Self-inflicted financial woes
THE CNMI chief justice calls it a “fiscal tsunami.” To have zero funding for the judiciary’s “all others” budget is “totally unheard of,” according to an associate justice.
You know what’s also unprecedented in CNMI history?
A governor who insists on pursuing a fruitless policy.
In an interview with Voice of America in January 2024, the governor was asked:
“Is there a revenue source to replace lost income from the Chinese tourism market?” He replied: “Not right now, so it’s very significant. We’ve had to make drastic sacrifices in government operations and public services. People are leaving the Commonwealth because of the depressed state of the economy right now, because of the major impact of losing close to half-a-billion to a billion dollars’ worth of economic activities.”
That’s what the governor said — not HANMI or the Saipan Chamber of Commerce. The governor himself.
“Tourism is our primary industry,” he told VOA. “It is our economy, basically. The significance of Chinese tourism pre-pandemic, it was close to [nearly half] of tourists that come to the Commonwealth were from mainland China. So that’s our second largest market. South Korea being the number one market. The China market is a significant market for [our] tourism industry.”
Maybe the governor knows something we don’t. We’re all ears. But it’s been over a year now since he made a request for direct U.S. aid “to replace the economic loss that we have experienced as a result of the CNMI’s pivot away from China.”
What was the official response of the U.S. government to the governor’s plea? The sound of silence?
And what about the governor’s request for 902 consultations? Even if President Biden finally appoints his 902 team, all it means is that there will be more meetings and more talks, then a report, and then waiting for the federal agencies and/or the U.S. Congress to act on the CNMI’s requests.
EVS-TAP was recommended by the 902 consultations in 2019. It will finally be implemented on Sept. 30, 2024. Five years. And that was a non-monetary request from the CNMI. Right now, based on its actual revenue collection, the CNMI government would need at least an additional $100 million a year to pay most of its pressing obligations. Do we actually expect a federal bailout just because the CNMI government spends more than it can collect?
And meanwhile, while waiting for an early Christmas courtesy of Uncle Sam — what? Allow the local economy to shrink further for the “long-term” good of the people while expecting them to pay more in taxes and fees?
Fiscal tsunami indeed, and the governor’s chosen policy is not helping.
What, us worry?
AS far as we know, the public was never consulted by the governor about his pivot policy. There were no prior discussions either about its possible consequences, which he himself has spelled out in an interview with Voice of America.
Blaming the previous administration for the financial mess he knew he would inherit just won’t cut it. The gubernatorial election is long over. He won. He is in charge now. But sure, go after the former administration. Continue the audits, the hearings, the investigations, and forward the findings to the feds and/or the AG’s office. But the governor should also do more to help boost tourist arrivals. All possible remedies should be considered, including the revival of what used to be the second largest tourism market, China, especially now that the EVS-TAP rule will take effect.
Now if the governor would insist that his pivot is the right thing to do and everyone else who disagrees with him is flat out wrong, then he should level with government employees, retirees, and other local residents. He should tell them the truth: without a significant increase in tourist arrivals or the entry of a new major investor, the CNMI government must implement additional cost-cutting measures. Work-hour cuts. Pay cuts. Benefit cuts. Downsizing. Layoffs. All this would result in more people leaving the islands and more businesses shutting down. And there would be more desperate proposals to increase taxes/fees to justify the administration’s rainbow-and-unicorns revenue projections. These, in turn, could lead to higher prices, more deficit spending, more debts, more unpaid vendors and/or contractors, more lawsuits.
These are the likely short-term consequences of the governor’s geopolitically inspired chosen path. No wonder he likes mentioning the “long-term.” In the “long-term,” everything would “work out just fine,” and today’s hardship would be “worth it.”
Thank God for regular elections.
