HERE’S my take on some of the startling assertions — set in italics — that were made by the governor in his FY 2025 budget transmittal letter.
As mandated by the Constitution, the budget submitted herein is balanced such that the total amount of proposed expenditures does not exceed the total estimated resources available for appropriation.
This is a token obeisance to a toothless constitutional provision. The budget is considered balanced if the projected revenue does not exceed the proposed expenditures. However, 1) the projected revenue is a projection (i.e. a guesstimate), and it may or may not be realized; and 2) certain obligations are not fully funded such as the government’s utility bills and medical referral costs. Like many other, if not almost all, previous government budgets, the FY 2005 submission is a balanced budget as much as mashed potatoes with gravy and bacon bits is a part of a healthy diet.
Incidentally, the CNMI Constitution also requires the government to “retire” its operating deficit “during the second consecutive fiscal year following the year.” So far, it’s a rule that seems to be as effective as the anti-littering law.
In preparing this budget proposal, the Administration has had to make difficult decisions that preserve essential services while also recognizing the need for prudent financial management. We understand the challenges we face. It is important that we work together strategically and collaboratively to face these head-on, not through band-aid fixes but through creative solutions and a firm commitment to long-term growth.
But what is “difficult” about declaring that in this (election) year, there will be no more government work-hour cuts, and retirees should continue to receive their 25% benefit?
How can anyone describe costly, and clearly unaffordable, spending provisions as “prudent financial management”? In the same transmittal letter, the governor reiterated the need for more “Band-Aid fixes” such as tax-hike measures he wants to impose on struggling businesses, consumers and other taxpayers. To help pay for the retirees’ 25% benefit at least until August, the governor also proposed another Band-Aid “solution,” which is to take $5.2 million from CEDA.
We have to pay more attention to what politicians actually do, and not what they say.
As you can see, we have taken a cautious approach in revenue projections.
The proposed FY 2025 government budget is only $7.7 million less than the FY 2024 spending level even though, as the governor himself noted, “collections for the current fiscal year already reflect a decrease in business gross revenue tax, income tax, and excise taxes, which comprise the bulk of the decline in our revenues through the second quarter.” The FY 2024 first quarter shortfall alone totaled $5 million. He should have taken a more cautious approach. But then again, it’s an election year, and his allies in the Legislature seeking re-election or higher office are unlikely to pass significant cost-cutting measures that would infuriate many voters (i.e., government employees and retirees).
The FY 2025 tourist arrival forecast submitted by MVA indicates an increase by 10% to just over 300,000 in total arrivals, accounting for new direct flights from Hong Kong Airlines and additional flights from Korea.
Prior to the pandemic, the local tourism industry’s “worst” year was 2011 with 338,106 total arrivals only. (The peak year was 1997 with 726,690 visitors.) According to the governor, MVA’s FY 2025 forecast of over 300,000 arrivals is a “positive indicator…of a modest recovery.”
2011, for those of us who may no longer remember, was a terrible year for businesses, consumers, government employees, retirees, critical public services, etc.
I don’t think we ought to be looking forward to a repeat of that annus horribilis.
Expediting the passage of legislation that would generate revenue can only help our financial challenges, and each day we hesitate, we fall further behind in providing essential services, investing in infrastructure and other long term investments, and supporting those most vulnerable and in need
This is arguable. Tax-hike measures in a bad economy does not necessarily result in additional tax revenue, and may even decrease actual tax collection, which defeats the purpose of a tax hike. Moreover, if “providing essential services, investing in infrastructure…and supporting those most vulnerable and in need,” etc. are the governor’s priorities then 1) he should identify redundant, duplicative or overlapping government entities and services as well as unnecessary expenditures, and reorganize the government accordingly; 2) he should scrap every single budgetary item that has nothing to do with essential services, investing in infrastructure, and supporting those most vulnerable and in need; and 3) he should clarify what is meant by “the most vulnerable and in need” — is he referring to his political allies running for office this year?
The time for debate has passed; now is the time for action.
The time for debate never ends in a democracy. And it is always a good time to deliberate instead of rushing the passage of mindless, quite possibly harmful legislation.
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