Like a Runaway Train

June 18, 2010

People should be very worried about the payless payday that has occurred in the CNMI.  I am not just talking about the unfortunate employees who will have their checks delayed.  Family members, store owners, landlords and others will be impacted by this development.  It will be especially difficult for those who live paycheck to paycheck as more and more Americans do.

For some, having a paycheck come four or five days late could mean going without food, medication, gasoline and other necessities.

This could be just one of many payless paydays. The plan to take $8 million from the Marianas Public Land Trust and Commonwealth Development Authority may be just another temporary bandaid, because shifting funds cannot solve the problem.  Since the lieutenant governor was the former Secretary of Finance it seems like he should have taken steps to avert this crisis, or at least given some substantial warning.

The government continues to spend more money than it has in the depleted coffers. From the Saipan Tribune:
In 2009, for example, the government collected only $154.69 million in taxes and fees, but spent $168.12 million, representing a $13.43 million deficit.

Three of the prior years were no different. In 2005, government revenue was $210.29 million but government expenditure totaled $224.10 million, or a $13.8 million deficit.

In 2006, government spending of $195.60 million exceeded the revenue of $192.03 million by $3.57 million.

It was different story in 2007 when the government collected $163.03 million, but spent only $162.67 million.

In 2008, government spending of $170.60 million again exceeded by $8.34 million its revenue of $162.26 million.

The Fitial administration expects shortfall in collection again in FY 2010, which ends on Sept. 31, 2010. Gov. Benigno R. Fitial revised the revenue estimates for FY 2010 to only $137 million.

In April 2010 Lt. Governor Inos said that hours would be cut for government workers to save money, but that there was no need to raise taxes or business fees as the Senate suggested. The Saipan Chamber of Commerce also objected to the Senate's proposal to raise fees and taxes.  Chamber president Brennan claimed that the government should instead reduce expenditures "to an amount less or equal to the revenue."

Expect some serious finger pointing to begin as the blame game escalates.  From the Saipan Tribune:
House Minority Leader Diego T. Benavente (R-Saipan) described the delay as “irresponsible” and “negligent.”

“I think it's negligent on the part of the administration to wait this long. They should have met with the Legislature last week, not two days before the payday,” Benavente said in an interview.

Benavente, a former lieutenant governor, said many government employees in the CNMI live paycheck to paycheck.

“And that means there may not be food on the table for days,” he said.

Had the Fitial administration reduced the quarterly allotment at the start of Fiscal Year 2010, and not waited until after two quarters had already passed, then the financial situation won't be this severe, he said.

He said the blame should not be on the defeat of the austerity bill that sought to reduce work hours by 10 per pay period, from 80 to 70.

“And the Legislature was jumping yesterday to pass the reprogramming bill, thinking that people would get their paychecks today [Friday]. That didn't happen. We had a payless payday,” he added.
At the same time CUC is owed millions mostly from government agencies and the retiement fund is evaporating.

In February 2009 Tina Sablan denounced the gamesmanship and urged community member to voice concerns about the budget. At a House session members attacked the governor for hiring 400 people to earn votes for the upcoming election. From the Saipan Tribune:
Tina Sablan raised concerns about alleged favors offered in exchange for not supporting an override.

“There's concern about the kind of gamesmanship going on. My office received word that favors are being offered in exchange for not voting for an override. Jobs are being offered to relatives of politicians, releases of allotments. The little favors, concessions here and there. Naturally, that presents a challenge,” said Sablan.

On Tuesday, Fitial vetoed the $156.76 million budget bill submitted by the Legislature, which includes $148 million in local revenue collections, due to lack of austerity measures.

The following day, the Senate overrode the governor's veto.

...During discussion on the governor's veto, Rep. Heinz S. Hofschneider said the governor does not need the Legislature to implement austerity measures. Just like other members, Hofschneider pointed out that the administration talks about belt-tightening measures but continues to hire additional employees.

He said the administration is “blackmailing” members of the Legislature into taking away salaries of government employees to be able to pay the salaries of over 400 new employees hired.

“We're being duped into participating in a disastrous policy.” he said, adding that the governor could have line item vetoed those sections of the bill that he does not agree to.
The debate about the budget continued through November 2009 with calls to adopt a balanced budget.  It didn't happen. Meanwhile the Department of Public Health posted an $18 million deficit, CUC is owed millions by the CNMI government and doesn't have money to buy fuel on a regular basis, nurses on Rota and Tinian have experienced weeks of payless paydays, the retirement fund is owed millions and on and on.

The CNMI is becoming one huge train wreck.


Anonymous said...

Count on it. Change will come. You have become corrupted with your absolute power. There will be a painful day of reckoning by all of you bums in the Administration for hurting our children and families. As for the Legislature, you are no less at fault.

Anonymous said...

The solution is simple. The governor needs to appoint a Blue Ribbon panel made up of outside economists, retired politicians or judges, and a few longtime residents with a reputation for letting the chips fall where they may. The panel would make recommendations on how to balance the budget, and the legislature and governor need to promise in advance to implement those measures without significant amendments. The budget gets balanced, the haole/retired politico panel members take the fall for the layoffs (there is established precedent for outsiders being brought in to do the dirty work the locals don't have the stomach for), and the elected officials get 'plausible deniability'.

Anonymous said...

