Faced with a drastic drop in revenue due to the COVID-19 pandemic, the Torres administration has identified its Settlement Agreement obligations on the CNMI’s pension program as its largest and “most concerning” obligation and has sought the help of Delegate Gregorio Kilili C. Sablan (Ind-MP) in finding a congressional solution.
The Settlement Fund that was established as a result of this agreement provides for mandatory minimum payments to the fund to ensure continued benefits for the CNMI government’s retirees. This year, the $44 million obligation is the largest single item of the Commonwealth’s budget, the administration said in a statement.
Torres’ appeal for Sablan’s help is in addition to his numerous requests for federal assistance to stop the spread of COVID-19 in the Marianas and is outlined in a letter of recommendations of measures that require congressional action.
In his letter to Sablan, Torres said that efforts have been made to safeguard the Settlement Agreement payment while allowing flexibility within the CNMI’s finances for this trying period.
“Through the constitutionally-authorized Pension Obligation Bond vehicle, the shifting of this judgment obligation to a long-term debt service obligation would provide greater levels of resiliency to manage cyclical downturns in the economy or unexpected shocks to our community in the form of natural disasters or, as we see now, global pandemics.
“The CNMI however, cannot at this time, offer the financial markets the security necessary to obtain affordable financing options. This is due to the structural deficiencies of our economy that are inherent in a location the size and nature of ours, and the persistent risks of external threats such as typhoons, tourism volatility, and negative ramifications of federal government actions and policy.
“In meeting these obligations, Congress can support the alleviation of this large obligation while allowing the CNMI government the opportunity to undertake additional structural reforms. Congressional action should also seek to allow for a federal guarantee to backstop our efforts to obtain financing to support our retirees. A federal guarantee of CNMI pension obligation bonds may give the market greater confidence in lending the necessary resources to the CNMI government so we may prioritize limited funding to supporting other critical public services.”
100% federal match for Medicaid funds
“Increasing Medicaid funds is a significant lifeline to the majority of our population and enhances the critical access to health care services in response to this health crisis. For the CNMI, however, this is both a health crisis and a financial crisis. Increasing the amount available for CNMI Medicaid beneficiaries creates a larger base for which limited local resources are required to match. Even at a reduced local share, increasing the total amount available, while the necessary measure to take, continues to impact the CNMI government’s finances, which should equally be of concern to Congress.
“I ask that in addition to increased Medicaid funding to the territories, the territories receive these funds at 0% local match for a duration of time so that the population continues to receive the critical health care services they need while recognizing that the economic collapse we currently experience does not impede that access.”
100% federal match for FEMA projects
“Eliminating the local share for [Federal Emergency Management Agency] programs provided in response to Super Typhoon Yutu and Typhoon Mangkhut are necessary to reduce the financial burden on the Commonwealth government, while allowing for economic activity to continue, employment to grow in the related sectors, and for local funds to be appropriated to critical functions of government.”
Increase Capital Improvement Program and Technical Assistance funds to OIA
“Allowing for additional funds to be available in the Department of [the] Interior, Office of Insular Affairs’ budget for the territories under the Technical Assistance Program and to the CNMI under the CIP program, is a necessary request to gain critical access to finances that would enable the CNMI to navigate the evolving circumstances posed by the COVID-19 outbreak. Further, I reiterate my previous request to increase the CIP appropriation to adjust for inflation.
“During this time of financial hardship, I request that you push for a similar allowance given to the American Samoan government to use the CIP allotment to cover some operational expenses of the CNMI government. We wish to obtain the freedom to work with OIA in utilizing these funds to offset recurring obligations of the Commonwealth government.”
Forgive federal student loans for taxpayers in the CNMI
“What is at the heart of our financial difficulties is a significantly diminished consumer demand due to the collapse of our tourism industry. To increase overall demand, removing the encumbrances on our population’s disposable income is of absolute necessity. Congress should provide an avenue for complete student loan forgiveness for all residents of the CNMI and U.S. territories who have obtained federal financing for education under 20 U.S.C. 1087(a) et seq.”
