WITHOUT ARPA funds, the CNMI is back to where it was in March 2020, when the tourism-based economy had to shut down because of global pandemic restrictions. In April of that year, the CNMI government, with the assistance of Graduate School USA, held a virtual Fiscal Response Summit. The participants were officials and representatives of all three branches of government, the municipalities, autonomous government agencies, MVA, HANMI, the Saipan Chamber of Commerce, other business groups, volunteer agencies and non-government organizations.
In his opening remarks, then-Senate President Victor B. Hocog “thanked the participants and staff for their assistance in moving the ‘bloated government’ forward.” He asked the working groups to consider the following:
• Recognize that the crisis is real;
• Review the size of government and seek a rightsizing of government that does not hamper services;
• Review departments and agencies for duplication of services and merge where duplications exist;
• Address the affordability of the medical referral program;
• Ensure proper budgets for law enforcement departments in either staffing or overtime to allow them to continue to protect the community;
• Leverage technology and establish a Department of Information Technology to reduce manual processes and routing costs;
• Create and support a rainy day fund to help during disasters or emergencies;
• Consider the reduction in the number of lawmakers and evaluate legislative proposals to ensure they do not add financial burden on the government; and,
• Put politics aside and strive for reform that will allow government to be efficient and effective in providing quality public services.
Except for the (out of place) proposal to create a new department, it would be hard to argue against the rest of the recommendations.
At the time, the judiciary alone was facing a 48% (!) cut to its budget. Court operations on Rota, Tinian and Saipan would “effectively shut down,” the chief justice told the Fiscal Response Summit participants.
For her part, the then-president of the Saipan Chamber of Commerce stated “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.”
During the summit, working groups were tasked to find “solutions” to the projected financial shortfalls in fiscal years 2020, 2021 and 2022 — $65 million, $85.2 million and $36.9 million, respectively. (Summit participants assumed that tourism would be on its way to full recovery by FY 2022. Nope.) The figures, moreover, did not include the accumulated debt from prior years.
On Day 1 of the four-day summit, participants identified the two largest portions of the CNMI’s structural budget deficit: medical referrals and overtime.
To reduce medical referral costs, participants discussed the imposition of an $8 million cap on the program (which requested $18 million in FY 2020). They also proposed increasing law enforcement salaries by $1 million, and no longer permitting overtime in excess of the appropriated amounts. (But what if there’s another super typhoon or other disasters?)
There were also discussions about “revenue generation” (or taking other people’s money) through new taxes and fees and/or tax/fee hikes including rebate cuts. Also considered: excluding students enrolled off-island from CNMI scholarship programs.
As for “rightsizing government,” the summit talked about 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 (which is 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.
Then-Lt. Gov. Arnold I. Palacios, who co-chaired the summit’s Working Group B with then-Speaker BJ Attao, noted that many of the issues identified by the summit “had been discussed for years in government circles.” He said the summit “marked a strong initial step towards implementation.”
Among the members of the Fiscal Response Task Force that prepared the briefing paper for the summit were Revenue & Taxation Director Tracy Norita and Special Assistant for Management and Budget Vicky Villagomez.
In his closing remarks, then-Gov. Ralph DLG Torres, who co-chaired Group A with then-Senate President Hocog, acknowledged that “many of the options that have been identified for implementation will be painful…and will require legislation….”
But then ARPA happened, and the day of reckoning was postponed — until now.
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