The report is available online
FOUR years ago, the CNMI government was facing a fiscal crisis that was worse than the current one. In 2020, the Covid-19 restrictions had shut down the tourism-based economy, and the government was staring at a $65 million budget hole in fiscal year 2020, and shortfalls amounting to $85.2 million (!) in FY 2021 and, in FY 2022, $36.9 million (an amount based on the experts’ mistaken assumption that tourists, by FY 2022, would start visiting the CNMI again.)
In April 2020, the Torres-Palacios administration, with help from the feds, convened the four-day CNMI Fiscal Response Summit. Officials from the three branches of government as well as the municipal governments, autonomous agencies, public corporations, business groups, volunteer agencies, non-government organizations — all of them participated in the summit, and came up with various recommendations that included several cost-cutting measures. All of which were forgotten after the CNMI received close to a half a billion dollars in ARPA assistance, which fully funded the Commonwealth government for at least three calendar years while the local economy remained in a coma.
That funding source is either gone or almost gone. But the summit’s proposals remain relevant — more so now when there is not another massive federal bailout in the horizon. The administration, however, no longer mentions the fiscal summit report (https://cnmi.pitiviti.org/). Ditto the lawmakers who attended the summit.
Like previous elected officials who also had to deal with the government’s deteriorating fiscal condition in the past, it seems that everyone on Capital Hill today prefers to wait for things to get better while, figuratively speaking, using their fingers to plug the holes in a financial dam — only to have new holes appear.
Recently, they found a way to “voluntarily” pay the retirees’ 25% at least until August. But after August what then? And what about medical referrals and Medicaid? Utility payments? Scholarships? Public education? Public safety? The government employees’ health and life insurance? Payroll?
As the current leadership is finding out, when the economy is down, there are no (politically) easy solutions to problems that require significant amounts of funding, and many things are beyond government’s control, whoever is in charge.
Overdependence on a single tourism market is not good
BASED on MVA’s latest arrivals report, South Korea, the primary market, continues to improve. But the CNMI’s two other tourism markets — Japan and China — have yet to recover. In April 2024, there were only 542 visitors from Japan, and 1,450 from China. Before the pandemic, in April 2019, the numbers were 2,313 arrivals from Japan and 16,973 from China. (The South Korean numbers are 19,595 in April 2024, and 17,182 in April 2019.) The April 2024 total arrivals are 46% higher than the numbers in April 2023, but 49% lower than April 2019.
Now take note that MVA is promoting the CNMI in Japan, and before the resumption of Hong Kong Airlines’ flight service to Saipan on April 28 there were no direct flights from China. There are still no direct flights from mainland China. Yet the China arrivals were almost triple than that of Japan. Now what if the feds exempt the CNMI from the USDOT cap on China flights, and MVA once again promotes the Northern Marianas in China?
This is what the business community has been saying all along. Yes to the governor’s pivot to the U.S. military. Yes to Japan, Korea and new markets like Taiwan, Australia, etc. Yes to federally funded road and other projects (boondoggles included). Yes to diversification. Yes to all that while also promoting the CNMI in a major tourism market that is China.
In trying to revive the tourism-based economy and improve the CNMI government’s fiscal condition, every possible solution, anything that could help, should be “on the table.” Now if the administration truly believes that the CNMI should just make do with what it has in terms of current tourist arrivals while hoping and begging for more federal handouts — fine. But allowing the government’s financial condition to deteriorate further, and its unpaid obligations to continue to mount is irresponsible.
