Acting Finance secretary David Atalig is committed to making sure the government meets its obligation to the Settlement Fund this week and its bond payments in May.
That’s where the planned line of credit from the Marinas Public Lands Trust would come in, to help ease the burden on the general fund as the CNMI recovers from the destruction of Super Typhoon Yutu.
Toward this end, a bill has been pre-filed in the CNMI House of Representives that would create a credit facility in order to address the bond obligations and retirement settlement fund payments.
House Bill 21-44, which House Speaker Blas Jonathan T. Attao (R-Saipan) would introduce in this week’s session, is pursuant to Article XI Section 6(d) of the CNMI Constitution.
Atalig, during a public hearing Thursday at the Senate on Capital Hill, told members of the Senate Executive Appointments and Government Investigations Committee that he has already asked MPLT through the Governor’s Office to negotiate that line of credit.
He says the line of credit is not necessarily a loan but a drawdown of some funds to help pay for obligations, to assist in the payment of the Settlement Fund and general bond obligations.
“At the moment, I am strapped for revenue cash collections. Until the enforcement and revenue collection task force show improvements, I need an infusion of cash to make good on our bond obligation payment of $4.2 million due on May 1 and [$2.9 million] for the Settlement Fund due by April 30,” said Atalig.
Senate President Victor B. Hocog (R-Rota), who joined the EAGI Committee in the meeting, said they are ready to act on H.B. 21-44 as soon as soon as it passes the House. “We’re heading to challenging times. This legislation would [somehow handle] the shortfall. We will look into that. We’re experiencing shortage to meet our bond payments and to the Settlement Fund, and these are critical,” he said.
Atalig said a delay in the reimbursements from the Federal Emergency Management Agency is one of the challenges that they are facing in coming up with the needed funds to fulfill the government’s obligations. The CNMI government’s expenses to recover from the onslaught of Super Typhoon Yutu will be reimbursed by FEMA.
“My plan is to repay this line of credit, not necessarily to take a loan but to have some flexibility of having some funds—a short bridge loan but not to obligate the CNMI government.”
“As acting secretary of Finance, we need this infusion of cash to pay our obligations but not at the expense of the general operation funds or operational costs,” he added.
He said it would be unacceptable for the CNMI not to make its bond payments and pay its obligation to the Settlement Fund “because there’s a negative effect to not paying our bonds; it will give us a bad bond or credit rating. And not paying the Settlement Fund will put us in a default where we are going to be obligated for $750 million and would put up in a bankruptcy situation. I would not allow that to happen to the CNMI.
“I’m prepared to make those payments; I have a due date, but our government is strapped for cash. Yes, we are in a serious cash-flow situation due to reimbursements from FEMA not coming to us as expected or in a timely manner.”
Atalig added: “We’re in a situation of not having the full funds needed to pay these obligations. As acting secretary, I have the authority to use other funds but I just choose not to touch other accounts for the purpose of the bonds or Settlement Fund. It goes back to the practice of not using other funds and knowing that these monies are set aside for a particular reason, which should stay in those accounts.”