State of the Commonwealth Address

The state of our commonwealth is more than just who we are now. It is where we came from, the journey we have taken together.

It is where we are going. The legacy we are leaving and the life our people will live decades from today.

The State of our Commonwealth began four decades ago, in a school auditorium where a group of leaders—our forefathers— joined together under the idea of self-determination, and with these words of our preamble: “We the people of the Northern Mariana Islands.”

They launched our story—our journey to the future we see today.

This is part of who we are as a people from the very beginning, since our ancestors navigated in dark nights, guided by the sea of stars, long before a Covenant or a Commonwealth ever existed.

But in our short years on this voyage as a Commonwealth, we have seen good waters and stormy seas. Our course has occasionally wavered, and at times, we have lost sight of the stars that guide us.

The late governor Inos took it upon himself during one of our darkest periods to correct our course a few short years ago.

And since losing my friend and my mentor, it is now my duty to continue our mission and in his spirit we are forging ahead and have found the winds behind our backs.

Whether we use these winds to bring us closer to fulfilling this promise is how well each one of us takes on our share of our important responsibilities.

We must remain steadfast under the belief that we are in this journey together. Whether you supported this administration or not or whether you will support us in the future, our successes and our losses are ours to share. We must continue this journey under the principle that has guided our community through this all—inafa’maolek—doing good for one other.

That concept of inafa’maolek was on full display back in August 2015 when one of the worst storms to hit the Northern Marianas left many of our families and friends displaced and financially burdened. But it was ordinary people—regardless of income or status, or religion or political party—who led the charge of bringing back normalcy to our families. Those people included Jenny Hegland at CARE, Geri Willis, John Hirsh at the American Red Cross, Empty Vessel, young people, and the countless volunteers from all walks of life and from around the nation, who were there from the very beginning, helping people out and getting them the resources they needed. And they still continue that work to this day.

Let’s give these people, who are here today, a round of applause.  

And I would ask you all to take just a moment now and remember where we were only a few short years ago.

If we honestly think back, the CNMI was seriously hurting and in the midst of a deep and persistent economic depression. At the height of the CNMI’s economic decline in 2009, the Commonwealth suffered a reduction in GDP by 17.5 percent.

Our tourism industry was struggling with low numbers of arrivals. Revenue was at record lows. High gas prices. Rolling blackouts. And both large and small businesses were struggling.

But things are different now. Over the last two years, we have experienced a surge of development in our tourism industry. Businesses are regaining their footing. New restaurants have opened. Unemployment has been dropping. And there’s an increased feeling of financial security and inclusion within our community.

That’s what the people who elected us want us to do and what I have tried to accomplish this past year.

I am extremely proud to remind everyone that last year we were able to pass a supplemental appropriations bill, Public Law 19-75, from our business gross revenue taxes, which increased our budget by $40 million dollars:

• $2 million used to help families save on the cost of paying for their utility bills.

• $7 million for CHCC to assist in our hospital’s ability to pay CUC

• $1 million for my administration’s Rehabilitation Program and the Community Guidance Center

• $2 million for the CNMI Medical Referral Office

• $1,451,365 for active civil service employees frozen at Step 12

• $10,241,826 for the Public School System

• $1 million for the Northern Marianas College

• $150,000 for the Northern Marianas Trades Institute

• $9 million for the payment of land compensation and judgments

• $3,500,000 as a bonus to our retirees and their beneficiaries

To build upon this appropriation, today, I am submitting a budget that builds on the progress started last year.

My budget makes critical investments in key areas, while ensuring that we continue to fully address our government’s longstanding obligations in a fiscally sustainable manner.

I am therefore submitting a budget that supports the needs of a growing population and projects revenues for this next year increasing by $24.1 million for total gross budgetary resources of $236.7 million.

This budget is part of the overall step toward a future that expands opportunity for all of our people.

In order to get there, we need to focus on developing our economy.

Our tourism numbers are strong. In 2016, for the first time we have surpassed the 500,000 visitors mark in more than a decade. Our GDP has risen by $86 million since taking office and is now calculated at $922 million—the highest it has been since 2009.

With one year in office, this administration has reduced the CNMI’s deficit by more than $23 million—a more than a 10-percent reduction.

In addition, business revenues are quickly rising, increasing by 41 percent since 2009.

But these numbers alone mean little. To me, the path ahead for our economy has its greatest measure in the homes and around the dinner tables of all the families living in our community.

In the conversations shared between husband and wife, parents and children at this table, we break away from politics and from ceremonial speeches. At these dining tables across our islands, the true state of our Commonwealth is being discussed.

