‘Economy still pretty darn good’

According to Republican Gov. Juan N. Babauta, the state of the Commonwealth “is still pretty darn good.”

In his nine-page State of the Commonwealth Address delivered yesterday morning at the Multi-Purpose Center in Susupe, Babauta said that, despite major economic challenges brought about by local and international events—9/11 attacks, SARS, tsunami, Bali bombing, Iraq war, and recently the lifting of the World Trade quotas that adversely affected the local garment industry—the CNMI economy continues to survive.

Quoting President Bush, Babauta said that the CNMI people—as are all Americans since 2001—“have been given new hills to climb and found the strength to climb them.”

He said the CNMI is in the middle of “another uphill climb”—the downsizing within the garment industry due to changes in WTO rules.

“But whatever new hills the future brings, we can trust ourselves to overcome the challenge. Just as we overcame every challenge in the last three years. Because the people of the Northern Marianas are resilient. And because the state of our Commonwealth is still ‘pretty darn good,’” said the governor, standing pat on his pronouncement two years ago in describing the local economy and eliciting some grins and chuckles within the fully-packed room.

House Speaker and Covenant Party standard bearer Benigno R. Fitial seized on this, saying in an interview after the speech that, “If the economy is ‘pretty darn good,’ why declare a state of emergency?”

The governor declared a state of disaster emergency in the CNMI yesterday in view of the current power crisis and the severe lack of funding at the Commonwealth Utilities Corp., which is preventing it from settling its debts with Mobil Oil Marianas Inc.

“How could you say that the economy is pretty darn good if you’re declaring a state of emergency? It doesn’t jive. You can’t say that in the same breath. There’s a term for that: oxymoron. It’s kind of opposite,” said Fitial.

Babauta and Fitial are both gubernatorial candidates in this year’s general election.

Another gubernatorial candidate, Rep. Heinz S. Hofschneider, who left the hall before the closing of yesterday’s ceremony, could not be reached for comments.

In his speech, Babauta cited that the government faced a $24-million deficit three years ago. Now, he said, “We can point to back-to-back balanced budgets.” He said the government’s tax rebate debt is now down to $5 million from $20 million.

In 2000 and 2001, he said the government had failed to pay for retirement, but now, “every month we pay Retirement enough to cover the checks for every government retiree.”

The Department of Finance had recently said that the government owes some $80 million in retirement contributions.

Babauta said yesterday that with $400 million in the bank and covering the cost of today’s benefits, “the retirement system is safe.”

He said the medical referral program “is running a surplus” and not “shaky” as what it was once during the term of Gov. Froilan Tenorio, who is running again for the highest post under the Democratic Party.

Babauta said his administration has essentially removed the threat of “federal takeover” by introducing labor and immigration reforms. This explains his frequent trips to Washington D.C., he added.

“I traveled to Washington—yes, I traveled; regularly—to report on the progress of our reform. I knew that real reform of immigration and labor—not playing public relations games—was best for the Commonwealth,” he said.

He cited that now, even CNMI critic Rep. George Miller admits that, “We are doing a good job.”

“The threat of federal takeover is over,” he said.

Babauta said that in his administration, there have been no “payless days” as the government implemented cost-cutting measures—cutting personnel costs at $2.6 million per year, replacing retiring personnel with less expensive entry-level workers, and shifting costs to federal programs.

He said that the government, which once needed $268 million to operate (1997), now runs at $55 million less.

‘Garment downsizing not catastrophic, tourism rebounding’

Babauta said that while the garment industry is downsizing, it is not the “catastrophic, overnight disappearance so many people predicted.” He said that the government has also managed to send displaced workers home “with a minimum of disruption.”

Tourism, he said, has rebounded with increased market share in Japan, opening the door to China by obtaining an Approved Destination Status, and developing visa procedures to bring in more tourists from Russia.

He said there are new direct flights to Saipan from Shanghai, Guangzhou, Taiwan, Hong Kong, and Manila.

Noting that private sector forms part of the state of the Commonwealth, the governor also cited new investments in the hotel industry and that new businesses have sprung up on Middle Road and Beach Road—technically “overnight.

The value of new commercial buildings, he said, has grown 130 percent since 2002.

Further, he said that business gross receipts have shown a “solid” 4.3 percent annual growth for three years.

He said the CNMI is not in decline or recession, but “in a period of transformation.”

Babauta reiterated that he is “not pleased” to see the Commonwealth “losing” Verizon, a Dow 30 multinational corporation but added that his office has at least negotiated an agreement “to protect the jobs of local employees at Verizon.”

He said the agreement also stops the long-distance tolls between Rota, Tinian, and Saipan.

Babauta said he still wants new investors to enter the market to build a second fiber optic “and to bring competition, lower prices, and improved telecom services to the Marianas.”

Babauta asked the Legislature to pass the administration’s $225.8 million budget submission for fiscal year 2006, which proposes to increase poker license fees by $6,000.

This poker fee hike, he said, would generate $13 million for education.

Reacting to reports about the Legislature not being able to pass a budget in an election year, Babauta asked, “Who made that rule?”
“When I read our Constitution, I don’t see any ‘escape’ clause. In fact, the most important job our Constitution assigns the Legislature is to make spending decisions,” he said. “Surely, it can’t be bad politics to put more money into our kid’s education.” He said he believes that the public supports his decision.

Fitial pointed out, though, that it was the governor who vetoed the budget.

“I think that’s one thing where the governor is not sincere with the people. The governor says that the Legislature should pass the budget. The Legislature passes the budget but the governor vetoes the budget,” he said.

On the governor’s statement about Verizon’s sale to Pacific Telecom Inc., Fitial said, “that’s the attitude that scares away investors.”

Fitial said he also travels but in a manner that is different from the governor’s. “I have my own way of traveling. I’ve been traveling. In fact I just got back from travel but I have not spent a single money of public funds,” he said.

Babauta’s speech began at 10:34am and ended at 11:15am.