In case you did not hear, the CNMI is anticipating a $40-million revenue shortfall due to the drop in Chinese tourists brought on by the threat of the 2019 novel coronavirus.
There are different scenarios being proposed, and one of them is cutting the 25% benefit payments to retirees. With a 25% reduction in the budget for fiscal year 2020, an across-the-board cut is expected, which is likely to result in cuts in government employees’ work hours and salaries.
For our part in the Legislature, revenue generating bills suggested so far include raising taxes, increasing the number of poker parlors in our community, online gaming, and cutting your tax rebate.
While we expect everyone in the Commonwealth to “suffer together” as a community, I can’t help but notice that it is those with the smallest salaries that will suffer the most. I am talking about our families who live paycheck to paycheck, barely getting by as it is right now. Now imagine a 20% cut in their salaries.
How many of us are going to have to take on part-time jobs? I already have, and so has my wife. It will become the normal trend in the CNMI. Working two jobs to make a living comes with some sacrifice and will result in less time spent with family, unfortunately. But what options do we have when we need to ensure our bills get paid and that we are able to keep food on the table and a roof over our heads?
What bothers me the most about all these scenarios is what is not even being considered, and that is collecting what IPI owes the Commonwealth government.
Let’s not kid ourselves. Imperial Pacific International (IPI) has been given carte blanche—complete freedom—to do as they please, without repercussions. It is IPI that continues to call the shots. Here is a prime example:
After a lengthy dispute, IPI finally settled with the CNMI government on what they owe in business gross revenue taxes. Instead of paying the $30 million they reportedly owe, they negotiated their way to a sweetheart deal and will only pay $18 million—an astonishing 40% savings for IPI! IPI saves $12 million, and the CNMI loses out on $12 million.
In the meantime, what else do they owe the CNMI government? Well, for starters, how about the corporate income tax they still owe us? According to a 2018 Deloitte and Touche IPI Audit Report, they owe the CNMI government $33 million, just in corporate income taxes. Why aren’t we collecting from them?
They also owe the CNMI about $37 million in their contractually obligated community benefit fund. Of course, there are a few political hires who will tell you that it is IPI’s money and that the CNMI can’t tell them what to do with their money. What hogwash. IPI is obligated to spend $20 million annually on education, infrastructure, healthcare, and retirement, all of which serve a public purpose and a benefit to the public. Why even have a community benefit fund when it clearly is not benefiting our community? We have asked for a report on this fund and have continuously been given the runaround. Why is it so difficult to get a report on this community benefit fund? Asking for our people.
What about the developer’s infrastructure tax that IPI still has not paid? They owe the CNMI government an estimated $16 million to $18 million. Why do businesses have to pay their developer’s infrastructure tax up front, but IPI does not? Asking for businesses.
What is so bizarre is that if any other company or individual were to not pay the taxes and fees they owe the CNMI government, it would result in penalties and fines. What penalties and fines have been assessed to IPI thus far?
IPI came to the CNMI and promised a $7 billion investment, with dreams of grandeur. How has that worked out for us so far? While the staunch supporters and beneficiaries of IPI continue to rally and champion their commitment to the community, the reality is IPI only paid a measly $41,000 in BGRT for the entire year of 2019.
To the retirees, you know what is really sad? The fact that your 25% cut is being considered. Why? Because the $15 million annual license fee IPI pays was originally being used to pay the 25% benefit payments that weren’t required in the Settlement Agreement, so that you would receive 100% of your pension. Unfortunately, H.B. 20-99, which became CNMI P.L. 20-10, changed all that and took the $15 million away from you retirees and gave it to the three senatorial districts to spend as they please. I voted no to this bill for all the obvious reasons. Had this disastrous P.L. 20-10 never passed, retirees would be protected right now and would not be affected.
A dear friend of mine who is an accountant told me, “Numbers don’t lie. People do.” He is so right. And here are the numbers:
• FY 2017 – $8 million deficit
• FY 2018 – $26 million deficit
• FY 2019 – $88 million deficit
Tonight, when you meet with your family members to discuss the hardships you will be facing this year, ask your family members this question: “Why isn’t IPI paying the CNMI government the tens of millions it owes?” And then ask the same question to all of your elected and appointed officials.
May God bless you and your family and our beloved Commonwealth.
Rep. Ed Propst