Taxes pay for government services. We pay zip in taxes. Many large businesses pay zero. This alone is a ticket to disaster. The average person would be glad to see 50% of their rebate returned if it would mean payed fuel, better water, improved services and no more threats. At the same time, the private sector needs to realize that they are on borrowed time as well. As long as they refuse to support a moderate tax increase and pay wages beyond the minimum, they are feeding the fires of this economic collapse.

Anonymous said...

So let's lure more billionaire investors by promising tax breaks, let them wreck the islands and pay zip. Who are the idiots running the NMI? Tax breaks should never be in the deal for ANY business. Time to increase income tax and impose a sales tax.

Captain said...

It is also time to maybe institute a property tax, (I am in travel, will comment further later)

Anonymous said...

We don't need increased taxes, we need to stop spending ridIculous amounts of money for useless employees, sweetheart contracts and feelgood but useless government agencies. What need do we have for DCCA, for example? carolinian affairs? Why do we need to send family members on medical referrals with outpatient service recipients? Name me any other community of 50,000 souls that couldn't live very comfortably on $130 million per year. LAY OFF 1,000 USELESS GOVERNMENT EMPLOYEES! NO NEW TAXES!

Anonymous said...

Downsize the Government employees, there are just too many. Downsize the number of Contract Workers. There are just too many of them and not enough jobs for locals unless you make room. With the Government out of money and the economy crashing, or crashed, it is only going to get worse here day by day. Crime is up in numbers never seen here before, assaults, rape, theft, murders, and plain ol petty crimes. With less and less money being earned and spent, more and more unemployed, with this first of many to come, payless paydays from the Government, we are in a downward spiral. Drastic changes must be made now and it can not and will not make a lot of people happy. The poor get poorer and the rich (current and prior politicians) get richer. Take a look around and see who has the money and where they got it from. A leech will not let go until you make it. I will just continue to suck your life away until you die.

Anonymous said...

Many are correct on downsizing the Govt employees. There are estimated more than 5K now.
In the past the newly elected have always hired prior to the elections and then laid of after the elections.
This Admin has no clue of "economics" and just creats new position to cicumvent the hiring laws.

BUT until the private sector pays wages equivalent to the Govt sector, the locals will not work for the minimum wages.
Until the people get away from Govt employment and the intimidation from the elected, the only thing we will have is this recycled clowns dragging everyone down.

Even if the wages are higher many, NOT ALL, won't work (for long)
Years ago a new owner (educated local) took over a Mobil service station franchise.
He made a big deal that he would hire only locals and pay higher than minimum wage, which was $3.05 at that time.
He paid $5 starting off. The only person he had that was CW, was the cashier.(because she could count)
The first year he went through more than 130 people because they did not show up for work or when they did they where usually hiding in the back and the cashier ended up pumping gas, clean the store etc.
He went back to hiring CW.(till today that is all he has working, they get $5)

Many more stories like this.
Another construction company pays locals $6.50 starting, same problem. Only a few long time locals remain.
Another place pays Davis Bacon AWD wages plus medical and 401K (lowest job description pays $10.14) they have the same problem with no shows especially on the shifts. The overtime is taking a big chunk out of any profits because of the no shows.

At any rate this place is self destructing around us.
I seriously doubt if the NMI will survive the term for the duration of this incompetence leadership from the self serving elected..


The train is heading to banzai clip, then all the way to marianas trench.


The train is heading to banzai clip, then all the way to marianas trench.

Anonymous said...

the only real solution is for the US to just take over and build the place into a state where it has an iota of a chance to run itself. the locals will NEVER be able to do so. corruption, greed, intimidation are just too ingrained in the 'culture'. we need a broader voting base made up of non-locals so intelligent and objective people have a chance of being elected. that's it!

The Saipan Blogger said...

The newspapers reported that 400 people were hired in the lead up to the election last year. After the election all the losing candidates, including the ones who had campaigned with Juan Pan (like Rita Dela Cruz at CRMO), were given jobs.

That's about 10% of the government workforce that was hired for no other reason than to get people to the polls last election day, never mind all the other political hiring that goes on.

Leave taxes alone and gut government spending. Cut retirement benefits, too. There is no reason that people should be eligible to retire when they are 38.

Anonymous said...

Most of these stories of government hiring are apocryphal or wildly exaggerated, usually by political opponents of the administration such as the Marianas Variety.

To get the real data, do an Open Government Act request to OPM or the NMIRF. But that would be too much work for the Variety.

Or do like many municipalities throughout the mainland. Pass a law requiring that the names and salaries of each public employee be posted on a website by OPM or the NMIRF. After all, they work for the people of the CNMI.

Wendy said...

Anonymous 1:17

The governor and AG do not respond to OGA requests! Try it yourself. I have.

Anonymous said...

Aon Jun 19 7:26 is correct.
The only way, I mean ONLY way, that government will cut it's employees is if some outside group is tasked to do it. The spineless lawmakers do not have stomach for it and they want to get re-elected with the salaries and outlandish slush funds. However, even these bottom-feeders know it has to be done. But who will do it? An independent group, like the base closing BRAC group (which was actually succesful) might give them the distance from the situation to allow it happen. We can blame the legislature for many things because they are quilty of many things, however, they cannot be blamed for the total economic condition of the island. They can, however, clean up their own house.