Pay cuts loom large •Governor, lawmakers prefer cuts over layoffs

The Legislature is set to look into an administration proposal that will reduce salaries of nearly 5,000 government employees by five to 10 percent in a frantic effort to stretch its dwindling budget and prevent huge shortfall in the next few months, officials said.

Some members of both the Senate and House of Representatives met yesterday with Gov. Pedro P. Tenorio to discuss ways on how to widen the current austerity measures and boost the depleting local coffers amid the worsening economic crisis in the Northern Marianas.

Senate Vice President Thomas P. Villagomez said lawmakers will try to work out a mechanism to implement the pay cuts on all government personnel, including civil service and contractual employees.

“Rather than outright reduction on the number of government employees, we are looking at possible pay cuts,” he said in a telephone interview after the meeting.

The proposal, broached by administration officials, will take away between five percent to 10 percent from the salary of “everybody under the payroll of the CNMI government,” Villagomez said.

“Nobody will be spared,” the senator added. About 75 percent of the budget is appropriated to the payroll of all departments and agencies of the government, the largest single employer on the island.

The commonwealth is reeling from its worst crisis in years spawned by the year-long economic upheaval gripping Asia, its main investment source and tourism market.

The slump that began late last year has also forced closure of more than 1,000 businesses in recent months, pulling down government income by as much as 13.4 percent.

Due to continuous drop in actual revenue collections, Tenorio last month pared the 1999 spending level by $32.5 million — down from $249.26 million approved last September to about $216.75 million.

The budget reduction is expected to shave quarterly appropriations of all departments and agencies by about 10 percent to 15 percent for the remaining months of the fiscal years.

But finance officials are still worried on further decline in revenue estimate, according to Villagomez. “We are still collecting less than what has been projected. It’s very bad,” he said.

Although he expressed concern over the drastic measure, Villagomez said he would support the pay cut of all government personnel, including legislators and other elected officials.

He maintained that rank-and-file employees receiving annual salary less than $20,000 should not be included, but agreed on a plan to decrease the pay of members of the legislature, governor and other elected CNMI officials.

Villagomez said they will also look into the possibility of reducing work hours of civil service employees, while asking those under contract to agree on pay cut rather than lay off.

Other possible cost-cutting measures which the legislature hope to tackle include removal of government benefits, such as housing for off-island recruits, as well as reduction of legislative staff and other expenditures.