Cut government costs instead of raising taxes
THE CNMI government cannot tax its way out of its latest financial crisis. The new administration’s proposal to grab more money from a business community that is struggling amid all this economic uncertainty may not even result in additional revenue for a bloated government whose elected officials, through all these years, have preached fiscal responsibility while implementing fiscally irresponsible measures.
It should also be noted that before the governor flew to Maryland to tout the business opportunities in the CNMI, he submitted a budget proposal that would raise the cost of doing business in the Commonwealth, which, among things, is also facing a population exodus and a labor shortage that could get worse without relief from the onerous if not unreasonable CW touchback rule. (We’ll say it again. Everything is interconnected in an economy. The touchback issue is not just about CWs. It’s primarily about the viability and survival of the remaining businesses in the CNMI — and the revenue they generate for the islands’ main employer of local residents and largest, and often delinquent, vendor, the Commonwealth government.)
Instead of penalizing businesses for the bad choices that the CNMI government has made, and continues to make, the new administration and Legislature should instead find ways to reduce the costs of running a bureaucracy with several overlapping, redundant if not useless agencies and/or programs, many of which attempt to do things for which the government has not shown any competence whatsoever.
“It cannot be business as usual,” the governor told the business community in February. But raising taxes while avoiding truly significant budget cuts is business as usual.
Back then, the governor also said that he wanted to hear “the voices and recommendations of our small businesses on the issues and policies that affect them.” He even mentioned the creation of a “Governor’s Small Business Advisory Council.”
But small businesses, above all, were the ones blindsided by the new administration’s business tax hike announcement.
Fiscal non-response
AND what about “revisiting recommendations put forth during the Fiscal Response Summit held three years ago” as the governor said three months ago? Many current administration officials, the governor included, and lawmakers participated in that summit.
Among its supposed goals:
“Review the size of government and seek a rightsizing of government that does not hamper services”; and “review departments and agencies for duplication of services and merge where duplications exist.”
These included merging the Finance and Commerce departments; DYS and Youth Affairs Office; Indigenous Affairs, Carolinian Affairs and DCCA; DLNR and DPL; Fire, DPS and Corrections; DPW and the offices of the mayors; Commerce and Labor; Commerce and CDA (now CEDA); NMTI and NMC; Parks & Rec and DPL; grants office and Finance.
The summit likewise considered the elimination of government-issued cell phones; an end to zoning; the abolition of municipal councils; pay cuts; reducing the size of the Legislature (from 20 representatives to 10, and from nine senators to six); personnel cuts; and reduction of leave benefits for government employees.
Where are the proposals to implement any of these measures?
During the summit, the then-president of the Saipan Chamber of Commerce reminded government officials that “just as the government does not shoulder the sole responsibility for the community’s problems, the private sector cannot be tasked solely with providing the solution through increases in taxes and fines whenever government experiences a shortfall.”
But according to the governor in his latest budget proposal, “to help sustain our government operations and services…., we will need…to generate additional revenues from the Gross Revenue Tax.”
Business as usual.
