Through this status, our citizens have been able to attain U.S. citizenship. We also now have a delegate in the U.S. Congress, which enables us to have our voice heard even more clearly there.
In this day and time, these are definitely successes. However, with the successes, there have been failures.
Anyone who has lived in the CNMI for any period of time can point out problems that haunt our government.
Recently there has been the issue of an unfunded liability for the Retirement Fund, there’s the lack of compliance with the balanced budget amendment, the plethora of poker machines that spread like a greedy scourge across our villages, and the misapplication of the Headnote 3A program, which has blessed us with large numbers of the unemployed, the unemployable, and the unwanted.
Interestingly enough, all of these issues, and many more just like them, are subsets of one single and huge policy failure: the lack of government fiscal responsibility and accountability. I will discuss the details of this failure, what we should learn from it, and how this knowledge can be applied to ensure a more successful future for our commonwealth.
A huge unfunded liability has been created in the Retirement Fund because politicians decided that their word was no longer their bond. Rather than deposit employer’s matching contributions into the Retirement Fund as required by law, the government took that money and put it into the general fund. This means that the Retirement Fund has been forced to use its principle to make payments to retirees and that, eventually, there will be no Retirement Fund left for the future eligible retirees of the CNMI.
Based on the Performeters, a study done by the Pacific and Virgin Islands Training Initiatives, a pension funding ratio of less than 100 percent indicates that the pension plan is underfunded.
In 2008, the CNMI’s ratio was at 52 percent. According to Moody’s Investors Service, as of fiscal year 2007, the CNMI’s pension trust fund had accrued unfunded liability of about $570 million.
Short-term policy decisions took money that was due retirees and put it in the general fund. Good for the general fund: more money for fishing derbies and little league baseball games. Bad for our elders who, after giving the prime of their lives in service to the government, get to enter their golden years wondering if they’ll be eating future meals only through the generosity of their children and grandchildren.
Another reason contributing to the unfunded liability is the Legislature’s increasing benefits, such as cost of living allowances, government payments of premiums for health and life insurance, and increases in annuity benefits without naming a source for the funding. These added benefits included a bountiful retirement benefit for elected government officials, including judges, senators, and anyone serving even a single two-year term as a representative. These benefits also included a 30 percent early retirement bonus, which offered persons within two years of retirement bonus for retiring, ostensibly to reduce the size of government.
This so-called austerity measure might have worked if other people did not immediately fill the positions of those who retired and if those retirees were not allowed to “double-dip,” even further taking more money from our rapidly shrinking government coffers.
The end result of these misguided and irresponsible policy decisions were lawsuits which forced the government to take money collected for the hotel occupancy tax and alcoholic beverage container tax and pay that into the Retirement Fund to make up for funds not deposited by the government. This funding, which should have to such agencies as the Marianas Visitors Authority, was thus sent to an agency for which it was not originally designed to go. The government was thus put into a position of having to take from Peter to pay Paul, and then to borrow from Mary to pay Peter, and then to steal from grandma to promise Mary that she would soon get back her money when a big pie in the sky arrives on a cargo cult ship from Uncle Sam.
A further example of the lack of fiscal responsibility and accountability on the part of the government can be seen in the passage of the so-called “balanced budget amendment.”
The CNMI government is required by law to pass and work within a balanced budget. This would require the government to spend no more than it takes in as revenue. It would also prevent the government from taking the Retirement Fund money to use as operations since, if there were a balanced budget amendment, that money could not be considered as a revenue source. Instead of operating under the very laws that they have implemented, our government continues to live the lives of the blind, the insensitive, and the greedy. Hooked on profligate spending and the use of a credit card backed by nothing more than a threat or a promise, our government lives in the glory days of bustling garment factories and a booming real estate and tourist market, blind to the reality of boarded up building that stretch from San Antonio to Garapan and a hotel occupancy rate of 50 percent.
