Rep. Joseph Deleon Guerrero (R-Saipan) supports the idea of creating a “rainy day fund” for the Commonwealth, but says the language of the bill that would supposedly create one is too restrictive.
Deleon Guerrero said Tuesday the intention of House Bill 20-100 is something he supports but its language “is not entirely clear.”
House Bill 20-100, offered by House Speaker Rafael Demapan (R-Saipan), would create a reserve fund for the Commonwealth in case an economic disaster occurs.
As outlined in the measure, 5 percent of taxes collected every year would be set aside in a reserve fund until fiscal year 2028. It says the collection will be used for economic development and diversification, infrastructure improvements, and medical healthcare facilities. The reserve fund would be handled by a Commonwealth Reserve Fund Investment Board.
Deleon Guerrero said that, upon reading the bill, it does not clarify how the board would utilize the funds for economic growth beyond 2028. A provision in the bill provided that the funds could be utilized prior to 2028 should the governor declare a state of emergency.
“How this funding is to be used for that intended purpose is not entirely clear,” said Deleon Guerrero.
As for using the funds for infrastructure improvements, Deleon Guerrero pointed out that infrastructure improvements are needed now.
“Infrastructure improvements [are] an ongoing need. If roads get damaged, water lines leak, or new homesteads open up, there would be a need for infrastructure costs. By saying that we could only use it for that purpose [in 2028], what do we do about our needs prior to then if we have needs five years from now?” asked Deleon Guerrero.
“The same applies for medical and health facilities,” he said, adding that the need for workforce training development is now.
He did stress that he does not question the intent of Demapan’s bill; setting aside money for future austerity measures is something he supports, he said.
“I am just saying [this bill] should not be limited to [economic growth, infrastructure improvements, medical and health facility improvements, and emergency declarations]. The bill should also include providing funding for the government to operate and provide essential services,” he said.
After more rounds of discussion, the committee decided to amend H.B. 20-100 to also allow the funds to be used for the continuation of government services in the event of an economic slump.
House Ways and Means Committee chair Rep. Angel A. Demapan (R-Saipan) said in an interview that the committee opted to defer the adoption of the bill until the comments of Department of Finance Secretary Larissa Larson are secured.
“…A lot of the members [of the committee] were concerned about the possible fiscal impact of reserving 5 percent of revenues annually [until 2028]. We would also ask our fiscal analyst team in the Legislature to conduct a cost-benefit analysis on this proposal,” said Angel Demapan.