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Thursday, April 17, 2014

House OKs mandatory hookup to CUC, pension bond bills
8 bills passed include new $25 fee for scuba divers, tax amnesty

Requiring hotels and other commercial businesses to hook up to the Commonwealth Utilities Corp. power grid moved forward on Wednesday with the House of Representatives’ passage of House Bill 18-41, along with seven other bills that included one that would pave the way for the government to float $120 million or less in pension obligation bond using business gross receipts as pledge.

Other bills passed included a new $25 surcharge fee per scuba dive customer and a new tax amnesty period ending 90 days after the measure is signed into law.

House members debated at length or until past 5pm Wednesday Rep. Tony Sablan’s (Ind-Saipan) HB 18-41 on the mandatory hookup to CUC.

Despite strong opposition of some members, Sablan’s floor amendment was adopted, so that CUC “may determine timing of connection based on availability of supply, connection costs, net metering considerations and other matters necessary to the implementation of this provision.”

The amended bill passed by a vote of 15-4 with one absence. HB 18-41, House Draft 1 now goes to the Senate.

The four “no” votes were from vice speaker Frank Dela Cruz (Ind-Saipan), Reps. George Camacho (R-Saipan), Edmund Villagomez (Cov-Saipan), and Ralph Yumul (Ind-Saipan).

Dela Cruz warned that CUC may only be claiming a reduction in power costs for everyone once major hotels and other big businesses connect to CUC, but won’t do any such cost reduction later on.

“To give CUC authority and expect it to reduce rates, to me, that’s wishful thinking,” Dela Cruz said during discussions.

Yumul, for his part, said that if CUC is serious in bringing back commercial businesses to its grid, it should approach these businesses rather than have the Legislature do something about it.

But Sablan said there’s nothing in the Constitution that prohibits lawmakers from finding solutions to reduce the high costs of power.

Yumul said he’s not putting a roadblock, but said if the Legislature is really keen on helping to reduce power costs, it should appropriate money to pay the government’s multimillion debt to CUC so that the corporation can finance its operations without having to resort to rate increases every now and then.

Hotels and other businesses earlier raised concerns about the bill, saying it would cost them much more to hook up to CUC rather than use their own power.

But proponents of the bill said these businesses should share the burden and make utility costs lower for everyone by adding to the CUC customer base.

Bond bill

The House also debated—and later passed by a vote of 16-3—Rep. Mario Taitano’s (Ind-Saipan) HB 18-171, amending the pension obligation bond law or Public Law 18-12 to allow the use of gross receipt taxes as pledge to the debt service, among other things.

The new target of $120 million is still within the “up to $300 million limit” allowed by the POB law, although the Inos administration earlier said it’s only looking at $60 million to $80 million.

Besides Yumul, Reps. Janet Maratita (Ind-Saipan) and Ray Tebuteb (Ind-Saipan) also voted “no” to the bond bill.

During discussion, Yumul offered a floor amendment that would have required a strong fiscal plan, final legislative approval and devoting all bond proceeds to the retirement settlement fund. But Yumul’s floor amendment was defeated by a vote of 11-8.

Yumul said it’s “unfortunate” that his floor amendment was shot down at a time when the result of a $120 million bond float has yet to be realized.

“We haven’t grasped the result, five years from now or when we have to pay the bond back. This body has not identified any funds that would service this one,” Yumul told Saipan Tribune, adding that the business gross receipts tax is only a pledge or “collateral” and not a means for repayment.

“Like I have said, the government spent $3 million over what was budgeted. What does that say to investors? We can’t even have a balanced budget and can’t stick to the [fiscal] plan, that’s why my amendment is to have a strong fiscal plan [before floating a bond]… We don’t have the foresight, we don’t see beyond this election year. It’s unfortunate that our children are going to end up paying for it,” Yumul added.

Tax amnesty, $25 scuba diver fee

Rep. Tony Sablan’s tax amnesty measure or HB 18-166, HD1 passed by a vote of 18-2; the “no” votes came from Yumul and Villagomez.

The revenue-generating bill, now on its way to the Senate, provides for a tax amnesty expiring 90 days after it becomes law. Under a tax amnesty program, taxpayers may request for the waiver of penalty and interest imposed on late-filed returns, under-reported income, and delinquent tax liabilities.

By a vote of 19-0, the House also passed Wednesday Rep. Roman Benavente’s (Ind-Saipan) HB 18-72, imposing an additional $25 surcharge per customer availing of scuba dive services.

The bill seeks to generate funds to buy, install, operate and maintain decompression chambers for government health centers on Saipan, Tinian, and Rota.

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