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PSS ‘immediately entitled’ to 25% of general revenue, say education officials

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THE Board of Education and the Public School System do not intend to financially “cripple” the government, but education officials said PSS is “immediately entitled to 25% of all general revenue as defined by the [CNMI Supreme] Court ruling.”

In a letter to Speaker Blas Jonathan T. Attao, BOE Chairwoman Janice Tenorio and Education Commissioner Dr. Alfred Ada said they are providing Attao with the PSS interpretation of the court’s “decision, the practical consequences of the decision for the FY 2020 budget and future budgets, and a brief discussion of the retroactivity of the decision on previous budgets.”

Under the CNMI Constitution, PSS is entitled to 25% of the CNMI’s annual general revenue.

Because the central government and BOE/PSS differed on the definition of “general revenue,” they submitted the issue, in the form of certified questions, to the CNMI Supreme Court.

In its slip opinion, the high court said PSS is entitled to general revenue, not special revenue. The court added that the Legislature “has the authority to suspend an earmark in an appropriations bill, [but] in doing so, those revenues transform into general revenue, in which PSS is entitled a percentage.”

In their letter to Speaker Attao, PSS and the BOE said based on the high court ruling, the school system is entitled to its share of the CNMI Gross Revenue Tax collections.

“This tax is one of the primary means by which the CNMI government funds its operations and pays its general obligations. It is not a unique tax or fee that was created for a specific purpose. Instead, it was an already existing tax that was diverted for a ‘particular purpose,’” PSS and the BOE stated, adding: “PSS is entitled to its constitutional share of all revenue that was diverted to the CGRT account.”

PSS and the BOE also believe that the school system is entitled to a 25% share of following:

• Customs, Immigration and Quarantine revenue. “This line item does not identify a fund in which the revenue is stored nor articulates the means by which the revenue was collected,” the education officials said.

• Hotel tax and container tax collections earmarked for the Northern Mariana Islands Retirement Fund. “PSS fails to see a nexus between the hotel tax and the container tax to the funding of the Retirement Fund,” the education officials said. “It maintains its position that the type of revenue collected must bear a reasonable relationship to the thing being funded. The only relationship here is that the government has an obligation to the Retirement Fund and has identified a revenue source to pay it. However, there does not seem to be a correlation between a tax on hotels and beverage containers to the funding or its pension obligations.”

• Special accounts for the 1st, 2nd and 3rd Senatorial Districts. These “lack an articulated purpose for the fund. Consequently, PSS should be entitled to its share of the revenue appropriated.”

• PSS Technical Education program. “PSS’ position is that revenue it receives under [this]…may not be counted against its entitlement to 25% of all general revenue. When a proper earmark is created it functions to create special revenue and thus any appropriation of that revenue is an appropriation of special revenue to PSS. PSS would still be entitled to 25% of all general revenue; exclusive any special revenue it was given,” the education officials said.

• Suspension of earmarks. “The government and PSS agreed…that if an earmark, such as [the Marianas Visitors Authority’s], was suspended, and if revenue from the fund was used for a different purpose…the revenue became general revenue. Consequently, PSS is entitled to 25% of all revenue spend by the government which was derived from the hotel occupancy tax and not remitted to MVA,” the education officials said.

“PSS is cognizant of the financial situation that the government is currently facing. PSS and the Board are eager to meet and discuss potential options that will both fund PSS and allow the government to weather these economic times,” they added.

In light of the steep decline in tourist arrivals due to the global novel coronavirus outbreak, the CNMI government’s projected revenue for fiscal year 2020 went down from $148.8 million to $111 million.

This will require an across-the-board 28.3% budget cut that includes PSS.

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