The Attorney General, Edward Buckingham, has asserted that the Governor has the ability to unilaterally cut pensions. His legal analysis was explained in an interview he did on KSPN2 on 6/18/12. In the interview he explains his interpretation of Legislative Initiative 16-11 (ratified in 2010) and how he feels it gives this power to the Governor.
Here is the clip:
HLI 16-11, also known as the Balanced Budget Initiative, can be found here: http://www.cnmileg.gov.mp/documents/house/hse_legini/16/HLI16-11.pdf.
On close inspection we were not able to find the section/provision of this Initiative that conveys to the Governor this unilateral ability to cut pension benefits.
While the initiative clearly calls for a balanced budget and a halt to draw-downs (except for essential services) should a balanced budget not be achieved, there is no mention of any right for the Governor to violate other provisions of the CNMI Constitution. The entirety of the HLI 16-11, that the AG referenced, amended one sentence in the CNMI Constitution.
In his interview the Attorney General also referenced a city in Alabama that has recently cut pensions. What he failed to mention was that there is no constitutional provision in the State of Alabama that protects benefits from being impaired or diminished. There is such a protection in the Constitution of the CNMI.
There were many factors involved that led the NMIRF to this point. One cannot overlook the enormous negative impact suffered by the NMIRF when the Governor failed to remit contributions for 19 months. We cannot forget that the AG also turned a blind eye to the constitutional protection of benefits and even defended the government’s right to withhold contributions. The judiciary eventually corrected the error when they ruled that the Governor and Legislature had violated the constitution by halting contributions.
That error in legal analysis by the OAG cost the NMIRF over $231 million. A judgment was rendered ordering the Government to pay back the mis-allocated contributions. To date, no payments have been made. To make matters worse we have now discovered that the government may still be neglecting their constitutional duty to remit employer and employee contributions to the NMIRF.
The assets of the NMI Retirement Fund are properties belong to the DB plan members not asset belong to the CNMI Government, therefore, such Fund assets are not subject to appropriation in the concept of the Budget Bill/Act. Only government revenues are subject to the budget act and the Fund assets are NOT revenue but assets of the DB plan members (retirees and active participants).
Give me a break!! A true dictatorship, in action. With Fitial in charge, pension cuts will range from zero to 90%, depending upon how close one is to him. . . Heck, some especially close to him may get a raise. After all, a dictator may do anything he pleases, with no justification required.
RON MANDELL
HLI 16-11 is referring to General Fund revenues that are subject to appropriation or the Budget Act not assets of the NMI Retirement Fund. My question: When the Governor declared emergency on the Retirement Fund, is it tantamount to sequestering the assets of the Fund? If so, that is tyrany in action! Wow, I can’t believe this is happening in the CNMI.
It sure looks like the AG is setting the stage for the Administration to cut benefits and/or raid the Fund’s investments – to balance the budget? Perhaps I am being overly cynical, but I have little trust that there is not some unspoken agenda regarding the so-called emergency and the significant power it gives the Governor. The AG’s reference to an Alabama county’s retirement plan does not even begin to address our issues in the CNMI, where our benefits have constitutional protection. Other statements completely miss the mark. As far as I know, there is no mechanism in the NMIRF for the adjustment of benefits either up or down depending on the return on the Fund’s investments. Yet the assertion seems to be that we are in a down cycle, and therefore must take our lumps. And the idea that we should all “celebrate” that there is no 58% cut, and sit back and let people “do their jobs” is absurd. Sitting back will not compel the central government to pay the multi-million dollar judgment. Sitting back will not move an ineffective legislature to do something that solves a problem rather than perpetuate inaction and infighting. I do not believe the retirees should be forced to settle for crumbs, and then say how much we appreciate the fact that there are still crumbs to eat. We should consider ourselves forewarned.