Taking a cue from the hard economic lessons of the last 30 years, when the CNMI economy went through a dizzying boom and bust, the CNMI government has created a reserve fund where it can set aside extra funds for when the need arises.
Gov. Ralph DLG Torres enacted last week a bill that would create a special reserve fund for the CNMI government. House Bill 20-100 House Substitute 1 is now Public Law 20-82.
Torres said in a statement that the reserve funds would be used primarily for education, medical and health care, and other immediate needs of the Commonwealth.
“The reserve fund would be used to enhance education and workforce development, economic development and diversification, infrastructure improvements, medical and healthcare facilities, to provide essential services in the event of a revenue shortfall, and on potential tax relief measures for residents and businesses of the Commonwealth,” said Torres.
When he introduced the bill, House Speaker Rafael S. Demapan (R-Saipan) said it is the intention of the Legislature to save a significant portion of the CNMI’s increasing revenue in a special reserve fund.
“The Legislature finds that it is desirable to establish a special reserve fund as a means of conserving a portion of the Commonwealth’s revenue derived from the increased revenue proceeds and other funding source as the Legislature may designate in order to meet future needs,” as stated in P.L. 20-82. “The principal of the fund shall remain inviolate and no portion of the principal may be expended or encumbered for a period of 10 years.”
The Finance secretary would establish the special casino gross revenue tax account, which will be different from the general funds. It will also be the Finance secretary’s duty to keep a record of the CGRT funds.
The first $220,000 of the funds deposited to the CGRT account, after each calendar year, shall be earmarked by the Legislature to cover the payment of 25 percent of settlement class members and CNMI Fund members receiving annuity.
The Finance secretary will be tasked to invest and manage the assets of the reserve fund.
The secretary would also engage one or more fund custodians that would assume the responsibilities for the physical possession of fund assets or evidence of assets.
“The custodian shall submit such reports, accountings, and other information in such forms and at such as requested by the secretary,” as stated in P.L. 20-82.