Gov. Eloy S. Inos asked lawmakers yesterday to amend both the pension obligation bond law and the Commonwealth Development Authority Act before the CNMI could proceed with floating a bond worth “anywhere between $60 million and $80 million”—well below the maximum $300 million authorized by Public Law 18-12.
The governor and and Lt. Gov. Jude U. Hofschneider held a closed-door leadership meeting with members of the House of Representatives and Senate yesterday afternoon.
In an interview after the meeting, the governor said that since this is not going to be a tax-exempt bond, “it will carry a higher interest rate than we’re used to in the past” but would help the CNMI financially “up to five years.”
“We don’t want to have a volume that would put a lot of strain on cash flow,” Inos said, referring to the expected $60 million to $80 million bond float as opposed to a higher amount.
As a non-tax-exempt bond, the POB “needs to be backed by gross receipts revenue as opposed to the full faith and credit of the CNMI,” the governor added.
House Speaker Joseph Deleon Guerrero (Ind-Saipan) separately said that among the governor’s recommended changes to the POB law is to ensure portions of the bond proceeds will go toward addressing the terms of the Retirement Fund’s global settlement agreement.
Only about half of the 29 members of the 18th Legislature were in attendance, as at least eight members of the House Committee on Tourism were holding a meeting with the Marianas Visitors Authority in the House chamber, while others were off-island. Senate President Ralph Torres (R-Saipan) also led some senators in the meeting.
Administration-drafted bills to amend both the POB and CDA laws are expected in the next few days.
Public Law 18-12, which Inos signed on July 2, authorizes CDA to issue pension obligation bonds of up to $300 million on behalf of the CNMI to pay the government’s obligation to the NMI Retirement Fund.
The POB law was signed a few months before the federal court approved a Fund global settlement agreement.
Inos said the POB law needs to be amended “just to make sure it’s accurate and it reflects the full intent of the effort,” based on prior consultation with CDA’s bond underwriters and bond counsel.
“There’s an amendment that needs to be made to the CDA Act that would allow CDA to issue that particular type of bond,” the governor added, referring to a non-tax-exempt bond.
Besides the pension obligation bond, the leadership meeting also tackled the health insurance for government employees, revenue-generating measures, and addressing the Commonwealth Utilities Corp.’s needs.
The speaker said they offered recommendations to the governor on ways to commit funding to CUC, which remains under a state of emergency.
“One is to earmark more CIP [capital improvement project] funding to CUC and that would take care of stipulated orders, the requirements for it, and capital improvement projects for CUC,” he said.
The speaker said it would be up to the administration how much in CIP funding it will commit to CUC.
Government agencies owe CUC some $18 million in utility bills.
The governor, for his part, said the government is “heavily subsidizing CUC through a very high rate.”
Government rate is substantially higher than commercial and residential rates.
“We’re working on the basis that we pay our bills because we’re just another customer; the only thing is that the rate that we pay is higher than anybody else,” he said.
Inos added that the government will also continue to keep utility consumption costs low.