Not a rosy picture
THE House version of the FY 2026 budget bill — a more realistic take on the administration’s original proposal — is still pending in the Senate. Senators are expected to offer amendments or even draft their own version, which is par for the course. The goal, in any case, is to transmit a budget measure to the governor at least a few days — ideally a week — before the fiscal year ends. Without a new budget by Oct. 1, 2025, the government will face a partial shutdown. The first and last time that happened was 15 years ago, when about 1,400 “non-essential” government employees were furloughed without pay for six working days. No one was amused. Since then, the executive and legislative branches have managed to enact a new budget each year despite political differences. We expect that to continue this year.
That’s the good news.
Here’s the bad news.
The local economy appears to be as grim as — if not worse than — it was in 2010. Then and now, the budget process involves dividing crumbs from a shrinking revenue pie.
First, there’s the mandatory 75% of government retirees’ benefits. Second, PSS’s constitutionally required 25% budget. Third, government payroll. After that comes funding for medical referrals, the local share for Medicaid, payments to CUC, and the retirees’ 25% benefits. The Rota and Tinian municipal governments will also have their own funding needs. These are just some of the major budget items that must be sorted out.
The CNMI government’s financial woes could be eased significantly if it reinstated a work-hour reduction and suspended its “voluntary” 25% payments to retirees. But the political costs may be too high — there simply may not be enough votes in the Legislature to pass such measures.
The administration’s politically painless “solution” is to take on more debt — from both a private bank and the Marianas Public Land Trust. This is not a fiscally sound remedy, to be sure, but what’s the alternative?
While elected officials scrape the proverbial barrel, businesses and other taxpayers may have to watch out for their wallets.
Down it goes
LAST week, the Marianas Visitors Authority outlined its “path forward” amid bleak tourism arrival numbers. MVA largely reiterated what the late Governor Palacios emphasized in his State of the Commonwealth Address about the importance of tourism. (“We never gave up on the Chinese tourism market,” the late governor had said.)
But this time, MVA also underscored the need “to provide financial and policy support to stabilize flights,” warning that “without immediate intervention, additional cuts to flights are expected in the coming months.”
So where will the funding come from, and how will the administration and lawmakers respond?
