NMC gets, then loses proposed budget

Northern Marianas College was an inch away from getting a much needed $350,000 budget allocation—the amount it says it desperately needs to survive up to December this year—when two minority congressmen raised concerns on its legality during yesterday’s session.

House Bill 14-187, an appropriation bill that was revised to include a $350,000 allocation for NMC from the Tobacco Control Fund, was up for passage yesterday when Saipan Rep. Arnold Palacios expressed his concern about the “substantial funding” that the Legislature is extending NMC.

“I have great concern in funding NMC. I’m not opposing to funding the college per se, but I have a problem with the substantial funding we’ve been giving to NMC,” he said.

He noted that the Legislature had just authorized the governor to reprogram $300,000 from the Tobacco Control Fund for NMC last June.

Further, Palacios questioned whether such use of funds for NMC is actually consistent with the intent of Public Law 13-38, which, he said, prescribes that the Tobacco Control Fund can only used for health promotion and education awareness.

“Is the use of this fund for NMC/La Fiesta consistent with the law?” asked Palacios.

He said that House Resolution 14-20 had in fact specifically authorized the reprogramming of the Tobacco Control Fund for the hospital.

Rep. Justo Quitugua, who introduced H.B. 14-187, said it is true that some $900,000 was reprogrammed for the hospital, but he stressed that this would not be affected by the NMC allocation.

Quitugua said that, at this time, there is enough funding available to give NMC money from the Tobacco Control Fund.

He said the Department of Finance has certified that some $800,000 in Tobacco Control Funds is available as of Aug. 11. “They collected more,” he said.

However, the minority argued that any available fund or excess collection could not be appropriated for something else.

House Speaker Benigno R. Fitial also agreed that such funding can’t be reprogrammed simply because it is not within the Legislature’s jurisdiction.

When the lawmakers inquired with legal counsel Joe Bermudes, the attorney agreed that tapping the money for NMC “is a problem.”

Bermudes, however, has put his signature on a draft standing committee report on the bill.

Former House Speaker Heinz Hofschneider, meantime, took the opportunity to point out that NMC has, in fact, “failed miserably” to justify its La Fiesta project during the previous Legislature.

“When the idea was presented to the Legislature, it came with several loopholes. We asked them repeatedly to come back and show us their market analysis, etc…. We asked, ‘Is that money [$10 million for La Fiesta] a loan on behalf of the government?’ The Constitution is very clear when it comes to borrowing—that it must get the concurrence of the Legislature. NMC has never acquired the concurrence of the Legislature,” he said.

He said the past Legislature was 100 percent supportive of NMC’s plans to enhance its revenues, but it was opposed to the fact that it was acquiring an expensive property, La Fiesta, without money.

“Normally, if you don’t pay the full amount, you lease it, but this is not a lease, it’s an acquisition,” he said.

NMC bought the La Fiesta complex in Aug. 2003 for $7.5 million, using a $3.5 million federal grant from the Office of the Governor as deposit.

The deal resulted in NMC incurring a $4 million debt, payable in 20 years at $200,000 annually beginning this year. Under the agreement, NMC is required to pay the first $200,000 installment on or before Oct. 31 this year.

NMC’s $350,000 budget request would cover the $200,000 obligation and $150,000 operations budget up to December.

Last year, the college petitioned the Legislature to help find some $10 million to renovate La Fiesta, a shopping mall, and convert it to a campus.

“Remember that by doing that [converting the mall], you’re injuring, killing another industry—tourism. Now, who would commit $10 million in 19 years for La Fiesta?” Hofschneider asked.

He said that NMC has created its own crisis when it went ahead with the project. “Now, they’re asking us for bailout; otherwise, they’d go on crisis. The crisis has been created. It’s not the obligation of the taxpayers to shoulder [that],” he said.

Hofschneider added that the CNMI does not seem to have learned its lesson in the $10-million Mitsubishi deal that had landed former Gov. Froilan Tenorio in court.

He said the $3.5 million deposit on the mall purchase could have done tremendous improvements at NMC’s present campus in As Terlaje.

“Did we really need to acquire La Fiesta? Is it the taxpayers’ responsibility to get La Fiesta going? If we go ahead with it, we’ve legitimized an illegitimate action,” he said.

Fitial, who met with NMC officials Wednesday, said there may be an alternative to funding NMC’s La Fiesta: He said the governor can use capital improvement project funds to fund the mall’s conversion.

“So, if the governor is really pushing for this, he has the authority to declare it as CIP,” he said.

“That’s the only way to skirt that,” said Hofschneider, while noting that the federal government would not approve of a project that cannot be funded.

Hofschneider also said the governor could request the Legislature for additional funding to address the issue.

“But it’s unlikely for the governor to be asking for additional budget because we never had one. [The previous Legislature] didn’t approve one,” he said.

Following the opposition from the minority bloc, Quitugua moved to amend the bill to delete all references to NMC.

The bill originally aimed to appropriate $15,000 for the Joeten-Kiyu Library and $80,000 for the Public School System.