‘Lower pension contribution rate further’

Gov. Benigno R. Fitial has asked the House of Representatives to bring the government retirement contribution rate further down to 11 percent, from the 18 percent enacted recently.

The rate adjustment is one of the financial measures recommended by the administration amid the Legislature’s continued failure to pass an updated appropriation for the current fiscal year.

Fitial, with reservation, signed into law the 18-percent pension contribution rate in January 2008. He now wants the rate adjusted, as he had originally proposed, to 11 percent of the total government payroll, retroactively to the beginning of fiscal year 2008.

According to the Fund’s actuary, CNMI government agencies must pay 36.7 percent of the payroll to sustain the pension program.

The governor is counting on the passage of a public borrowing proposal to restore the pension program’s fiscal solvency.

“Upon passage of the legislative initiative to secure a pension obligation bond, the administration will move swiftly to retire the Fund’s unfunded liability,” Fitial told Speaker Arnold I. Palacios.

Two such initiatives are pending before the House. One of the initiatives, sponsored by Rep. Heinz Hofschneider, proposes to secure a $200-million pension obligation bond, to prohibit additional benefits to members, and to gradually reduce the size of government. The other initiative, sponsored by Rep. Joseph Deleon Guerrero, will allow the CNMI government to borrow an amount equal to what it owes the Retirement Fund by the time the initiative is enacted.

To date, the government’s debt to the Fund has reached approximately $193 million.

The governor also requested the House to endorse other budget provisions. Specifically, he asked the House to restore the so-called “austerity Friday holidays”—or government shutdown every non-payday Friday—and to suspend legal holiday pay.

The House was also asked to grant 100-percent reprogramming authority to the Executive Branch, and to allow the Governor’s Office to transfer or reprogram any available funds outside of the General Fund for the operation of the central government.

Furthermore, Fitial urged the House to suspend certain earmarked funds to keep available revenue resources at the level set under the FY2007 budget (which the government is following in the absence of a new budget).

“As you well know, our Commonwealth is currently facing great financial challenges and these financial challenges cannot be properly addressed by the Executive Branch alone. The Executive Branch needs the support and assistance of the Legislature,” the governor said.