AFTER more than a year of denouncing the previous administration’s overspending ways, and after repeatedly stating that we should expect the worst once the ARPA funds were depleted, the CNMI’s newly elected officials seemed surprised to realize that they were right. Their doomsday forecast has come to pass. Now that they’re in charge, many of them are finally learning the difference between running a campaign and a government.
After publicly saying early this year that he was not inclined to propose tax hikes to pay for government misspending, the governor ended up proposing tax hikes. With tourism numbers still down, he also announced, in March, a “pivot” from the China tourism market, the CNMI’s second largest, while seeking more U.S. funding and assistance…that has yet to materialize. This new “policy,” in any case, could have been better worded. The governor could have stated that it was his intention to “pivot” from the China tourism market once there is actual and sustained U.S. assistance that could make up for the loss of about 44% (!) of the CNMI’s tourist pre-pandemic arrivals. Instead, the governor willingly — and inexplicably — painted himself into a corner, and the only way out now is to contradict himself. “I’m not saying we’re not going to welcome [Chinese tourists], I never said that,” he told reporters in November.
As a hotel executive has pointed out, tapping the China tourism market — which is what other U.S. jurisdictions are now doing — “would be the fastest and easiest path towards recovery….”
More bad news:
The U.S. Congress ignored the governor’s plea for the temporary suspension of the CW touchback provision amid a labor shortage and delays in badly needed, federally funded infrastructure projects due to, among other things, a lack of workers.
After almost a year in office, moreover, the administration and the Legislature are still struggling with the mismatch between the government’s spending habits and actual revenue collection. Meanwhile, people are leaving the islands, further shrinking the CNMI’s consumer and tax bases. Many businesses are either downsizing or shutting down, resulting in more job losses.
And the CNMI, which used to have three major tourism markets, is now “overdependent” on one of them, South Korea, but the government still refuses to adjust its spending levels. Apparently, the administration and its allies in the Legislature are still hoping for the arrival of federal manna, and the passage of their dubious tax and fee hike proposals. Unlike the House of Representatives, however, it appears that the Senate is no longer reliably pro-administration.
As for proposals that could generate new revenue without raising taxes, they are, as usual, being shouted down by vocal members of the public, including those who believe that the government should provide extensive public services and programs that cost a lot of money, which the same government doesn’t have. Elected officials seeking reelection in 2024 have no choice then but to decry, once again, the previous administration’s mishandling of BOOST funds, and the sorry existence of the IPI building and its owners’ unpaid obligations to the CNMI. They would rather discuss anything but the main problem at hand — the CNMI government’s mounting financial pressures. How long until the government has to announce additional work-hour cuts and/ or a suspension of the retirees’ 25% benefits even as government vendors — including CUC — demand overdue payments?
Considering how dreadful 2023 was, however, there should be some improvements in the new year. Barring another global emergency or crisis, Korean arrivals should continue to recover. The numbers from Japan and even China should also, finally, improve. But would these be enough to turn the economy around? We’ll soon find out.
<p style=”text-align: center;”><strong><em>”After almost a year in office… the administration and the Legislature are still struggling with the mismatch between the government’s spending habits and actual revenue collection. Meanwhile, people are leaving the islands, further shrinking the CNMI’s consumer and tax bases. Many businesses are either downsizing or shutting down, resulting in more job losses.”</em></strong>