A valuable lesson in math and self-reliance

Now that the Legislature has overridden the veto of the budget bill for fiscal year 2009, Gov. Benigno R. Fitial has stated that his administration has no choice but to reduce personnel.

The administration’s logic is fascinating: If there is a budget, there will be inadequate funds and employees will have to be let go; however, if there is no budget, there will be plenty of funds and no employees will be terminated.

This is not magic. It is a simple case of planned deficit spending. The first quarter reports from the Governor’s Office had the government on track to overspend by $18 million for Fiscal Year 2009.

This spending trend is astonishing, particularly since it comes from the very office that set the estimated revenue levels. In 2009 this number has been reset several times. More than any other government entity, the Governor’s Office knows what the level of available resources is.

So why has the spending in excess of these levels continued? The governor used to say it’s because there was no budget. Now he’s basically saying it is because there is a budget.

Each time the estimated revenues have changed, the Legislature has worked together and provided legislation that has accommodated the new estimates.

One point in the public discussions that keeps coming up and causing confusion is the way estimated revenues are being reported. In the governor’s original budget proposal, he included the use of Compact Impact and certain Outside General Fund resources to be utilized in addition to the General Fund revenues.

There were $5.1 million in Compact Impact funds and $3.5 million in Outside General Fund resources in addition to the General Fund resources. The budget that is now in place accounts for all three; $ 5.1 million plus $3.5 million plus $148 million equals $156.6 million. These figures all came from the Governor and this is the same framework that was used in the FY2007 budget and now the FY2009 budget.

The Legislature, albeit belatedly, has finally put in place a budget that contains controls on hiring. It also puts the expenditure authorities and department heads in the position they should be, responsible for bringing their personnel costs into line with the available funds.

There must be reductions in personnel costs. This has already occurred in the Legislative Branch. Math is math, whether you run a grocery store, a government, or are balancing your checkbook. If the money coming in is less than the money going out, there are problems.

This administration seems to be more inclined to support the local economy through direct government employment than in developing a private sector no longer addicted to artificially low minimum wage jobs filled by guest workers. We managed to sail through the garment factory era using that economic model, but it is not working now.

According to the U.S. Department of Labor, the average annual wage of an accountant in the United States is $57,060. Today in the CNMI there is advertised an accountant’s position in the private sector at $18,000. Government employees with the title of accountant I – IV have a salary range from $17,701 to $42,558.

What is wrong with this picture is that the requirements for that private sector job include [I]“four years of college and work for several years in accounting to be considered qualified.”[/I] This level of expertise is not listed as a requirement even at the Accountant IV level for public service.

So, do we continue to desperately scramble to preserve the two-tiered system that crowds our government offices with personnel, and our private sector with guest workers? Do we keep fighting minimum wage increases? Do we continue to resist a “federalization” that can open up jobs for locals in the private sector?

I say no. It is time to stop wasting energy on a dysfunctional economic model and embrace a future that makes sense. The imbalance in the CNMI’s wage system only contributes to its economic woes. The government cannot and should not engage in unjustified hiring in an effort to avoid facing political pressure from local businesses as they transition to a 21st century labor market.

For all of their posturing, private sector executives in the CNMI are well informed. They know the real value of the positions in their companies. Opposing increases in labor costs is part of being in business. However, in spite of the fact that the minimum wage increase in the US of 1996-1997 affected 10 percent of the working population, it did not create a discernable drop in employment opportunities.

All of this being said, right now each person and company in the CNMI is just trying to get by during this period of economic turmoil. There are challenges, but there are also some clear opportunities available to us all.

Self-reliance is probably the most valuable lesson to be learned here. I applaud the initiative taken by Saipan Southern High and their wind power project. Anthony Pellegrino’s trade institute is another example. There are others, companies and individuals alike, who are using their talents to improve the quality of life for themselves and their families and communities.

There are more ways in which the government can economize. I hope to identify and target more of them during the upcoming FY 2010 budget review.

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