Austerity measures announced today

Kevin Bautista

The Torres-Palacios administration is expected to make an announcement today, Friday, about the implementation once again of temporary austerity measures, even as it assures that retirees will continue to get 100% of their pensions.

Press secretary Kevin Bautista did not mention, however, whether the administration will give or not to the retirees the 25% benefit payments not required in the Betty Johnson’s class action settlement agreement.

Bautista said yesterday that the closure of the CNMI’s second largest tourism market, China, for the rest of the fiscal year, means a loss of about 150,000 tourists, which would result in a revenue loss of about $40 million to $50 million.

Bautista said the initial conservative estimate first pegged the loss at $35 million to $40 million but that number has since been adjusted to about $50 million. As of yesterday, the Department of Finance was still working on finalizing the hard numbers, he said.

Part of what will be announced today, Friday, is the number of working hours that will be cut during the austerity, said Bautista.

Rep. Joseph “Lee Pan” T. Guerrero (R-Saipan) earlier disclosed that the administration is going to implement austerity measures, this time cutting employee work hours from the regular 80 hours to 64—a deduction of 16 hours.

Yesterday, Bautista said they’re preparing a letter that will indicate the cut hours and a directive to all department agencies to temporarily implement austerity measures once again. The last time the administration implemented austerity measures—payless Fridays—was in July 2019 and was only lifted in December 2019. It involved a modified 72-hour work schedule.

Babauta said that, as Torres mentioned in a recent speech, the administration is putting all options on the table to prepare for the economic loss as a result of the coronavirus outbreak in the region.

Those options include reinforcement of cost-containment measures, reviewing the tax structure, and reduction of work hours.

When it comes to dealing with the retirees’ pensions, Bautista said the Torres administration, working with the Legislature, has always prioritized the pensions of retirees since the beginning to ensure that they receive their full pensions.

With the economic circumstances facing the CNMI right now, Bautista said they are looking at how they can make up for the loss of hours among government employees, while ensuring that they do not touch the retirees’ pensions.

Bautista noted that the Torres administration has contributed upwards of $200 million to the Settlement Fund to ensure that the retirees receive 100% of their pensions.

“And that’s the promise that the governor personally handles himself, along with the rest of the administration, Secretary of Finance, and Legislature leadership,” he said.

The press secretary said they are still reviewing the numbers to ensure that will be able to ensure the full pensions of retirees.

He pointed out that, at the end of the day, payments to the Settlement Fund is a mandated court judgment that the government has to pay.

“We are doing our very best. Announcement of the final numbers after we finalize our determination on the cost analysis will be out [today],” Bautista said.

Bautista said that given the economic climate that the CNMI is in, both the administration and the Legislature are all hands-on-deck to make the cuts necessary to keep the government afloat and to keep the tourism industry intact.

He said the Torres administration and Marianas Visitors Authority, along with the business community, are advocating for the whole community to continue to promote the Marianas as a coronavirus-free destination.