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‘We will overcome challenges’

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GOVERNOR Ralph DLG Torres told a U.S. Senate committee that despite the grave challenges faced by the CNMI, “we will overcome [them] and I pray that our people will remain strong, resilient, and healthy throughout these trials.”

Chaired by U.S. Sen. Lisa Murkowski, R-Alaska, the Senate Committee on Energy and Natural Resources invited the governor to submit his written testimony on the impact of the Covid-19 pandemic in the CNMI.

In his testimony, the governor said the “dramatic fiscal shortfall resulting from the elimination of the CNMI’s sole industry will have deep and lasting impact on the lives of our people for years to come.”

He said the Pandemic Unemployment Assistance and the Federal Pandemic Unemployment Compensation program as well as Economic Impact support payments mitigated some of the suffering in the CNMI, “but the path ahead is still presenting cause for serious concern.”

The governor said the CNMI, like many states in the nation, “is in dire need of direct financial support to alleviate the deep budget shortfalls that have complicated the administration of necessary public services such as public safety and social services.”

The relief to state/territorial budgets provided through the Coronavirus Aid, Relief and Economic Security or CARES Act “supported the large and un-appropriated obligations required of the Commonwealth to respond to the urgent healthcare needs of the population, but much is needed…to retain viability of government operations,” Torres said.

The governor said as a result of the Covid-19 pandemic, the CNMI budget was reduced in half due to the loss of resources.

“With no certain end to this pandemic in sight, the future for the CNMI’s tourism industry, and government income derived from this economic activity is bleak,” the governor said.

“Additionally, critical components that would have otherwise aided in this effort to support government services were not made available to the territories under the CARES Act.”

He cited in particular the Municipal Liquidity Facility created by Section 4003(b)(4) of the CARES Act, which would “allow the issuance of municipal debt…to cover, among other things, the reductions of tax and other revenues related to or resulting from the Covid-19 pandemic.”

The governor said this program has been deemed inaccessible to territorial governments. The lack of access to such financial tools greatly impacts the ability of a territorial government to finance necessary obligations in the environment of severely limited revenues, he added.

“We have showcased our commitment to downsizing government operations through furloughs and deep austerity measures; however, we can only cut so much before the residents of our community will further experience disproportionately the impacts of this crisis in levels unseen in communities in the mainland U.S.,” he said.

The governor said the largest and most concerning obligation of the CNMI is the settlement agreement with the district court pertaining to the pension program.

The federally created Settlement Fund requires mandatory minimum payments  to ensure continued benefits for the CNMI government retirees.

This year, the $44 million obligation to the Settlement Fund is the largest single item of the Commonwealth budget.

The governor said efforts have been made to safeguard this payment while allowing flexibility within the CNMI finances for this trying period.

Through a pension obligation bond, he said, “the shifting of this judgment obligation to a long-term debt service obligation would provide greater levels of resiliency to manage cyclical downturns in the economy or unexpected shocks to our community in the form of natural disasters or, as we see now, global pandemics.”

However, he added, the CNMI “cannot, at this time, offer the financial markets the security necessary to obtain affordable financing options. This is due to the structural deficiencies of our economy that are inherent in a location the size and nature of ours, and the persistent risks of external threats such as typhoons, tourism volatility, and negative ramifications of federal government actions and policy.”

Torres believes that “this is an appropriate time in our history to fully commit to discussing the economic development policy of the U.S. government as it relates to the territories.

“This crisis,” he added, “has showcased that the territories lack resiliency in our healthcare systems and our economies to withstand regional and global crises, and our residents and citizens are forced to contend with greater challenges and less resources than their mainland counterparts.”

Torres said the “special and significant effort done on the part of the federal government agencies and departments in aiding our fight against this pandemic has been truly remarkable,  but laws and regulations exist within the federal government that make the foundations of our community weaker to withstand these threats alone.”

 

 

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