Provide 100% federal cover-over for the Earned Income Tax Credit
“The CNMI needs more external resources to reach the hands of our population in order to mitigate the effects of lost income and wages from the collapse of our tourism industry. Congress should quickly allow for a 100% federal cover-over of Earned Income Tax Credit payments made in the upcoming tax filings so that residents can offset the damage caused to individual finances during this crisis. Anything less than 100% would represent a severe burden to an already over-burdened fiscal scenario and threatens the viability of our government’s financial stability and should be avoided.”
Ensure refundable and nonrefundable credits created in response provide a cover-over of funds to the CNMI Treasury
“As the CNMI’s representative to Congress, I am asking for your diligence in ensuring that any credit (refundable or nonrefundable) created in response to the COVID-19 outbreak do not negatively impact the CNMI’s finances. As you are aware, as a mirror-code jurisdiction, the CNMI adopts the provisions created within the Internal Revenue Code. If a credit is created to mitigate the economic impacts of this crisis, that credit must contain provisions to provide for a federal cover-over of funds from the U.S. Treasury to the CNMI Treasury. A lack of vigilance in this matter could greatly worsen the CNMI’s financial position and impact our ability to provide critical services to our people.”
Amend U.S. Public Law 115-218
“We must be cognizant of the extent to which this crisis has crippled the CNMI economy. Action should be taken in this opportunity to recognize the economic impact the CW-1 program has on our future economic growth opportunities and amend provisions of the Northern Mariana Islands U.S. Workforce Act that will further impede our economic recovery.
“I ask that you include a complete elimination of the requirement for CW-1 employees to return to their country of origin for a 30-day period prior to submitting a renewal petition for the third renewal period. This loss of a quarter of our workforce during this period will result in a tremendous reduction in productivity and revenue for employers and will most certainly lead to even greater business closures in the months ahead.
“Further, we must recognize the need to eliminate the prohibition on construction workers under the CW-1 program in its entirety as we will require access to construction trades to undertake development and redevelopment projects to rebuild sectors of our economy that were not impacted by Super Typhoon Yutu, but have been impacted by this outbreak.
“Additionally, we must recognize the significance of this downturn in the business cycle and allow for the prevailing wage determination to be eliminated for this fiscal year so that businesses can make the necessary personnel adjustments within the private sector to keep the current level of employment steady. Already, due to the effects of this outbreak, unemployment has surged as businesses are forced to close their doors in an effort to halt the spread of this disease. Increasing the cost of labor at this timeframe will destroy opportunities for employees throughout our labor force and result in further delays in our recovery.”
Increase federal funding opportunities for PSS
“The CNMI government’s revenues do not provide the adequate levels of funding to support our Public School System. Even after providing 25% of their constitutionally-mandated share of general revenues, the current economic conditions are not producing sufficient financial resources to ensure adequate funding for our students. There is no way around this fact.
“I ask that we do all we can to increase the amount of funding available to our PSS and provide for greater flexibility in the use of these funds so that our school administrators have the resources to provide the best for our students during these difficult times.
“The CNMI must make every effort to push forward with available federal resources to increase economic activity and stimulate employment within our islands. The CDBG-DR program provides these resources; however, states across the nation have recognized the obstacles created by federal law that slow the release of these funds. To provide expediency for the release of this program’s benefits, I request that Congress do the following:
“Remove the restriction on the use of these funds for purposes tied directly to covered disasters so these resources can be mobilized in support of recovery from this most recent disaster
“Waive NEPA compliance requirements for activities funded by this program
“Reduce the standard requirements for Citizen Participation related to the Action Plan.”
Torres closed his letter with a renewed call for teamwork and collaboration for the greater good of the CNMI during this public health and global economic crisis
“This is a disaster of unprecedented proportions for the CNMI. As such, the needs of the community are constantly evolving. Above all, I ask for your cooperation in continuing productive dialogue as it relates to the needs of our people and this government. This administration is doing its utmost to avert a greater disaster if we do not adequately respond to the multitude of issues presenting themselves today.
“There’s too much at stake for our people and our islands. However, I am confident that if I can get your support to push these necessary measures in Congress, we will be better positioned to help every individual and family in the Marianas get through these tough and unprecedented times.” (PR)