Federal Cavalry to the rescue
A BIG thank you to Congressman Kilili for ensuring that the CNMI, which is facing an economic disaster, is included in the $1.9 trillion federal rescue package. He says he will continue to look for more federal funding opportunities, including for CUC projects. Based on his track record we believe him. The CNMI is fortunate to have a tireless congressional delegate who caucuses with the majority party and has 12 years seniority.
Federal assistance, in any case, is a lifeline that should help this U.S. Commonwealth stay afloat as it tries to reach the shore of economic recovery.
Around the world, many nations would also like to appropriate gargantuan relief measures, but only the economically advanced could (arguably) pull it off. The U.S. economy remains the world’s largest and most dynamic, and barring another unforeseen catastrophe, it is poised for recovery. According to the Wall Street Journal, the U.S. economy “is about to zoom ahead as the pandemic and social distancing ease. This year could see the fastest GDP growth since 7.2% in 1984, and the economy is poised to make up all of the ground it lost during the pandemic as soon as this quarter.” (There are, of course, grave concerns about the possible consequences of runaway government spending: the Congressional Budget Office estimates that the federal government ran a deficit of $312 billion in Feb. 2021, and that the current federal budget deficit is projected to be $3.3 trillion. “With the Pelosi-Schumer-Biden blowout,” the Wall Street Journal stated in an editorial, “the deficit this fiscal year will now be in the neighborhood of 18% of GDP. That’s the highest by far since the four wartime years of 1942-1945.” But that’s another story.)
In the meantime, the CNMI should continue preparing the islands for the re-opening of its tourism industry under the “new normal” protocols. Economic diversification — an NMI goal since the TT era — must remain a priority. At the same time, we should remind ourselves that the Northern Marianas is competing with several other jurisdictions and countries that also depend on tourism and are just as eager to develop and/or attract new industries.
As for the CNMI government, it should make it easier not harder for budding entrepreneurs to start their own business. It should make it easier not harder for businesses to remain open or to reopen soon. It should, for once, realize that the private sector is not the government’s all-purpose piggy bank. It should stop imposing new or higher fees and/or taxes. If the CNMI government can’t cut spending for political and other reasons, then it should at least stop spending more than the actual revenue it collects.
Not a solution
THE proposed Senate legislative initiative that will “cap” the CNMI government’s annual budget level at $190 million may be well-intentioned, but quite possibly inadequate.
To begin with, its main premise is not a statement of fact, but a political argument: “The CNMI government is facing an unprecedented fiscal and economic crisis due to uncontrolled government expenditures over the last 5 years and the drastic reduction in revenues due to the Covid-19 pandemic.”
Was there ever a time when CNMI government expenditures were “under control”? Throughout Commonwealth history, when the economy was down, the CNMI government spent more than it collected, and when the economy was growing, CNMI government spending rose.
The legislative initiative also states that in order “to avoid repeating past mistakes and to put our government on a sustainable financial course…our government must have effective financial control in place in addition to the present requirements of a balance budget, a plan to reduce and eliminate operating deficit, and criminal penalties for budget over-expenditures.”
So what happened to the current financial controls and laws and rules already in place? Maybe lawmakers should try to find out why many laws they pass are as “effective” as, well, the anti-littering law.
As any lawmaker should know, the primary budgetary items that usually exceed their annual funding allotments are medical referrals and emergency/disaster response. These, more often than not, involve life-or-death scenarios. And what about PSS, NMC, scholarships, CHCC, the court/justice system, utilities, public works, bond payments, the Settlement Agreement, among other ongoing government obligations?
The legislative initiative, in a way, indicated that it is basically a political press release when it stated that the “readjustment of the CNMI Budget will require tough and harrowing decisions.”
How many voters will elect politicians who promise to make the people’s lives tougher and more harrowing than they already are?
Incidentally, for FY 2021, the government is hoping to collect $144.4 million of which $47.9 million is for bond payments and other obligations, including $41 million for the Settlement Fund. The projected revenue available for government activities is $96.4 million, an amount that does not include the over $4 million for DPL.
In other words, imposing a $190 million budget cap on the CNMI government today is like putting someone who can barely move into a straightjacket.
As for the legislative initiative’s corollary proposal to create a “rainy day fund,” please see the “rainy day fund” law or P.L. 20-82 enacted in 2018. It aims to “establish a reserve fund to be used to meet the future needs of the Commonwealth.”
Right now, perhaps it is a better idea — as proposed by Sens. Paul A. Manglona and Edith Deleon Guerrero — to allow the entry of a (more) qualified (and more competent) casino operator on Saipan. That bill could be worth considering.