Northern Marianas
Reality Check
Speaker Blasts Babauta
The good news, at least for now, is that the Commonwealth of the Northern Marianas Islands government is making payroll for its 4,000 employees. The bad news is that a long-term financial crisis is looming: the government owes $65 million in employee contributions to its retirement program, which itself is underfunded by close to $400 million.
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And the CNMI government owes Northern Marianas residents millions in tax rebates and refunds for 2001 and 2002 that it lacks resources to pay on time.
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"This economy cannot afford a Band-Aid approach," insists Heinz Hofschneider, speaker of the CNMI House of Representatives. "It needs long-term basic policy reform." The catch-up mode of the government in paying its debts late and attempting to get loans to pay tax refunds is, "indicative of a crisis in long-term policy and sound financial management."
A six-term veteran of the House from Saipan, Hofschneider believes that government has to slash a bloated bureaucracy-the financial burden of which is threatening to sink the CNMI. "I haven't seen a real effort yet to contain costs," he says. "I've expected Gov. Babauta to step up to do something about the long-term financial problems. But during the last two years, I haven't seen one example of his being a leader," says Hofschneider, who, like the governor, is a Republican.
Hofschneider believes that Babauta's "lack of leadership" is spawning fast-growing voter disillusionment with government. "In 12 years, I've never seen (anger) expressed this way," he says. "Sure, there have been lackluster performances by previous administrations." But he describes growing public criticism in recent months as "vengeful" from "disgruntled people expecting better things."
The straight talk has increased speculation that Hofschneider, only 45, will be a candidate for either governor or lieutenant governor in the 2005 elections. The other Republican whose name comes up is current Lt. Gov. Diego Benavente. There is widespread speculation in political and business circles that Babauta, formerly the commonwealth's representative in Washington, will be a one-term governor.
Although Hofschneider is blunt about the need to reduce the size of the public sector, he believes it can be done without simply tossing people out of jobs. The CNMI is the only U.S. territory in control of its own labor and immigration system, "so we have minimal excuse for unemployment," he says. "But we have 30,000 foreign workers in the apparel industry, hotels and other service jobs. There are 30,000 opportunities being filled by expatriates, not locals."
The stark reality is that each year 50 percent of CNMI high school graduates don't go on to college, he says. "What is the system offering so a kid with a high school diploma has a marketable job skill?" he asks. "This is what needs to be attended to, with the collaboration of everyone."
Remarkably, CNMI political leaders are still talking about increasing government benefits. "Who's going to fund it?" Hofschneider asks. "Be real. The government is bursting at the seams with employees. The numbers have to be reduced in line with financial resources."
