Realistic thinking

By MARIA FRICA T. PANGELINAN
Special to the Saipan Tribune

After World War II, there were very few of us. That was only 60 years ago. Really, as a people, we had nowhere to go but up. We did.

In the 1950s the islands were closed. We could not leave. Only U.S. citizens could come to the islands, and, only with the permission of the high commissioner and the U.S. Navy. Effectively, there was no private sector development. Our economy was stagnant, tiny, basically a subsistence economy.

The 1960s brought changes. We were allowed to invite outside investments. And in 1965, travel restrictions were finally relaxed. This was vital, we had to go to the U.S. mainland just to earn an accredited high school diploma. We also were working very hard to plan the kind of self-government we wanted to have.

The 1970s were exciting, vital times. We worked to shape a mutually beneficial relationship with the United States. In 1970 the first phone call was made from Saipan to Guam. That was only 36 years ago.

Most of you remember the 1980s and the Covenant. Our economy took off. Foreign investments, tourism, assistance from the U.S. government, money came pouring in. This was great, our economy started booming, and we never looked back. Occasionally, we should.

The economic difficulties we are experiencing today will not set us back 60 years. Nor will they set us back 36 years. It will sometimes be uncomfortable; sometimes even hard.

First, our Commonwealth is very, very young. This is the downside of our very first economic cycle. We didn’t have economic cycles before. All economies have cycles. This is the good news. This is our first and, to reach the upswing of the next economic cycle, we must work through this downturn. How hard we work to manage this difficult period, and how much we learn from it, are key to how quickly we cycle through it.

Secondly, we now have many people who are well-educated. Many have been all over the world, seeing how others manage their businesses and governmental affairs, and any special talent we cannot find on-island is a phone call or e-mail away.

We have come a long way in a very short time. We are now full-fledged citizens of the world. That being said, we are now fully responsible for the prosperity of our islands and our quality of life.

Responsible is the operative word here.

For several years now the government has been spending money it does not have. How? By not paying the Retirement Fund. By not paying the CUC. By not paying the public employees’ and retirees’ medical bills. By not staying the course in the Legislature and passing a budget. Where did that money go? That is truly a moot point. Fact is, it is gone.

Which brings me to the proposed 10-percent wage cut for all government employees. Yes, it is true that the CNMI Constitution protects the salary levels of the governor, lieutenant governor, judges, justices and the resident representative. No one considered the possibility that those salaries might need to be reduced as a cost-cutting measure.

I am determined to examine all of the facts and figures and to listen carefully to all of you who can attend the public meetings before I make a final decision about how to vote on the wage reduction issue.

From a practical standpoint:

– The payroll is more than three-fourths of the yearly expenditures of the government. When looking for ways to cut costs, this becomes a prime target.

– The number of government employees versus the population is also very high compared to states in the United States. This situation, if not under analysis now, certainly should be.

– There are only 13 more pay periods before the end of the fiscal year. If a pay reduction is to be implemented across the board, soon would be wise.

– Some savings can be made by not replacing employees lost through attrition. Only, however, if replacements are not hired. This can be a long-term strategy, but makes only a small difference in the short-term.

– If salaries are too high compared to similar jobs in the private sector, re-evaluation is in order.

– There is no other place in the expenditures of the government where an equally large savings can be realized as quickly.

There is a misconception that this wage reduction measure is only to offset the cost of the fuel to power the CUC. This issue is only one of many that has driven the government into spending more money than it has.

Yes, this is uncomfortable. No, none of us like it. I don’t want to take a cut in pay, nor do I want to perpetrate it on other people. However, I have to weigh several issues, issues that I share with you:

– Hospitals in Hawaii and on the mainland are starting to turn away NMI patients because of non-payment of medical bills through the group health plan.

– Mobil will not deliver diesel without payment. How many of us have back-up power that can run our households long-term?

– Investors do not like risk. If the Commonwealth government is financially unstable, they are less likely to be willing to risk their dollars here. Furthermore, investors are unwilling to shoulder additional fees and taxes to pay for a government deficit they had no part in creating.

– The proposed wage cut saves many from being laid-off or fired. At this time, without any definitive study of worker productivity to guide hiring and lay-offs for public employees, a cutback in salaries is the most equitable, short-term solution.

The next few years are going to be difficult for all of us. Some will have a harder time than others. But if you want to know what hard really is, ask your grandparents about their youth in the NMI. Our tradition of strong family ties will serve us well.

We will work through this. It is a cycle.

What I hope for, and will work very hard to accomplish in concert with the Legislature and the Executive Branch, is a long-range plan for the future that will help us put aside funds during the good times to soften the downside of future economic cycles.

The CNMI has all the elements required for a prosperous society. We have good people, a wealth of natural resources, and a functioning democracy. Mix these with a practical approach to fiscal policy, and we will move to a stable economy again. And a more experienced one.

(Maria Frica T. Pangelinan is a senator of the 15th CNMI Legislature.)