AG’s office: PSS not entitled to injunctive relief

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THE Public School System is not entitled to injunctive relief, according to the opposition filed by the Office of the Attorney General to the PSS motion for summary judgement.

Gov. Ralph DLG Torres and Secretary of Finance David DLG Atalig are represented by the AG’s office in the lawsuit filed by Commissioner of Education Alfred Ada who is asking the Superior Court to declare the budget law, or P.L. 21-08, unconstitutional for alleged inaccurate allotments being made to PSS in fiscal year 2020.

Assistant Attorney General John P. Lowrey said PSS has not provided minimum facts necessary to establish that the revenue resources being challenged in the lawsuit failed to meet the new definition of special revenues in the CNMI Supreme Court decision on the certified question.

PSS, which is represented by attorney Tiberius Mocanu, has asked the trial court to declare five funds and associated sources of revenue as “general” rather than “special” in its lawsuit.

These include: (1) revenues collected from taxes on gross revenue set aside to make payments under a settlement agreement; (2) revenues collected from hotel and container taxes set aside for the NMI Retirement Fund; (3) revenues collected from e-gaming licensing fees set aside for the NMI Retirement Fund; (4) revenues collected from e-gaming licensing fees set aside for the first, second, and third senatorial districts; and (5) revenues collected from the jackpot tax set aside for the public school system technical education fund.

Lowrey said to support its contention that all five of the challenged revenues are general, PSS makes a hurried attempt to apply the rather complex “special revenue” test created by the decision of the CNMI Supreme Court on the certified question submitted by then-BOE Chairwoman MaryLou Ada and Gov. Torres.

Lowrey said the CNMI Supreme Court decision made clear that application of its special revenue test was not a quick or cursory endeavor.

In fact, Lowrey said, the high court stressed that it could not “definitively determine what revenues may qualify as special and what revenues may qualify as general” as “this relationship must be evaluated on a case-by-case basis because the particulars of a revenue’s source and the purpose turn on the unique circumstances of each fund.”

Thus, determining whether a revenue is “general” or “special” is a fact-specific, case-by-case inquiry that looks at both the revenue source and the articulated purpose of its use, Lowrey said.

He said the special revenue test established by the CNMI Supreme Court involves the: (1) identification of the revenue source, (2) identification of the articulated purpose of the fund, (3) assessment of the relationship between the source and purpose, and (4) consideration of whether the relationship is too attenuated.

Lowrey said PSS failed to properly apply the test.

“Although PSS argues that the five challenged revenues fail to meet the ‘special revenue’ standard, it makes this claim without providing sufficient — let alone undisputed — facts establishing the ‘unique circumstances of each fund,’” the government lawyer said.

“In particular,” he added, “PSS has not provided the court with the articulated purpose for any of the five challenged funds. The articulated purpose is necessary for the proper application of the special revenue test, and PSS cannot succeed on its motion without establishing this as an undisputed fact.”

For example, Lowrey said, PSS contends that the e-gaming license fee revenues have no relationship to the special accounts established for the first, second, and third senatorial districts.

“Had PSS reviewed the relevant public laws, however, it would have discovered that one of the articulated purposes for depositing a percentage of the e-gaming licensing fee revenues into the special accounts was to increase e-gaming activity, generate more income, and create nightlife activities for potential tourists,” Lowrey said.

“Even if the revenue sources meet the definition of special revenues, retroactively applying the new definition to the 2020 budget would invalidate actions already taken, undo vested rights and payments, and could possibly disrupt government activity on a broader scale — prospective application of the definition to the 2020-2021 fiscal year is more appropriate.”

The PSS lawsuit wants the trial court to declare P.L. 21-08 unconstitutional and to issue a preliminary and permanent injunction to stop  the governor and the secretary of Finance from issuing any payments or disbursements that do not comply with the Constitution.

According to the PSS lawsuit, Public Law 21-08, which set the Commonwealth government budget for fiscal year 2020, appropriated $37,718,904 to PSS, which PSS said is only about 16% of the budget.

Under the CNMI Constitution, PSS is guaranteed an annual budget of not less than 25% of the general revenues of the Commonwealth government.

Lowrey said contrary to the claim of PSS, it was allotted 25.3% of the total local revenue and resources available for appropriation for Commonwealth government activities in FY 2020.

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