Agencies reminded: Austerity still in effect

Gov. Pedro P. Tenorio has reminded all CNMI government agencies that cost-cutting measures implemented in financial year 1998 remain in effect as he asked officials to ensure that their offices continue to strictly practice austerity.

Mr. Tenorio, in issuing the memorandum to all government offices last month, pointed out the need to continue slashing expenditures to reflect the decline in the overall amount of revenues expected to be generated.

The governor said delivery of essential government services like education, public health and safety, should not be disrupted by declining revenues especially when there are available effective ways to reduce the cost of government operations.

The austerity plan was crafted and implemented, beginning FY-98 or when visitor arrivals to the islands started to trickle, in a way that it would not entail drastic moves that could require general decrease in work hours for employees.

Mr. Tenorio said cost-savings measures have resulted in a noticeable decrease in government expenditures, primarily because of strong cooperation by public offices in reducing or eliminating their respective non-essential expenses.

“Preservation of the public health, public safety and orders in our communities remains our principal concern. I do not wish to take any action that will decrease the levels of service provided to CNMI residents or that will adversely affect the livelihood of government employees,” he said.

Government expenses that would require closer monitoring and approval from the Special Assistant for Administration include off-island trips.

Overtime works will also be limited to employees directly involved in law enforcement, fire protection, emergency management or medical service activities.

Faced with the task of efficiently running the government through limited funding, the Commonwealth is also rushing to identify potential business activities that may save further collapse of the economy in order to nourish public coffers.

Government officials are wary that the anticipated demise of the garment manufacturing industry on Saipan would give the local economy harder blows considering its proven resilience against the effects of the downturn in major Asian economies which sent CNMI’s tourism sector into an all-time low.

The austerity program instituted by the administration of Mr. Tenorio resulted in major reduction in government spending that range from as low as nine percent to as high as 50 percent.

In the period covering Fiscal Years 1997 to 1999, the Tenorio Administration managed to cut personnel expenditures by nine percent; professional services by 50 percent; travel expenses by 24 percent; communication costs by 32 percent; and lease vehicles by 27 percent.

The cost-cutting measures were installed following the 20 percent drop in overall government revenues in the same period mainly because of the significant plunge in visitor arrival figures since the onset of the Asian financial crisis.

The 20-percent drop in overall government earnings was a bit low than the anticipated fiscal impact of the recession, thanks to the resilience of the apparel manufacturing industry which posted growth while all the other sectors were on the downside.

In fact, user fee collection from apparel exports have registered consistent growth since 1990 at only $6.3 million. The figure first reached the double-digit mark in 1996, recorded at $18 million, growing again in 1998 at $36.9 million and is anticipated to increase to $36.9 million this year.