What’s more, poker machines were brought in as a source of revenue. The social costs of poker machines have far outweighed the tax benefits that these soul and dollar sucking machines have contributed to our community. A study done by NMC students showed that 60 percent of the violent crimes in the CNMI occur in or near poker parlors. Also, the link between crystal methamphetamine, more commonly known as ice, and poker parlors is a well known but hardly deliberated about problem. The stories of small children left outside in cars while parents gamble are so numerous that they’re no longer even news.
Policy makers once made a good decision. Headnote 3A, wisely negotiated by our government leaders, allowed products that are at least 50 percent manufactured in the CNMI to be exported to the U.S. tax free and with no quotas. Made in the USA! Headnote 3A was implemented to create jobs — much needed jobs — for local people.
However, as history shows us, we didn’t keep these jobs for locals. Instead, we brought in tens of thousands of foreign workers who overwhelmed the infrastructure of our island. We polluted our lagoons and killed off our coral, we increased animosity between the locals and the workers, and we earned a mass of negative press due to garment factory owners who abused their imported staff and stole from their imported workers paychecks.
Remember America’s Slave Island? That’s what the good idea that was Headnote 3A morphed us to become.
Now, after the factories have gone away, the vast social upheaval within the community continues, as former garment factory workers continue to work, sans umbrellas or umbrella permits, in the world’s oldest untaxed and unregulated profession.
In this brief review of government responsibility and accountability, we have discussed flawed policies and the decisions that have led to them. We must now also consider toothless enforcement. A law passed without enforcement is a ray without a sting. Although there have been many laws passed that could help our government fiscally stabilize or even thrive, many of the laws are merely paper resolutions. For example, a law says that the government cannot borrow money for operations. So instead of paying their bills, the government stiffs its vendors and misuses earmarked funds for operations. Government agencies end up accusing other government agencies of thwarting their missions and threaten those agencies with dire consequences if payments are not made. There is little enforcement of the business gross receipts tax. Many “mom and pop” stores fail to provide receipts or keep track of their sales, thus failing to provide proof of taxable income and reducing the amount of income the government should be taking in. Although Revenue and Taxation is tasked with this job, they are sadly inconsistent with their enforcement.
Now, what should learn from all this? How can we correct these past mistakes? Our government leaders need to learn to be accountable and to live within our means. It is irresponsible to come up with a budget based on revenue that we do not have and obviously cannot find. We need to be more fiscally responsible and accountable. The Legislature is not fulfilling its fiduciary duty to its taxpayers. The government cannot continue to give jobs that it cannot afford to people who produce little or nothing. This does not mean that all government jobs are pointless, but the government should be run more like a private business. Accountability is the key. Your employees produce, and you pay them. If your employees don’t produce, you get rid of them. The government should spend exactly what it brings in as revenue, or provide a surplus at the end of the fiscal year, and provide a rebate of credit against the next tax year. Stop the deficit spending.
For a more successful future for the CNMI, we need to force the government to make its employer contributions to the Retirement Fund. We need to comply with the balanced budget amendment. We need to get rid of the poker parlors and machines in Saipan. We need to focus our energies the only viable industry that we have in the CNMI, which is tourism. We also need to reduce the size of government. We need to take away the free-spending privileges of our congressmen and senators. The once overflowing coffers we had when our representatives could be given a $100,000 in discretionary spending are long empty and gone. These funds, unregulated, unreported, and unaccountable, can be used for the whim of the politician. Need a condo in Hawaii? An addition to the house? No one can say no, and no one needs to know. Don’t government workers have cars that they can drive to and from work? Take away government cars! Pay for your own gas. We have an Open Government Act that wouldn’t light up a cave. We continue to whine about how we need all these foreign workers, and yet we have a government that could easily be privatized to reduce costs. This reduction in staffing would reduce payroll costs and provide plenty of job seekers to fill the positions that will be vacated by the exodus of foreign workers in 2013. We need to enforce the laws that we have on the books. Gen. George S. Patton once said, “Success is how high you bounce when you hit bottom.” We’re about to hit the bottom. How high we bounce is up to us.
Adeleyah Charlotte C. Mojica is a senior student at Marianas High School. Her speech placed second in the recently held 26th AG’s Cup competition.
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