BASED on what they told voters during the campaign season, the CNMI’s newly elected officials knew they would “inherit” a, more or less, insolvent government. They told voters that the previous administration was overspending and/or misspending local and federal funds. They said the ARPA funds were most likely squandered and/or depleted already.
The newly elected officials, in other words, knew what they were getting into. And they still signed up for it.
In contrast, the CNMI’s newly elected officials in 1998 were supposed to take over a strong and booming economy, and it was — until the tsunami-like Asian currency crisis finally reached the Commonwealth.
A quarter of a century ago, the newly sworn in governor announced a $35 million shortfall (about $64 million today) in government revenue. He said “serious belt-tightening will be required, a lot of fat must be cut and the size of government must be reduced.”
The president of the Korean association on island told Variety that the business situation had become “very difficult,” adding that over half of the Korean businesses on Saipan had shut down.
The CNMI Department of Labor and Immigration or DOLI reported a spike in the number of complaints filed by guest workers over “non-payment of wages” and the failure of their employers to “provide work.”
A hotel executive revealed that from an 80 to 90% occupancy rate in Jan.-Aug. 1997, the figure had dropped to 50-55% in Sept.-Dec. 1997. “The future is very bleak,” HANMI said.
More bad news:
Continental reduced its flights and closed its reservation office at Oleai Center. It said there would be no Korean flights for the rest of the year.
DOLI said because “a lot of businesses are shutting down…some employers are abandoning employees — we want to send them all home.”
The then-Board of Public Lands said five new hotel projects were likely to be shelved. They were shelved.
On Rota, the new mayor declared a financial crisis — “taya salape!” he told legislators — while the new administration on Capital Hill issued a list of austerity measures, effective immediately.
CUC announced a restriction on OT and travel, a hiring freeze and a suspension of pay hikes. CUC also said its maintenance expenses were increasing even as its revenue was decreasing.
At least 40 executive branch employees were given a 60-day termination notice.
MVB (now MVA) projected a 15% drop in overall arrivals.
CPA said it was running out of cash because revenue from its airport division was down by 46%.
The Saipan Chamber of Commerce president said their members were trying to cope with the economic slump by “trimming and cutting down the fat” and by going “on a diet.” “Downsizing is the name of the game,” he added.
HANMI said it had reduced work-hours and room rates and was also considering “retrenchment.”
In July 1998, the tourist arrival rate was down by 32%. In the following month, an 83% decline in Korean arrivals was reported.
MCV, the only cable provider in the CNMI, said due to the decreasing number of subscribers it would increase its rates.
The PSS payroll budget was cut by $1.5 million, equivalent to about $2.7 million today.
Car sales were down by 81%.
At the time, economist Bill Stewart reminded us that “only the well-being of profit-generating private enterprise…is capable of producing tax revenues.” Sadly, he added, “some don’t really seem to comprehend the interlocking elements unless…they have been in business themselves, had to meet payroll on time and…operate at a profit to stay alive. If you don’t have a healthy private sector, you don’t have an economy. Without a vibrant economy there are reduced tax revenues and thus fewer government services and employment opportunities.”
The local economy didn’t recover until 2014. Then Yutu and Covid-19 happened.
Today, the CNMI needs more tourists and new investors. How to bring them in should be the CNMI government’s primary task.
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