What matters most to me is that we focus our efforts to help the parents who sit there late into the night shaking their heads, filled with stress over how to pay their bills, to provide enough food on that table to feed the family.

For the record, I also hear the voices of some who caution us not to reach too high and not too fast.

To those who question the benefits of economic growth, I wish to offer you briefly some information that shows why growth is important.

For example, total employment has increased by more than 9 percent since governor Inos and I took office and we can all be proud knowing that today we have more U.S. eligible workers in our local labor force than at any time since 2004.

Our growth has provided more jobs to our residents and is allowing both the new and existing workers a competitive wage that can better lift them from living paycheck to paycheck. Wages for our workers has increased 54 percent since its lowest point in 2006. This is something we should all be proud of…

The number of individuals who require food stamp benefits to help make ends meet is on the decline—dropping 18 percent since 2015—a reduction of 1,400 individuals, and nearly 400 households. The lowest levels for the program since 2004.

Together with the good staff at the NAP program, we have strengthened our efforts to encourage recipients who are able to work to help aid in our labor shortage. Since 2015, we have reduced the total number of work registration participants by 30 percent.

And perhaps even more important, never since the beginning of our modern economy have we had a greater ratio of U.S. to foreign workers.

Since the beginning of this century, we have gone from 30 percent domestic workers in the labor force to nearly half of all workers.

Our growth is not just benefiting our people. For the first time in recent history, it is our people who are in the driver’s seat.

The strength of our economy is now more than ever built upon the fathers and mothers who are earning more to support their families, and it is hardened by the student waiting tables or working at the gas station, developing the work ethic that will be the foundation of their future successes.

This administration has worked hard over the last year to be able to reach the station where we are today.

We have refocused our efforts to improving the quality of our islands as a world-class tourist destination.

Together with our CNMI legislature, we have increased total funding of MVA in our last budget by $3 million, which is seeing tremendous results, making our tourism industry resilient and strong.

We have developed and implemented a policy to revive the Japanese market and despite a global downturn of outbound tourists from Japan, the CNMI has realized sustained growth and renewed excitement among the Japanese market.

Through innovative marketing strategies such as the “Three-Day Weekend in the Marianas” and the intense rebranding effort in off-island markets, the CNMI is positioning itself to truly compete with the world.

We have more sporting events, like Ironman, XTERRA, and the Saipan Marathon bringing in visitors from all over the world. We’re collaborating with our private sector partners to revitalize Garapan, the heart of our tourist district through our Garapan Revitalization Task Force. We’ve relit the Froilan Tenorio pathway for tourists and residents alike to walk along the beautiful sunsets of our western shores in safety and comfort.

Our goal has been and will continue to be a diverse tourism sector that can withstand global trends, guided by the benchmark of 30 percent Japan, 30 percent Korea, and 30 percent China.

Based on our efforts, our hotels are at nearly full capacity for the first time in years. We have new hotels in the works and have also seen the renovation of the beautiful Kensington Resort, and with each new hotel comes greater amenities for our tourists and jobs for our people.

As we increase visitor arrivals, we must continue to ensure that the benefits of the economy are fostering local entrepreneurship. I want to recognize the success of the CNMI Micro Loan Program, which has provided $73,000 to entrepreneurs from Saipan and Tinian in 2016.

One such loan is a shining example of not only the potential for success in our economy, but of the ability of our young entrepreneurs. I would like to recognize one recipient of the program who has been instrumental in leading the way for the new generation of CNMI locally owned businesses.

Robert Travilla, CEO and president of Tribe Marianas, had a dream and relentlessly pursued his passion, navigating his way through the pitfalls and hurdles of small business development to find a market and a home for his creativity.

Through the CDA Micro Loan program, Rob was able to turn an idea into a beautiful storefront on Middle Road, producing locally designed clothing that is worn across the Marianas and even around the world. Let’s give Rob a round of applause.

Moreover, through a collaboration between the CNMI Department of Commerce and CDA, the CNMI has been able to support the development of restaurants, safety gear distributors, uniform and medical supply retailers and entertainment providers through the U.S. Treasury’s State Small Business Credit Initiative Program, and has deployed more than $8 million into the development of small businesses in our economy.

In fact, since coming into office, this government has witnessed more than 1,500 new businesses open up shop to provide goods and services, offer new restaurant opportunities, and accommodations for our tourists. In 2016, we saw a remarkable 36-percent increase in new business applications compared to 2013. The CNMI is and will continue to be a land of promise and opportunity for all with an idea and a dream.

To those dreams still waiting to be chased, the resources are here, the market is growing. The time is now to make your dream a reality. Your government is standing ready to support you. We are your partners.

