THE impact of the “touchback” rule on the CNMI economy was not taken into account in the fiscal year 2024 revenue projection because the government is still “developing a fiscal model that includes economic analysis” in its annual budget, Finance Secretary Tracy B. Norita said on Saturday.
Hundreds of foreign workers on CW-1 visas have started to “exit” the CNMI as required by the federal touchback rule, which requires them to leave the islands before they could be renewed. The processing can take up to seven months.
“We’re talking about experienced workers who are also customers, consumers, tenants and taxpayers in the CNMI,” said a long-time resident who declined to be identified. “Of course, the government’s revenue collection will take a hit.”
Norita said the administration’s revenue projection for FY 2024 was based on financial information from her department’s financial system that takes into account the historical collection.
She said the economic analysis part “is something that we have been wanting to include in our projection.”
Finance is “currently working with our federal partners to develop a fiscal model that includes economic analysis,” she added.
To brace for the impact of touchback, she said the administration has shared with CNMI legislators the importance of additional revenue-generating bills — that is, tax-hike measures.
Gov. Arnold I. Palacios, for his part, said “it is unfortunate that this is unfolding as we speak,” referring to the touchback.
He hopes that the federal government “is listening to us and becomes sympathetic to the challenges we have here.”
The governor said the departures of employees affected by touchback “is just going to impact a lot of businesses, but obviously it is a reality that we have to look at.”
He added, “We hope that when the U.S. Congress sees the impact [of the touchback rule] on the CNMI, they’ll consider” passing H.R. 1420, which U.S. Congressman Gregorio Kilili Camacho Sablan introduced to delay touchback for at least three years.
In the meantime, Palacios said businesses in the CNMI will have to re-adjust how they recruit their employees, and whether to consider applying for H-visas for eligible workers.
