A last-minute addition yesterday to a “compromise” budget bill from a joint legislative panel gave Gov. Eloy S. Inos the authority to reprogram up to 50 percent of the budget to remedy a “zeroed out” account to pay La Fiesta’s $200,000 land lease for fiscal year 2014, among other things.
Reprogramming up to 50 percent of the annual budget is an increase from the 25 percent already provided for by the Planning and Budgeting Act.
The House and Senate will hold back-to-back sessions at 1:30pm Wednesday to tackle the $123.4-million spending plan.
The bill could reach the governor’s desk by late Wednesday afternoon if the Legislature passes it, some two weeks before the Oct. 1 start of fiscal year 2014.
“The 50 percent reprogramming authority was the major addition we made; the rest were administrative and technical in nature,” House Ways and Means Committee chair Tony Sablan (Ind-Saipan) told Saipan Tribune yesterday.
The House budget version went with the Budget Act’s up-to-25 percent budget reprogramming. But the Senate version gave the governor authority to reprogram up to 100 percent of the budget.
However, during conference committee meetings, this reprogramming authority was not added to the list of “differences” between the House and Senate budget versions that needed to be hashed out.
Moreover, the House set aside $200,000 for La Fiesta’s land lease payment, which was also in the governor’s budget submission. The Senate scrapped that $200,000 appropriation.
Just like the reprogramming authority, the La Fiesta lease payment also wasn’t originally tackled by the conference committee.
Sablan said from the start, he tried to bring the conferees’ attention to the lack of money for the La Fiesta lease payment.
“It’s an obligation by the government and we should be prepared to face the consequences,” Sablan said in an interview late yesterday morning.
The consequence is risking default on the land lease payment.
By late yesterday afternoon, the conference committee reached another compromise—to give the governor power to reprogram up to 50 percent of the budget to be able to deal with the La Fiesta land lease payment along with other possible shortfalls throughout fiscal year 2014.
Senate Fiscal Affairs Committee chair Jovita Taimanao (Ind-Rota) separately said she’s glad that the committee continued to reach a compromise on issues important to both sides.
“In the end, both sides were satisfied as a result of compromise,” Taimanao said last night.
The Planning and Budgeting Act gives the governor power to reprogram up to 25 percent of the budget of all operations and activities of the Executive Branch, including all of the critical services that fall under his jurisdiction.
If the governor declares a state of emergency, he can reprogram more than 25 percent.
Inos administration plan
The Inos administration seeks investors interested in revitalizing the former La Fiesta mall.
Under the government’s plan, any investor taking on the project would also take over the annual land lease payment of $200,000.
But because there is no investor yet, the government still has to budget for the lease payment.
Taimanao said yesterday morning that the Senate only followed the fiscal year 2013 budget that also zeroed out the land lease payment for La Fiesta. At the time, the administration expected an investor to revitalize the former mall but negotiations fell through.
Press secretary Angel Demapan, when asked for comment, said there are efforts underway to seek investors for the revitalization of La Fiesta.
“If this pulls through in 2014, then the government would not be responsible for the lease payment. However, until such time that development begins in the area, the government will have to find a way to fund this lease,” said Demapan, prior to the last-minute compromise reached by the conferees.
Another plan to entice investors to revitalize La Fiesta is House minority leader George Camacho’s (R-Saipan) House Bill 18-114, providing a temporary 50-percent tax cut for businesses that will use a space at La Fiesta, but the Saipan Chamber of Commerce opposes the bill.
Chamber president Alex Sablan said their organization believes that a “piecemeal tax incentive approach” to La Fiesta’s use “will not bring the desired result” offered by the bill.
Sablan said as a rule, the Chamber supports tax incentive programs as a way to entice both foreign and local investment, stimulate an economy, and create jobs and tax revenue. But not in the case of HB 18-114, which provides a piecemeal tax incentive approach.
“The Chamber believes a tax incentive aimed at a larger developer could actually entice investment where there would be a greater probability of return through job creation, tax revenue, and the actual reopening of a major tourist attraction,” Sablan told Camacho in a letter.
Sablan said there are already tax incentive programs in the CNMI, including the Commonwealth Development Authority’s Qualifying Certificate Program “that exist to do exactly that.”
“If the Legislature is intent upon addressing the redevelopment and re-opening of the La Fiesta Mall, the Chamber would recommend rewriting HB 18-114 to focus only on tax incentives for a developer specifically for use of the entire La Fiesta Mall,” Sablan added.
The CNMI government has been spending $200,000 every year to pay for the La Fiesta land lease yet it has not been earning any dime from it since at least 2004 when the mall closed.
Recently, the Inos administration—including the governor and lieutenant governor—cleaned up the surroundings of La Fiesta Mall as part of cleanup and beautification efforts.