The blame game

Posted on Feb 08 1999

Once I stumbled on a news leak that angered a few people with the former administration. That was in early October 1996. The story: a $20.3 million deficit. Constitutionally, a deficit ought to be retired two years from when it occurred; in this case, retirement fell due on Sept. 30, the end of fiscal 1996, the deficit being incurred in 1994. Administration people bristled at the notion that it overspent. The former special counsel on legislation, Doug Muir, tried to discredit the report with semantic hairsplitting. He said the government wasn’t “running” a deficit although it “has” one. Then he heaped the blame on the Guerrero government, which his boss, Froilan C. Tenorio, succeeded.

The likes of Muir are far from extinct. In a reversal of luck, Tenorio now takes his turn to be damned. From indications, he needs to summon his guardian angels to break the curse on him: from delayed rebates, to fiscal mismanagement, to loose lending to the Tinian Gaming Casino Commission, to overpriced service contracts and Heaven-knows-what-else. Finally, Tenorio has found his comeuppance, so his legion of enemies must be thinking. Tenorio has a carefree, razor-sharp tongue that cuts at anyone who refuses to go along. And he shuns consensus-building almost to the point of arrogance. Yet for all his flaws, he cannot be the only one to blame for the toubles that bedevil the CNMI today.

The very same people who have returned for another term are equally responsible. I can think of two standout issues: the grant of government salary increases and the foreign-investment law. Tenorio struck them down with a veto. Legislators shot back with an override. In both cases, the Legislature ignored contrary opinions that raises without steady stream of funds were no more than a false promise and that a $100,000 security deposit would rattle foreign investors.

That foreign investments had crawled to a trickle speaks volumes about the depth of the alarm the Saipan Chamber of Commerce had forewarned policy-makers about. Ditto with the raises as being only a sweetener.

The Legislature’s intentions though were as well-meaning as they were political. Legislators, notably House Speaker Diego T. Benavente, had found it necessary to screen foreign investments for financial soundness. He said a great deal of investments served only as front act for the ulterior motive of moving one’s family over to become longtime residents. He said the rise in foreign-owned mom-and-pop stores and “four-dollar haircut shops” reflected the trend to enter through the backdoor. A valid point, indeed. The security deposit, however, as a panacea for immigration problems was way off. The Department of Commerce had made it clear that investment is one thing, immigration another. So if barber shops had so in fact mushroomed, then let them and let the fittest survive.

The free-trade zone plan should inspire government leaders to smash investment barriers. Perception matters in the dynamics of business. Why, for example, was it a big issue that the Hong Kong government snapped up stockholdings even if the intention was to keep speculators at bay? Answer: It sends the wrong message that the sacrosanct policy of nonintervention has been diluted. CNMI should foster a similar friendly, unadulterated business climate.

What more is left unsaid about the salary increases? The reality may have dawned on the employees by now that no sooner would the legislated raises materialize than when the financial crisis will have run its course. But there is another dimension to the issue: No stable source of funds has been locked in to make the increases look less than an empty promise. A connection may be drawn to the deficit.

Back then, Tenorio insisted on using lapsed funds to pare the deficit. “But first the executive branch must be given the authority to spend the money for deficit-reduction,” Muir said. Preferring to tap them for salary adjustments, legislators said no, despite being told that lapsed funds “are always unpredictable and quite small.” The Legislature used political muscle and had its way.
Since then, no increases have been given, Rep. Karl T. Reyes, the chairman of the House Ways and Means Committee, told me yesterday. But that’s beside the point now. The point is that the deficit has surged to $50 million-plus — and climbing. From there, blame shifts away from the former governor.

Strictly a personal view. Beverley A. Lomosad is editor of Saipan Tribune.

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