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Costs to run CNMI gov’t leap 422%
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Posted on Feb 02 1999
Expenditures of the CNMI government have soared 422 percent to $266 million in 1996 from $51 million in 1978, or an increase of 9.62 percent annually, but it did little to help improve the commonwealth’s infrastructure, according to a federal report.
This means a huge portion of the increase have been spent to finance the operations of the island government since it became a commonwealth to the detriment of capital improvement, says a report commissioned by the Office of Insular Affairs.
The study called the CNMI Fiscal Impact shows the operational expenditures have grown at an annual rate of 1.7 percent, while per capita capital expenditures have shrunk -8.8 percent.
A substantial amount of expenditures went to public safety, education and public health during the period reviewed by Robert Rudolph and James Nicholas, authors of the study.
From 1978 to 1996, public safety expenditures jumped 1,235 percent to $21.33 million from $1.60 million, or an increase of 15.49 percent a year over the period.
Expenditures for education rose 14.46 percent per year to reach $49.34 million in 1996 from $4.34 million, while public health expenses leaped 883 percent to $46.98 million from $4.78 million, or an annual growth of 13.54 percent.
“These increases appear…to have been financed by reductions in funding from public works and capital expenditures,” according to the federal report released in January.
What is troubling, it notes, the trend “appears that the CNMI’s capital account has been sacrificed in order to continue operations in light of a rapid growth of population.”
The report says population growth, which rose 300 percent since 1978, was slightly behind the increase in capital expenditures at 8.41 percent a year against 9.62 percent.
According to the OIA report, the increase in revenues generated by the commonwealth through tax hikes to finance its operations have been held off by the sudden rise in population from 17,903 in 1980 to 52,742 in 1997, largely due to the presence of non-resident workers, including citizens of the Freely Associated States.
