By Zaldy Dandan
Variety Editor

Cut and cut cleanly

WHEN the government budget is cut by $30 million, dropping from $193 million to $160 million, you know that cuts will occur in every department and branch. The administration had no choice but to initiate the first round of cuts, which as this newspaper has said, was way too low, which explains why additional budget cuts are necessary.
This should be an eye-opener for the community. This crisis offers lessons in proper planning, the value of saving and living within ones means. It also shows the need for self-improvement, getting a good education and voting intelligently at election time.
Prior administrations did not fix the budget at appropriate levels, and the Legislature did not conduct budget hearings to scrutinize budget submissions. New investors will not take the plunge because the CNMI’s reputation for clean and simple transactions was compromised long ago. Moreover, its wage and immigration laws remain hostage to the political situation in Washington, D.C. Once in a blue moon, new investors will express interest in the CNMI but once here, local government bureaucracy takes over and turns them off. Hotel turnovers, incidentally, were not the product of government promotions, but of cheap prices.
Prior administrations did not meet their basic obligations. They didn’t pay utility bills, the Retirement Fund, rebates or vendors. Yet the budget was kept artificially high. That might have been all right if they managed to grow the economy, but they didn’t.
This administration may not have judged the poor state of finances accurately enough so its initial cuts didn’t go far enough. It didn’t help that hundreds of new employees were hired even as a modest austerity holiday law was implemented.
The government is much too large. It is so big it gets in the way of itself — and sound financial practices and business and growth. Not surprisingly, close to 85 percent of the government budget goes to salaries.
BOE and PSS are now waging a propaganda campaign claiming that schools will close and hundreds of people will be out of jobs if cuts go forward. School officials would like the public to believe that every employee in the public school system is essential, and this just isn’t so. Not everyone in any organization of this government is essential. The government is in deep kimchi precisely because it has a lot of non-essential personnel. This is not exactly a state secret.
Every department and branch, to be sure, has appealed to the administration for exemptions to proposed cuts, even the Department of Commerce, which has done little to promote commerce but a lot to stifle it through regulations.
But there simply is no money to continue operating at current levels. Which is why besides budget cuts, the administration must also consider out-sourcing certain government functions on a permanent basis. The Retirement Fund is on this track with the government health insurance plan. Indeed, the question about the privatization or out-sourcing of government assets or operations is not whether it should be done at all, but whether the government is conducting these important and complex transactions properly. Are these processes well-designed — meaning, will they produce a beneficial outcome for island residents — and are they transparent?

In the case of power privatization, for example

CUC objected to our characterization of the last round of submissions as pre-qualified candidates. CUC is correct. This last round of submissions does not automatically pre-qualify all four candidates.
But in this convoluted process that requires multiple submissions to CUC and nearly $100,000 in fees just to determine if a company is pre-qualified to participate in the bidding, the agency has lost seven of the 11 companies that initially indicated an interest in the bid. Only four companies remain in the competition and this winnowing process has not yet determined which of these companies is in fact qualified to participate in the competition.
Solid, internationally recognized and experienced power companies chose not to participate in the bid because it was obvious that the government was deliberately limiting the number of competitors. Instead of opening the field to the widest number of competitors on the long-established theory that competition is good, CUC deliberately limited the field. This is not a good sign for doing business in the CNMI which badly needs it.
CUC also claims that it instituted the $100,000 fee to cover its costs, but this is questionable. The protest that was filed will erode whatever costs or savings the agency intended, and this is what routinely happens to big procurements in the CNMI. Government officials will not conduct proper procurements despite knowing that shortcuts always result in protests, delays, additional costs, damage to the CNMI’s reputation abroad and the erosion of the public trust in government actions and its officials.
While civic groups and concerned citizens consider and lament the CNMI’s current state, they must go beyond the obvious responses. What the CNMI needs are solutions that will fundamentally change the way we do business here: new standards and expectations for elected leaders; more competent public sector employees; more responsive, smaller, and more efficient government; and a more responsive and responsible private sector. These are the challenges facing not only the government, but every member of this community.