It’s all about the math
That was the CNMI government’s total identified budgetary resources for fiscal year 2019 — before Typhoon Mangkhut slammed into Rota; before Super Typhoon Yutu devastated Saipan and Tinian; before Covid-19.
With over $258 million in projected local revenue and resources in FY 2019, $171.5 million (which included $4.5 million for DPL) was supposed to be appropriated for CNMI government activities.
At the time, the tourism industry seemed to be on its way to full recovery, and a new major investor, Best Sunshine/IPI, had become, in the words of the Settlement Fund trustee, the CNMI government’s primary source of revenue.
Besides making full and timely payments to the Settlement Fund — which owns a consent judgment totaling $779 million — the CNMI government in FY 2019 allotted over $43 million for PSS so it could afford the pay raises approved by the Board of Education. More funding was also set aside for NMC, the scholarship office, medical referrals, CHCC, DPS, the fire department, Corrections, Customs.
“Everything” was, budget-wise, fine. Back then, one of the main complaints among the political opposition was that the CNMI had become dependent on the casino industry.
Fast-forward to FY 2021 which started on Oct. 1st, 2020. The government’s projected local revenue and resources have dropped to $144.4 million of which $101.million (including $4.5 million for DPL) may be appropriated for CNMI government activities.
From $258.1 million to $144.4 million is a decrease of about 44%.
From $171.5 million to $101.1 million is a decrease of about 41%
These are catastrophic reductions in government revenue.
Here then is a recap of the past three years: When more tourists visited the CNMI and a new major investor started doing business on Saipan, the economy improved, producing more revenue for the government which was, for the first time in decades, was again able to pay its most pressing obligations while spending more for its numerous offices, activities, programs, etc. Then the economy tanked because of natural disasters and a global pandemic. Government revenue plummeted, resulting in deep budget cuts, pay cuts, furloughs and other austerity measures.
Now if some politicians say that the CNMI government’s fiscal crisis was caused by overspending — as if there is another kind of government spending — then this new year is their chance to propose an alternative budget that will identify the specific cuts they believe are necessary so that the government will no longer “overspend.”
They may want to start with the governor’s office and its $765,000 budget for FY 2021 (down from $1.57 million in FY 2019).The governor’s office, especially when occupied by a politician of the other (the “wrong”) party, is apparently the ground-zero of “runaway government spending.” (Again, as if there is another kind of government spending.)
So never mind the extravagant judiciary and the $7 million it wants to spend on its white elephant that it failed to maintain and cannot afford to maintain. Never mind the redundant offices, agencies, programs, etc. Never mind medical referrals and the costs of disaster/emergency response — both items with annual expenses that cannot possibly be anticipated. Never mind all these truly gargantuan expenses. Let’s focus on nickel-and-dime budgetary topics (usually provided with no context or comparative figures from the past), but are politically “explosive” and just the thing to further enrage an increasingly unhappy electorate.
But no one wants to talk about the math
TO make things “whole” again in this fiscal year, the CNMI government must raise an additional $114 million. How? What should be done besides more oversight hearings, more meetings and more heartfelt speeches?
Where are the specific budget cuts and/or tax hike proposals that, for sure, will be vehemently opposed by many voters?
Well, we just answered our own question.