‘Salary cut to worsen economic condition’

The local economy’s current situation would worsen if the CNMI government pursues its plan to cut its employees’ salaries by 10 percent, warns Commonwealth Development Authority board chair Tom Glenn A. Quitugua.

“It’s a horrible proposal. You’re crippling the purchasing power of your people. Can you imagine the plight of employees earning $10,000 a year?” asked Quitugua.

He said that if the local population’s purchasing power is diminished, it would result in economic stagnation, worsening the financial crisis that the government is already in.

“If there’s less money circulating, guess what impact it has on the businesses. Guess what it will do to the economy,” said Quitugua.

“What our elected leaders need to do is to be more creative,” he added, reiterating his call on government leaders to immediately market Mt. Pagan’s pozzolanic ash.

He said the sale of pozzolan could bail out the government from the crisis and make it “a prosperous Commonwealth.”

There is an estimated 200 million metric tons of pozzolan deposit on Pagan, which can reportedly be sold for up to $70 a ton.

Pozzolan is used as ingredient in cement making.

Majority of people who attended the government’s public hearing last week on the proposed 10-percent salary cut heavily opposed the proposal, which is contained in two separate bills—Senate Bill 14-40 and House Bill 15-115.

These measures are being pushed by the Fitial administration after it failed to implement a proposed work-hour reduction scheme.

In justifying the salary cut, the administration cited the government’s fiscal condition, in view of the $155 million cumulative unreserved deficit, the $15 million reduction in revenue estimate for fiscal year 2006, and $50 million projected shortfall by the end of FY 2006.

The administration said it had already cut government spending from a monthly average of $19.2 million from October 2005 to January 2006 to $16.8 million in February and March 2006.

The administration said its goal is to reduce the monthly spending to $14.6 million to prevent a deficit at the end of the fiscal year.

To achieve that, the administration has some options: the Executive Branch can delay its payment of employer contributions to the Retirement Fund, tap the deficit reserve account, or “as a last resort” cut government wages.