WITH NO TOURISM AND REVENUE
A total of 180 government employees who are currently furloughed will be permanently terminated from their jobs due to the continued lack of tourists and a depressed CNMI economy.
Gov. Ralph DLG Torres informed the Legislature yesterday that he and Lt. Gov. Arnold I. Palacios are making a very difficult decision to initiate the reduction-in-force procedures as part of ongoing cost-containment measures to ensure the continuity of public services.
“I have no choice when we don’t have any tourism and revenue,” he told Saipan Tribune.
Torres said this is why he and the administration have been pushing for a travel bubble between Saipan and Korea since last August, then last December, and last month as a means to at least have a partial resumption of tourism.
In his letter to Senate President Jude U. Hofschneider (R-Tinian) and House Speaker Edmund S. Villagomez (R-Saipan) yesterday, Torres said that rehiring the 180 furloughed employees would require $5,688,239 for fiscal year 2021, which the government doesn’t have
This, Torres said, is in addition to the 3% shortfall in anticipated revenue incurred during the first quarter of fiscal year 2021.
He said he and Palacios decided to go ahead with the reduction-in-force after consulting with the Civil Service Commission, the Office of Personnel Management, the Office of the Attorney General, and the Commonwealth’s executive department heads and analyzing the ongoing fiscal impact of the loss of tourism and the administration’s financial projections for the rest of the fiscal year.
“The dire fiscal circumstances facing the CNMI have forced us to take this regrettable, but necessary step,” he said.
Torres said the onset of the COVID-19 pandemic in early 2020 has resulted in a “dramatic and severe reduction” in economic activity and tax revenue. He said the pandemic and measures to control it resulted in suspended flights, which in turn, caused the tourism industry to come to a complete standstill. As a consequence, the governor said, the CNMI’s tourism-based economy became depressed and tax revenue was thus drastically reduced.
After reducing the fiscal year 2020 budget by 48% due to the shutdown of the tourism markets, the government furloughed civil service employees and terminated excepted service employees. About 516 government employees in total were laid off, with approximately 269 of that number being furloughed civil service employees.
“This was done in order to ensure basic services remained operational during the ongoing public health emergency,” Torres said.
At that time, Torres said, the administration had hoped that the COVID-19 threat would pass within a year and that tourism would resume and that the economy would revive.
Torres lauded the Commonwealth Healthcare Corp. and the COVID-19 Task Force for successfully keeping the community safe from COVID-129, yet the CNMI’s economy remains down because of the inactive tourism industry, resulting in further decline of government revenue.
The infusion of federal funding from the CARES Act and other federal grants allowed the administration to place laid-off government employees—including about 89 civil service employees—from the furlough list into federally-funded positions and other positions important to the COVID-19 response operation.
Torres said their goal was to maximize federal funding in order to accommodate as many furloughed employees as they could, and that they are grateful that they were able to do so given the circumstances and limited resources.
“Unfortunately, even with reprogramming and maximization of all available financial resources, we have not been able to bring back 180 government employees from the furlough list,” he said.
The governor noted that the current fiscal year 2021 budget appropriation does not provide sufficient funds to recall these furloughed employees.
Despite initiatives pursued to increase economic activity such as the travel bubble with South Korea to resume tourism and increased federal funding through such programs as the Community Development Block Grant-Disaster Relief, it is doubtful that they will have enough revenue to increase the fiscal year 2021 budget and be able to recall the furloughed employees in the next few months, he said.
“Due to the unlikelihood that the economy will revive sufficiently within the next few months so that revenue will increase to the point that the government can recall all furloughed employees, the administration deems it necessary to initiate the reduction-in-force procedures,” Torres said.
The administration has directed all executive branch departments and activity heads that currently have furloughed civil service employees to immediately submit a notice of intention to implement a reduction-in-force form to the Office of Personnel Management in compliance with the NMI Administrative Code.
The administration has also directed Executive Branch departments and activity heads to cooperate with OPM to implement the reduction-in-force procedures.
Torres said the significance of the CNMI’s tourism industry on the economic wellbeing of the community and the proper financing of the services the community expects from its government have been made very clear in this crisis.
He said that in 2019, the CNMI received on average 30,000 tourists a month—approximately 30% of the resident population—with each one spending between $400 to $758 a day.
Torres said the elimination of tourist arrivals during this crisis devastated businesses who rely on this market.
“While federal assistance aids in mitigating the further loss of consumer activity, it will not replace the role of tourism in supporting economic activity and government revenue,” he said.
Torres said he will continue to take action to protect the islands, ensure that the government provides its public services, rebuild the economy through tourism promotion, and pursue federal relief to assist the residents.
He said his administration continues to work with the Marianas Visitors Authority and South Korea travel partners to fully implement the travel bubble, which would allow a partial resumption of tourism under strict COVID-19 mitigation guidance, and generate needed revenue.
Torres pointed out that this, however, will not be enough to make up for the shortfall.
He said the estimate is that in order for the CNMI to generate the necessary resources from the tourism industry to support these employees, they would need more than 130,000 tourist arrivals in the remaining months of this fiscal year.
For this reason, the governor underscored the need for the Legislature to pass legislation that promote revenue generation and business development in order to aid in the collective efforts to increase government revenue and hopefully bring back all employees.