22 Sep 2017
- By Bryan Manabat – [email protected] – Variety News Staff
IN the past two years, the CNMI government has been making weekly payments of $1 million to the Settlement Fund, according to its trustee, Joyce Tang.
In a report to the federal court, Tang said these $1 million weekly payments provide the cash flow needed for bi-weekly benefit payments without having to liquidate the Settlement Fund’s investment
Tang said the CNMI government is able to make the weekly payments, partly because of increased Saipan casino gross revenue tax collected in 2016 and 2017.
She said the casino gross revenue tax has developed into a primary source of revenue for the government.
Moreover, the government’s cooperation and willingness to make these large weekly payments eased the Settlement Fund’s liquidity requirements, allowing the Settlement Fund to invest its money for longer periods, she said.
But Tang said reliance on the casino GRT is very risky, adding that the continuing payment of the casino GRT to the government at the current rate is, at best, uncertain.
The lack of diversification in revenue sources also create risks for the CNMI, she added.
In order to mitigate the risk, the trustee said she is exploring alternative funding methods including obtaining full funding of the Settlement Fund.
“The Settlement Fund’s investment consultant has calculated the amount that is needed in order for the Settlement Fund to be fully funded,” Tang said. “Subject to certain assumptions, an infusion of an additional $468 million today is required to fully fund the Settlement Fund. The trustee plans to engage the government in discussions regarding options available to obtain this funding.”
She said the CNMI government has worked closely with the Settlement Fund to pay the minimum annual payment of $30 million in FY 2016 and $33 million in FY 2017.
For FY 2018, she added, the minimum annual payment will increase to $45 million.
Tang said the settlement agreement also requires the government to make Alternative Payment of a Greater Amount or APGA equal to the difference of 17 percent of the government’s total annual revenue, after deducting the amount of minimum annual payment paid.
Based on the government’s audited financial statements for FY 2014 to FY 2016, the APGA amounts due are as follows:
FY 2014: $5,919,797.89 (paid)
FY 2015: $1,209,243.87 (paid)
FY 2016: $11,534,522.38 (outstanding)
Tang said Gov. Ralph D.L.G. Torres has “committed to working on an appropriation bill to fund the $11.5 million APGA for FY 2016.”
Tang said the Settlement Fund has proposed the following payment schedule for the $11.5 million APGA, broken down as follows:
First payment (Oct. 17, 2017):
Second payment (Dec. 31, 2017)
Third payment (March 31, 2018)
“Governor Torres has tentatively accepted the proposed payment schedule,” Tang said.
As of Sept. 2017, her report stated, there were 3,035 settlement class members, 72 of whom are active CNMI government employees.
Source: Marianas Variety : http://www.mvariety.com/cnmi/cnmi-news/local/98755-settlement-fund-trustee-nmi-government-making-weekly-payments