And so it begins
IN his first press conference over three months ago, the new governor said everything was “on the table,” budget-wise, and “spending like there’s no tomorrow” was “not sustainable.” More importantly, he said he didn’t “want to go out and raise taxes again and impose the penalty on the businesses and the people of the Commonwealth because of the misappropriation [and] misdeeds [of] government officials.”
In his recent FY 2024 budget cover letter, however, the governor told lawmakers to…raise taxes. His administration, he said, “proposes a new revenue stream to address persistent challenges to help sustain our government operations and services…. [W]e will need the enactment of legislation to generate additional revenues from the Gross Revenue Tax.”
The reasoning behind those statements is flawed. The first proposition doesn’t necessarily lead to the next one. Why does the government need “a new revenue stream to address persistent challenges”? Why not cut government costs in a way that will still allow it to maintain critical operations and services, and meet its obligations?
And, once again, no. The CNMI government is not facing “unprecedented” financial challenges as repeatedly claimed by this administration. Lack of funding has been the default mode of the Commonwealth government since it was established in 1978. And as the governor himself noted in his cover letter, the challenges are “persistent.”
Yet after noting that the largest cost category in the budget is personnel — 60% of expenditures — the governor said the 72-hour biweekly work schedule will remain effect in the executive branch only. But law enforcement personnel are exempted — and so are the Legislature and judiciary.
And what’s this? The governor is asking lawmakers “to enact legislation amending the salary compensation statute to authorize the annual salary compensation of key Cabinet positions within the range of $65,175 and not to exceed $100,000…. This group of employment workforce [was] excluded for consideration for a salary adjustment in Public Laws 19-83 or 21-9, and an amendment to update the salary ceiling to be consistent with these statutes will allow a fair and equitable pay adjustment for this group of workforce.”
Is he requesting higher pay for certain cabinet members in the same letter in which he stated that “our meager resources are insufficient to fully fund government utilities”? (Sorry CUC.)
Austerity for you then, but not for them.
Fiscally irresponsible, among other things
IT is not fiscally responsible to spend money you don’t have on items you can’t afford while raising taxes during an economic downturn.
According to the governor’s FY 2024 budget cover letter, he wants to collect more money from businesses, starting with those whose annual gross revenue earnings are in excess of $50,000.01. He is urging lawmakers to “act swiftly” because his proposed budget “anticipates to realize [the] revenues beginning on the first day of the second quarter of Fiscal Year 2024.”
In other words, spend now the money you’re hoping to get later from other people.
Again, that’s not fiscal responsibility.
The problem with tax hikes
TO quote economists Antony Davies and James R. Harrigan, “most politicians…look…at taxes the way a barfly looks at an ATM near closing time: he thinks he can simply draw money out of the economy whenever he wants without consequence.”
In pushing for more taxes, Davies and Harrigan added, “politicians either don’t understand or won’t admit that every tax ― no matter on whom it is levied ― is ultimately paid by people. Every tax on ‘business’ gets passed on in the form of higher prices, lower wages, or lower investment return. Businesses don’t pay taxes to the government; they collect taxes for the government. One way or another, people pay.”
