By Zaldy Dandan – Variety Editor
Recovery plans must move beyond paper
VOLUME I of the governor’s 480-page fiscal year 2027 budget submission includes a report from his revenue council, which developed the FY 2027 revenue forecast and helped prepare the governor’s budget proposal.
The report says nothing that we do not already know:
• The CNMI continues to face economic constraints due to Super Typhoon Yutu, the Covid-19 pandemic, declining international tourism, and now Super Typhoon Sinlaku.
• Local revenues remain below pre-2018 levels and continue to be sensitive to changes in tourism, construction, and workforce conditions.
• Tourism remains the islands’ main economic driver, but recovery is slower than expected due to fewer flights, no direct service from mainland China, and external market and currency factors affecting key source countries.
• The private sector continues to be constrained by workforce shortages, declining business registrations, and demographic trends (including a shrinking population).
• Federal assistance remains the key stabilizing factor in CNMI finances, covering about two-thirds of revenues in the near term. U.S. support sustains essential services and infrastructure but underscores the need for stronger local revenue generation and long-term fiscal stability.
Beyond the usual age-old generalities — “strengthen compliance within existing tax systems, improve audit timeliness, and prioritize strategic investments that support economic recovery and diversification” — what specific measures can be adopted and implemented right away?
Incidentally, how is the implementation going for the 2025 Marianas Economic Roadmap and the 2020 Fiscal Response Summit recommendations?
It’s a spending problem
THE report provides an unusually (for the government) candid assessment of its dependence on federal assistance:
“Rather than declining to pre-pandemic levels, federal grants are projected to continue comprising more than two-thirds approximately 67 to 74 percent of total government revenues in FY 2027 and the near term….”
This “reliance on federal grants presents several structural weaknesses that must be addressed in the FY 2027 budget outlook. The most significant concern is the degree of fiscal dependency, which exposes the government to risks associated with changes in federal policy, funding priorities, and appropriations cycles. The sharp increase in federal funding during the pandemic period is not sustainable, and the anticipated decline in such funds underscores the vulnerability of the CNMI’s fiscal structure. Furthermore, the variability and competitive nature of certain federal grants introduce uncertainty into budget planning, making it difficult to project long-term revenue with precision. The administrative burden associated with federal grant compliance including reporting requirements and matching fund obligations also places strain on limited local capacity and increases the risk of fund de-obligation if requirements are not met.”
So what is to be done?
Well, as usual, the CNMI will bank on its “greatest hits” of policy recommendations: economic diversification, strengthening tourism, lowering utility costs and expanding utility assistance, prioritizing spending, stabilizing labor, reducing government healthcare expenditures, and (drumroll please) revenue-generating legislation — i.e., new or higher taxes — to which we say: no — a thousand times no.
The government should, for once, acknowledge that it has a spending problem, not a revenue problem, and act on that fact.
Zaldy Dandan is the recipient of the NMI Society of Professional Journalists’ Best in Editorial Writing Award and the NMI Humanities Award for Outstanding Contributions to Journalism. His four books are available on amazon.com/.
