Gov. Arnold I. Palacios speaks to the members of media during a press briefing in his conference room on Capital Hill.
GOVERNOR Arnold I. Palacios on Saturday shared with Variety the highlights that defined his and Lt. Gov. David M. Apatang’s administration in 2024.
He said these included “stabilizing the CNMI government’s finances and accelerating infrastructure projects, among other initiatives.”
In the past, he said in an email interview, “administrations often pursued quick, unsustainable investment schemes that promised immediate growth or instant rewards but ultimately led to economic troubles. These short-term strategies, particularly an overreliance on one market, left the CNMI vulnerable when global circumstances changed, as seen during the pandemic.”
“When we came into office,” he added, “we committed to building a strong foundation for our economy. This involves investing in infrastructure and workforce development to create a diverse economy that’s resilient and not entirely reliant on factors beyond our control. While these efforts might not provide instant gratification or catchy headlines, they are essential for enduring prosperity and sustainable growth.”
Reflecting on the first two years in office, Palacios said, “we are proud of the progress made despite facing harsh criticism and mischaracterization from a select few.”
He said remarks about pivoting from an over-reliance on the China tourism market “have been purposely misconstrued.”
“My aim was clear — to avoid short-term schemes that inevitably lead to economic failure when external policies shift. We all felt the effects under the previous administration when the CNMI was blacklisted by China due to the casino and completely shut out during the pandemic,” he added.
“Thankfully, now, we are witnessing sustainable and organic growth, with positive indicators pointing toward long-term success rather than fleeting gains followed by inevitable setbacks. I remain optimistic not just for the next two years but for decades to come,” the governor said.
Government finances
Palacios said he and Apatang want to continue “building a strong economic foundation built on fiscally responsible policies, modernizing and expanding infrastructure, building local workforce capacity, and other initiatives we continue to champion.”
He said by eliminating “avenues of corruption and self-enrichment that served a select few, we are prioritizing the well-being of the entire CNMI community, paving the way for a sustainable future for all.”
He provided the following examples of the government’s financial situation and his administration’s efforts in stabilizing government finances:
1) Deficit
a) The Fiscal Year 2022 annual report indicated a $38 million deficit due to the Covid-19 pandemic.
b) The FY 2023 annual report indicated $3.08 million deficit due to group health and life insurance underfunding.
c) The FY 2024 4th Quarter Report indicated balanced budget versus expenditures.
2) Financial management accomplishments
a) Cleared approximately $16 million in arrears to GHLI-AETNA by Sept. 30, 2024.
b) Cleared approximately $10 million in arrears to the Commonwealth Utilities Corp. by Sept. 30, 2024.
c) Transitioned one-third of all CUC meters to prepaid.
d) Current with allotment cash transfers to the Public School System, Northern Marianas College, and the Commonwealth Healthcare Corp.’s Health Network Program previously known as medical referral services.
3) Tax collection
a) FY 2023 and FY 2024 revenue collection within 1% target range.
b) Tax collection taskforce collected $14 million.
c) Aggressive tax enforcement capacity. The Division of Revenue and Taxation received Internal Revenue Services training and support in advanced collection techniques and criminal tax audits in 2024.
d) Hotel Occupancy Tax or HOT collection increased by 51% since 2022.
e) Gross general collections increased by 8% since 2022.
4) Austerity lifted.
a) Restored hours for approximately 793 employees on active payroll.
b) FY 2025 revised budget will sustain restoration of hours for entire fiscal year.
5) Maintained retirees’ 25%. Total commitment to date $23.7 million (excluding Commonwealth Economic Development Authority funds).
a) Made a total payment in FY 2023 in the amount of $12.8 million.
b) Made a total payment in FY 2024 of $7.8 million from the general fund, $5.2 million (CEDA).
c) Made a payment in FY 2025 to date: $3.1 million
Accelerating infrastructure projects
According to the governor, “Economic growth for the CNMI is directly tied to infrastructure development. Investors come here to explore opportunities, and the first thing they say is we need to fix our infrastructure — roads, ports, utilities. The administration has placed a high priority on loosening bottlenecks so that infrastructure projects can be completed.”
He said his administration has:
• Negotiated a line-of-credit agreement so that U.S. Economic Development Authority projects throughout the CNMI can progress more expeditiously; and,
• Worked with the Commonwealth Ports Authority board of directors to lower airport fees and pay back debt.
In addition, the governor said the Beach Road Project re-construction will be completed in 2025.
He said CPA, for its part, received a CNMI Owner-Agent Engineer grant award in the amount of $1.5 million to pay for a master-planning for seaport and airport.
Moreover, the $3.47 million airport and seaport terminal infrastructure master plan is underway as well as the CUC energy and utility masterplan, which has been awarded a $4.25 million grant.
Palacios said his administration continues to support lowering the cost of energy for the people.
Meanwhile, he said, the reconstruction of educational institutions continues: Northern Marianas College, Admiral Herbert G. Hopwood Middle School, Daok Academy and the Northern Marianas Technical Institute.
Palacios said numerous other infrastructure projects are ongoing.
In addition to these “accomplishments and highlights,” he said “significant progress and accomplishments were made in garnering military support, engaging federal partners and agencies effectively, advancing renewable energy efforts and other sustainability activities, expanding workforce development programs, and ensuring access to high-speed internet for all residents.”
