Budget questions
SOMEONE in the Legislature should ask the administration why it believes its proposed budget for FY 2026 adds up. Actually, it is the Legislature’s job to do so. The government missed its first-quarter revenue projection by $2.7 million. Visitor arrivals and hotel occupancy rates are still declining. More businesses are either shutting down or downsizing, which will further shrink the CNMI’s tax base. And yet, the governor expects the government to collect more in FY 2026. By what mathematical hocus-pocus — or accounting gimmick — can that be made possible?
Do leftover federal funds still exist, despite the administration’s repeated claims two years ago that they were depleted? In his letter to the Legislature, the governor said autonomous agencies are among the “additional revenue sources” for his FY 2026 budget. What are these agencies? MPLT? CEDA? NMHC? Lawmakers should find out. And how much are these agencies supposed to fork out? Is that allowed under current law? If so, which law permits it?
The governor also said that he “continues to work closely with [CEDA] to secure a pension bond….” Is he saying that the CNMI government will take out another loan? How much? Who’s lending? What’s the interest rate? How will it be paid?
Taxpayers want answers.
As for the “innovative, sustainable revenue-generating measures” mentioned by the governor, here’s one proposal: identify redundant departments, divisions, bureaus, agencies, programs, or offices — then merge some and eliminate the rest.
Here’s another: stop voluntarily paying the 25% retiree benefit not required by the settlement agreement. If officials believe it’s a priority, they should implement across-the-board spending cuts to fund it.
Will any elected official — including the so-called “fiscal conservatives” — propose these measures? That’ll be a cold day in hell.
Can’t pay for it, can’t have it
IN his budget submission letter, the governor reiterated his (misplaced) belief that spending federal funds alone can “help spur economic activity and growth.” The CNMI government has spent close to half a billion federal dollars in the past three years. Where is the economic growth? How will spending another half a billion dollars from Uncle Sam be any different?
Here’s the hard truth. Pouring money into the financial black hole that is the government won’t improve the economy.
In their well-informed letter of advice to the governor in Oct. 2023, the Saipan Chamber of Commerce and HANMI pointed out “the difference between tourism spending and government spending, such as those provided through federal grants. When a visitor chooses to spend his or her dollars it can go to a range of businesses across sectors — services, restaurants, hotels, amusements, etc. These components of the visitor’s expenditure rely on each other for revenue and resources to support employment. Thousands of local residents have built experience and careers within these fields. Turning off the source of revenue that provides for these businesses and individuals is not replaced by government spending which finds itself largely within the construction and professional services industries.”
No matter how this administration describes it, the local economy is tourism-based. Tourism is down and will likely remain so for the next few months — or longer. Asking the feds for hundreds of millions more — on top of the hundreds of millions of federal dollars the CNMI already has, according to the governor — is no slam dunk. And raising taxes amid all this economic uncertainty is a disastrous course of action that the public should oppose.
Like struggling businesses and households, this government should not spend more than it makes. It should, for once, keep its hands — and eyes — off someone else’s wallet.
