Between the financial disaster COVID-19 has imposed worldwide, and chronic overspending, the Northern Mariana Islands are facing an unbalanced budget that may require federal intervention.
Finance Secretary David Atalig announced in early August that the commonwealth was in an $11 million deficit as of the third quarter of the fiscal year. The secretary attributed the deficit spending to the unpredictable effects of the pandemic, and said that “we’re learning how to live with COVID.” While the pandemic has certainly had financial consequences around the world, its unpredictability is largely mitigated by the fact that the world has been dealing with COVID-19 for over two years. What’s more, four different Northern Mariana Islands agencies exceeded their budget, suggesting an alternate reason for the commonwealth’s financial woes. The public safety, corrections, fire, and biosecurity departments exceeded their budgets by a combined $3.3 million. During the fiscal year, expenditures exceeded appropriations by 15.8%.
For a territory with a total budget of $103 million, a deficit of $11 million does not bode well. But there is some good news for the Northern Mariana Islands. Federal funding for the islands has been very generous, with the territory receiving $56 million for infrastructure development as part of the Biden administration’s Bipartisan Infrastructure Law. Moreover, Atalig confidently expects $20 million in federal reimbursements, which he believes will alleviate the deficit.
However, the federal government will not simply solve the territory’s problems. The territory has sought to become more financially self-sufficient, and Atalig has promised to move away from the federal government. Given the islands’ long-standing goal of financial independence, relying on the central government to fix the deficit is a foreboding sign. What’s more, federal government funds have not always fixed the territory’s financial problems. For example, last year, the Northern Mariana Islands received $482 million from the American Rescue Plan. $348 million of this has already been spent, but the commonwealth has still failed to meet all of its commitments. Representative Tina Sablan (D), who has been a vocal critic of the current administration as part of her gubernatorial bid, pointed out that there has been a delay in paying the Commonwealth Healthcare Corporation (CHCC). Sablan lambasted the administration for still owing the CHCC $34.2 million with only two months left in the fiscal year, calling it “an abject failure of leadership.”
It seems that no matter how much in federal funds the commonwealth receives, it is behind in paying what is needed. More financial prudency will be required if the Northern Mariana Islands are to relinquish their reliance on federal funding.