The government has a spending problem, not a revenue problem
“When a business or an individual spends more than it makes, it goes bankrupt. When government does it, it sends you the bill.” — Ronald Reagan
WITH Typhoon Mawar long gone and recovery efforts on Rota now ongoing, CNMI officials should have more time to focus on their main task: to somewhat, somehow improve the Commonwealth’s financial condition — or at least not to make it worse.
They should help stabilize the workforce situation by working with the U.S. Congress in amending the federal CW law and ensuring the passage of Congressman Kilili’s bill, H.R. 560. They should also continue the expansion of local workforce training and tourism promotion while seeking new legitimate investors, and/or creating new legitimate investment opportunities.
The government, however, cannot tax its way out of a financial mess it has lurched into. The current tax base is small and will shrink further if you impose additional costs on doing business or residing in the CNMI. To be sure, tax/fee hikes would allow the government to pass another inflated budget based on “new revenue” that it would supposedly collect…in the future, fingers crossed. Which is business as usual. But this new administration earlier declared that it can no longer be business as usual in the CNMI.
As usual, the main problem is the government’s huge and costly responsibilities and obligations created and maintained by elected officials and enthusiastically backed by voters. It is a setup that can “work” only as long as the local economy is thriving. The local economy, however, is back to where it was in 2011-2012: in the abyss.
The government must, one way or another, cut costs. The private sector is not the government’s ATM. As the then-Saipan Chamber of Commerce president told the author of an abominable tax-hike bill in 2011: “Now is not the time to extract, through increased taxation, funding for government expenditures from businesses that are barely surviving.” Further increasing the cost of doing business in the CNMI “would have a net negative effect on business activity, consumer pricing, actual revenue generated by the proposed increases, and jobs….”
Instead, like any other entity that can no longer afford its current expenses, the government should reduce them. Start with the politically feasible measures such as a reduction in the number of Senate and House seats as well as a drastic curtailment in the use of cell phones, official vehicles and utilities. Next is the consolidation of department/agencies/offices/programs that are either redundant or duplicative.
“Providing critical public services” is supposed to be the government’s main task — not providing jobs and contracts to the politically connected.
About the casino
WHILE the courts continue to resolve the numerous lawsuits against IPI, the administration and the Legislature should, by now, have figured out what they want to do with Saipan’s barely-breathing casino industry. Abandon it? And then what? Try to revive it? How?
The CNMI needs to move forward on this issue. The blame-game should be over by now. Some six months ago, a significant majority of voters had already assigned blame. Hence, a new administration and a new Legislature were sworn in. Members of the public now want to know what their new leaders are doing to address the specific problems that their newly elected officials knew they would inherit. And these include the obligations to the “health network” (medical referral) program, local Medicaid, government retirees, PSS, CUC, vendors, among many, so many, other things.