And as we grow our small businesses, we must recognize the contributions and commitment of our private sector partners who have stayed with us through good times and bad. Joeten Enterprises, Herman’s Bakery, J’s Restaurant, and TanHoldings are but a few notable examples of businesses who are tied to our community, who have weathered the most trying times of our economy and who are now seeing a financial return as we continue to grow.

Joeten has built upon their decades of devotion to these islands and has embarked upon new investments that are hiring more U.S. citizens and making a lifelong impact on the quality of life in the CNMI. To the Joeten family, and all of our long-term private sector partners, thank you and si yu’us ma’ase. Your success is our success.

I have made it my personal responsibility to advocate for the continuation of our economic growth against federal laws that try to limit the heights we can achieve.

This year we have accomplished a first for the CNMI’s relationship with the federal government. We undertook and completed the complex process outlined in Section 902 of our Covenant to speak toward the issues affecting our relationship with the federal government.

For the first time since the creation of our Commonwealth, the 902 consultations resulted in a final report being approved by the President of the United States and sent to Congress.

During our consultations, the CNMI laid out the case that our economy can grow with both foreign and U.S. workers. That our economic growth provides real benefits for U.S. citizens living on our islands. And that our private sector can be responsible in our efforts to hire and train U.S. citizens.

In the final report, the federal government agreed with us. They agreed that given our small population and location in Asia, we need access to workers in this part of the world as well as from the United States.

I want to thank the former Assistant Secretary of Insular Affairs, Esther Kia’aina, for her tireless work for the territories and for the CNMI during the 902 consultations.

And now we are taking these arguments for our prosperity to members of Congress.

Together we will continue our efforts of advocating to the federal government for our right to succeed, and our right to provide for more jobs and more opportunities for all who call these islands home.

We must and we will take steps to extend the transition period, and allow the CNMI the access to the labor force we need to grow.

The simple fact is that there are not enough U.S. qualified workers living here to meet the demands for labor our economy requires today.

It is clear that the presence of foreign labor does not take a job from a worker born in the CNMI; it allows more jobs to be created for everyone.

And I am proud to report that the relationship I have built with our new President and Congress is growing stronger, and my office has open lines of communication with the White House to inform our President of the CNMI’s needs.

While we may not agree on all of the issues, I am confident that our unprecedented ability to communicate directly with our counterparts in the nation’s capital will continue to be of great importance and value.

For example, in my communications with the President I have stressed the economic needs of our community offered through the CW program and the discretionary parole granted to visitors from China. But I have also made it known that the CNMI is taking all steps available to us to be responsible members of our American community and that we can work collaboratively to address the concerns of the federal government.

Collaboration includes doing our part to curtail the practice of illegal immigration into the Commonwealth.

To be clear, the practice of bringing in workers under the disguise of tourists will harm the overall economy and it will not be tolerated.

Working with the Legislature and the federal government, the CNMI not only condemns this action, but we will put forward the resources to penalize those who threaten to harm our community’s progress.

If you exploit workers in the CNMI, if you threaten our economy, if you put at risk the many families relying on our success we will stop you.

I will continue working with all stakeholders on this issue to ensure the community’s safety at all costs. We will cancel flights, and reduce tourist arrivals if I have to because this is our government and our islands.

And we have much work yet to accomplish

I am strengthening my commitment to providing the businesses and residents of the CNMI quality infrastructure to support your needs.  

Working with CUC and the CNMI Legislature, we have injected the largest appropriation of local dollars to the rehabilitation of our aged power generation system, to support stable and affordable electricity to a rapidly growing community. This is along with my commitment to newer, more efficient generators and the pursuit of alternative energy sources.

We are increasing our efforts to locate, fix, and maintain our water lines throughout Saipan, making significant steps toward providing quality 24-hour water access to all Saipan residents.

Your team at DPW is hard at work putting into place more than $9 million in improvements to our roads, from Capital Hill to Beach Road—the most critical access ways of our community, in addition to secondary roads such as Kannat Tabla.

But we are not done. I am announcing the mobilization of nearly $31 million of federal and local funding to roads across the CNMI over the next two years. We will have new roads from Beach Road, to Kagman Road, and roads and routes throughout Tinian and Rota. We are putting into place the money and the manpower to fix the roads to our major tourist sites, such as the newly developed Kalabera Cave, and finally making it easier to reach Mt. Tapochao and the Forbidden Island lookout.

Federal and local dollars have sat unused for years, and this administration is poised to do more, to spend more, to build more roads than ever before.

DPW is truly “On the Road Again”

In the coming months, we will also launch the CNMI’s first public transit fixed route system through the hard work of COTA. What will begin with one bus will grow to a fleet that will fuel our industry and remove one of the greatest barriers to our people’s success in the labor force…simply getting transport to their jobs.

