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Tenorio backs CPA pay cut, rules out bailout
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Posted on Feb 11 1999
Gov. Pedro P. Tenorio yesterday said the Commonwealth Ports Authority would have to solve its own financial troubles because the CNMI government and the Legislature will not be able to bail out the cash-strapped agency.
According to Tenorio, he will support the planned 15 reduction in salaries of CPA employees for one or two years if it is the only way the ports authority can survive and avoid the massive retrenchment in the agency.
The CNMI government has been having difficulty raising $5 million to $6 million to pay for salaries of more than 4,000 employees under government payroll.
Since the Asian financial crisis began 17 months ago, the island’s tourism economy has been battered by the regional crisis pulling revenues down and forcing many establishments out of business.
Board chairman Roman A. Palacios said the ports authority is looking at reducing the working hours of employees from 40 to 32 hours per week and still run the agency efficiently.
A huge chunk of the CPA’s $11 million budget goes to salaries and wages of its employees when its workforce shot up to more than 200 employees from a low of 167 in 1994.
Since late 1997, the ports authority has been carrying out various cost-cutting measures amid shrinking revenue due to the downturn of the island’s tourism economy.
Due to mounting pressure from airlines and government agencies, the ports authority is now studying the possibility of deferring for at least one year the planned airport rate increase.
Should it finally decide to suspend the rate hike, management would have to immediately look for alternatives to meet the 125 percent debt service requirement.
The raising of the airport fees was one of the conditions imposed by the rating agencies– Fitch IBCA and Standard & Poor’s — before it can provide a rating to the airport bonds. Without any rating before March 1999, the interest rate will increase from 6.25 percent to 6.70 percent.
A study conducted by airport consultant Ricondo & Associates revealed that the aviation division of the ports authority will only experience a 4.5 percent growth this year due to Asia’s economic woes.
