GOVERNOR Arnold I. Palacios on Wednesday said “the State of the Commonwealth could be better, but it is also getting better because we are making it better.”
In his first State of the Commonwealth Address, which he delivered for about two hours during a joint session of the Legislature at the multi-purpose center in Susupe at 10 a.m., Palacios talked about how his administration stabilized the government’s finances by “cleaning up the mess” that he said the previous administration left behind.
“When you add it all up, it was like a super typhoon had ripped through our government finances. So what do you do right after a typhoon? You clean up the mess and you rebuild. That’s exactly what we did,” said Palacios, who assumed office in Jan. 2023. He served as the lieutenant governor of his predecessor.
Noting the decrease in tourist arrivals and several business closures, Palacios began his SOCA by saying, “the economy could be better.”
With inflation, labor shortages, and construction delays, he said infrastructure development could also be better. With “more and more of our people relocating off island to seek greener pastures, including my own kids, life here could be better,” he said.
“These are the cold, hard facts, and as they say, ‘Facts are stubborn things.’ But you know what else is stubborn? The will and determination of our Commonwealth, because for the past two years, good, hard-working people have been doing all that they can to restore trust, integrity, and hope in the Northern Marianas. But, instead of repeating the mistakes of the past with quick fixes, we have focused on long-term solutions that will benefit everyone, not just a select few,” he said.
“And let me be clear,” he said; “this was not some haphazard approach. We developed and executed a very clear plan to stabilize our finances, make our community safer, healthier, and cleaner, build our infrastructure, and, most importantly, revitalize our economy. I can assure you, these efforts have not been in vain.”
He said when he and Lt. Gov. David M. Apatang came to office, the CNMI deficit was “over half a billion dollars.” He said there was also a “long list of questionable expenses that didn’t help us one bit.”
He said that when his administration finally initiated a long-delayed single audit, “we confirmed that material weaknesses and significant deficiencies added up to $104 million in questioned costs.”
Palacios said the management of federal funds under the previous administration “was so bad that they failed to fully account for $36.3 million in CARES Funds, $93.7 million from the Community Disaster Loan program, and $481 million from the American Rescue Plan Act.”
He said this comes as “no surprise when one considers just some of the things the previous administration spent that money on.”
He said this included a sole-source contract for $1 million, or almost $5,000 a day, to sanitize the multi-purpose center; $1.7 million for a horse course; and a sole-source contract of $5 million paid to a “well-connected businessman for PPEs that were never used and never needed.”
Is it any wonder, he asked, that when he and Apatang came into office, the government’s audits were three years behind?
“And because so much of our funds come from the federal government, this jeopardized our federal grants and federally funded programs. In fact, because of these delayed audits, the scope of federal audits on the CNMI almost doubled from eight programs to 14 programs, bringing more scrutiny and uncertainty to critical services.
“It did not help that the previous administration implemented an entirely new finance software system, but didn’t take the time to properly transition and train government offices and vendors. The hasty implementation disrupted reliable processes, delayed payments to vendors, and further undermined our efforts to complete timely audits,” Palacios said.
He said he and the lieutenant governor “took decisive action to cut costs, restricted departments from exceeding their monthly budget allotments and imposed strict limitations on travel. They also reduced regular and overtime work hours in order to optimize labor costs, and ended over 600 ARPA-funded employment contracts that were initiated by the previous administration for political gain at the height of the 2022 election.”
The rest of the SOCA, which included video segments, highlighted the “achievements” of the CNMI government, including the administration’s efforts to “revitalize” the economy by “invest[ing] heavily in a digital economy,” referring to the federal funds received through the BEAD program, among other things.
“However, as I said earlier, we are not repeating the mistakes of the past by resorting to quick fixes that might work in the short term for just a few, but fail in the long term for the people of the Commonwealth. We have been developing a diversified and sustainable economy that benefits everyone.”
Reactions
In an interview after the SOCA, Senate President Dennis Mendiola said, “I’m not sure if that is actually the right state we’re in when we’re talking about economy.”
Asked if he agrees that the CNMI is getting better, he said, “I don’t believe we are in that position right now, but I’d like to see the evidence that the governor was presenting [during] today’s SOCA.”
Noting that the governor mentioned businesses opening up, Mendiola said, “I am not seeing that, in actuality.” He said more businesses are actually closing down, “so I’m not sure where [his] numbers are coming.”
Mendiola said there is a lot of work that needs to be done. There are a lot of regulations that the CNMI government needs to look at, because “we need to make the CNMI a viable place for businesses who want to come and invest in the CNMI.”
He said it is important that “we put our heads together to actually try and get us out of this economic crisis.”
For his part, Speaker Edmund S. Villagomez said he likes the governor’s report. He noted that the governor has stated that the CNMI could do better. “So that is what we are all trying to do — to improve the quality of life here in the CNMI. We are not denying the fact that the economy is really difficult right now. We are going through a lot of challenges and other issues,” the speaker added.
He said the administration is working with different partners and agencies to make the CNMI better.
Pleased
The new deputy assistant secretary for Insular and International Affairs at the Department of the Interior, former Rep. Angel Demapan, said he was very pleased to hear the governor say that the CNMI is getting better.
“Our people deserve a state of the Commonwealth that is better and a government that is functioning better. So I am very excited to hear how he plans to move forward,” Demapan said.
He noted that the Interior Department provides assistance to the CNMI government “so we can discuss that further with the governor and I am excited to see what the plans are.”
For his part, former Gov. Juan N. Babauta said Palacios’s SOCA was “excellent.”
“It was comprehensive. He gave us the big picture, yet it was filled with a lot of details. And the visual presentation was a positive addition to the presentation. It was a very good and excellent presentation,” Babauta added.
He said the governor also contrasted instant gratification with the goal of building a more comprehensive and diversified economy.
“It’s all true,” Babauta said. “We tend to adopt this instant gratification…bringing in a huge company, for example, the casino that promised to take care of everything. Then, we put all eggs in one basket. The governor is looking at a more comprehensive and diversified economy that is sustainable and he described that in his SOCA very well,” Babauta added.
https://www.youtube.com/watch?v=ZX9i2YsQXC4
Gov. Arnold I. Palacios, center, delivers his first State of the Commonwealth Address at the Governor Pedro P. Tenorio Multi-Purpose Center in Susupe as Senate President Dennis James Mendiola, left, and Speaker Edmund S. Villagomez listen.
Gov. Arnold I. Palacios, center, delivers his first State of the Commonwealth Address.
Gov. Arnold I. Palacios, center, and Lt. Gov. David M. Apatang, fourth left, with lawmakers, judicial branch officials, Saipan Mayor Ramon Blas “RB” Camacho, Rota Mayor Aubry Hocog, and Tinian Mayor Edwin P. Aldan, right.
Gov. Arnold I. Palacios and Interior Deputy Assistant Secretary for Insular and International Affairs Angel Demapan shake hands as they pose for a photo after the governor’s State of the Commonwealth Address.
Senate President Dennis James Mendiola applauds at the conclusion of Gov. Arnold I. Palacios’ State of the Commonwealth Address.