For our workforce, we will take the necessary steps to build a network of vocational training institutions so that our workers of tomorrow can be found right here at home. And in this budget I am offering students willing to take on vocational training more options for their future careers. Because our greatest resource is and will continue to be you, our people.

This past year also showcased the viability and potential of our casino gaming industry—a new venture that has diversified our tourism makeup, bringing in new resources for our government, and most importantly jobs and opportunities for our people.

To date the operations of Best Sunshine Live, the live-training facility on Saipan, has brought in over $72 million in BGRT, excise, and salary and wage tax revenue since beginning its operations in 2015.

To the many local employees of this new venture, the more than 600 new workers that have found a good paying job and satisfaction in the work, I thank you.

This is an ambitious project that will bring the CNMI into a new era of prosperity, but we must carefully implement its phases and even delay its full implementation so that we can ensure we have the infrastructure and plans in place to strengthen our economy and protect our community.

But the gaming industry is only one aspect of my efforts to diversify our economy.

We cannot settle for success of Saipan alone. A strong Commonwealth lives up to the term and relies on the common wealth of all who call these islands home.

Already, we are seeing success of proactive policymaking on Tinian and, with the signing of Public Law 20-01, which clarified the terms of development on our ports, our laws now better support the success of the Tinian people and investors, instead of hampering them unnecessarily.

As a result of the enactment of this law, I can announce today a long-awaited need for the community and the Tinian economy. This year, we will once again have an inter-island ferry service, shuttling passengers, residents and tourists between Saipan and Tinian. I must thank and recognize Bridge Investment Group and Phillip Mendiola-Long who is making this happen.

To the people of our beautiful island of Rota, I am proud to announce that work is on the way to bring this natural jewel of the CNMI back to life, and jumpstart the economy toward a path of becoming a world-class, environmentally sustainable tourist destination.

I am working with commitment and locally focused investors to see the development of hotels, air travel, and air cargo to Rota this year that will improve life for all Rota residents and provide opportunities for the sons and daughters of Rota to return home.

I stand before you today to announce to the people of Rota and Tinian, that we will continue the work toward an economy we all can be proud of. Because we are one Commonwealth pulling together.

In the years ahead, I dream of a community with a strong and diversified economy with a vibrant middle class on all islands.

We are already on the path to realize this dream. I am proud and thankful for the efforts of Docomo Pacific who is on track to lay our second fiber optic cable in the CNMI. Their work will supplement our access to the world, and provide the infrastructure to see our residents and businesses obtain advanced access to the unlimited potential of the internet. This is a milestone in our history that I will build upon to help craft a Commonwealth that is a shining light in the Pacific—a connected, competitive, and innovative society whose ambitions have no limits.

However, as proud I am of the progress being made with our technology infrastructure, the process of getting us to this point highlights the limits of our regulatory and permitting structure.

In order to advance in a competitive world, we need to streamline our governmental regulation process.

Our laws and regulations are made to serve our people.

And when we see laws and regulations that are outdated or out of touch, we must have the ability to change them.

In the coming weeks, I will order all executive branch departments to undertake a review of their regulations to identify changes that will eliminate the barriers to prosperity. When we find regulations that limit progress, we will fix them.

As we progress with our economy, I want you to know: Complaints without solutions do nothing and our people deserve better than that. If anyone can provide a legitimate alternative to our current path that increases jobs, provides for our retirees, creates opportunities for our small businesses, decreases our levels of poverty, and grows our ability to provide our people a greater standard of living, I will support your efforts.

However, there are times our community requires bold action and solutions, and we must act.

For example, we had to take decisive action to protect the wellbeing of our retirees because how we care for our elders is a pure reflection of who we are.

Our retirees did the foundation work and labored for so many years for the success of these islands. In return, they did not ask for luxury or extravagant retirement benefits, but the basic needs to survive after their years of service.

That is why it is so important for me to uphold the promise of receiving their full benefits, to ensure we have the resources to keep this promise, and ensure that they receive their full benefits.

The intent of dedicating all of the $15 million annual license fee generated from the Saipan casino is to make good on the promises we have given to our retirees.

And I will continue to ensure that the Commonwealth does all it can to protect them because to do otherwise is more than bad policy, it strikes at the very foundation of who we are.

Our manamko overall should be cherished and supported. They were at the forefront of our development. And they are our linkages to the past, and were the stewards of our land.

In protecting them, we must also continue their legacy of conservation and stewardship over our shared resources.

To be continued tomorrow.

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Ralph DLG Torres is governor of the Commonwealth of the Northern Mariana Islands.