, for example, that will still be better than $64 million a year.
“It takes more than one measure to address the problems,” he said, adding that he applauds the Senate for taking a pro-active approach in trying to help prevent the Fund from collapsing in two years.
Senate President Paul Manglona (Ind-Rota) asked Deleon Guerrero about his opinion on why the previous initiative on the same matter failed.
Deleon Guerrero said previously, there were so-called retirees and “experts” lobbying against the initiative's passage, and there was not much public education, along with the retirees association back then not taking a strong stand in support of the POB initiative.
He said this time around, the Retirement Fund, the Commonwealth Retirees Association, the Legislature, and the administration are united in pushing for the pension obligation initiative.
“They are all helping the constituents understand this [initiative],” he said.
HLI 17-5 seeks to add a new Section 10 to Article 10 of the NMI Constitution to authorize the Commonwealth to issue pension obligations bonds and for other purposes.
In the 2010 elections, a similar initiative was ratified by only 4,200 of voters who participated in the election, while 5,611 voted against it. Registered voters who cast their votes that time totaled 11,436.