The party is over

Outgoing Gov. Ralph Torres is leaving behind a broken and broke government. Despite his claims of financial management and there being “no deficit,” the cracks in the wall behind the tapestry of lies are growing. Already, some 500 temporary government workers Torres hired and his people promised would be renewed, have been let go. That is now 500 newly-unemployed citizens, and no unemployment insurance to give them a soft landing.

And there seems to be, at least in some corners, untrue information circulating that by some force of magic, incoming governor Arnold Palacios can wave a wand and make the problems disappear. Unless Mr. Palacios has the ability to print money, then the sad reality is that 1) Mr. Torres spent all the money and since December 28, 2015 has been running the Commonwealth into debt. 2) More employees will lose their jobs, there will be reduced work hours, there will not be anywhere near enough for any agency or branch of the government to operate, taxes will be levied, or all of the above, coming this year.

This is the Commonwealth that the Torres regime has left behind. And we’ll be darned if he’s allowed – as a parting discourtesy – to blame the mess he started on the guy who will work hard to clean it up.

No reasonable person can expect that the inauguration of Arnold Palacios magically will solve the problems Mr. Torres created the past seven years under his regime. All we can reasonably expect on day one, is that the corruption will be reined in, the bleeding of public resources stopped, and the hard work to repair the damage begun.

A drug addict has a simple choice, when the drugs run out. Stop doing drugs, or find more. Only one of those options leads to health; the other, hastened death. But the good option isn’t easy. It requires sacrifice, discipline, new behaviors, and an acceptance of who you used to be, and who you are becoming without drugs.

The very first reality to face, is that the party is over. And as you look back at the mess you have to clean – a mess you allowed to happen – it can be easy to despair or to wonder how you will ever repair all that you broke. ‘One day at a time,’ is a common piece of advice in the recovery community.

Corruption is the same. The addiction to money and power was so strong, that it reeled in common citizens in the Commonwealth, who ordinarily would condemn public corruption. Gov. Ralph Torres and his men dangled $17 million in federal funds, called it a BOOST, and the most reasonable people among the citizenry did not once stop to ask why the government was spending money to advertise the giving away of money.

Times are tough for most. People had to do what they had to do to survive the economic doldrums of the pandemic era. Whether that was a ‘BOOST,’ or a temporary government job right before the election, or a contract with the Ralph Torres administration, a free fan, a break on your utilities bill, or help with the rent and the mortgage. For the past nearly-three years, the CNMI essentially had one major source of money in the absence of tourism and the scandalous failure (remember the vocal minority who opposed gambling and said the promises were lies?) of the big casino.

Federal funds, thanks to U.S. Congressman Gregorio “Kilili” Sablan’s advocacy, and the generosity of the American taxpayer, have been all that has stood in the way of the CNMI being forced back into an agrarian economy of subsistence, and the complete devaluation of its land. Had it not been for grants such as Medicaid, Pandemic Unemployment Assistance, and the two federal pandemic relief packages (CARES and ARPA), very few people in the Commonwealth would have had the means to earn any money. Without the majority of people having an income, there would be virtually no purchases. No income and no purchases equals zero tax revenue. That means there would have been no government.

So while we’re all wondering about the mechanics of a $17 million BOOST scandal that obviously was an illegal front to enrich cronies of Gov. Ralph Torres, here’s another dose of reality: that $17 million is nothing compared to the total pot of money Congress gave to Mr. Torres to spend in the CNMI.

Try more than half a billion dollars. The American taxpayer in early 2020 made an initial deposit to the CNMI Treasury of CARES Act funding meant specifically for direct aid for the Commonwealth government. Then, the following year, U.S. taxpayers made another donation. It totaled more than half a billion dollars.

Some lawmakers knew exactly what Gov. Torres was going to do with that money: misspend and waste it. They knew this because when the smaller CARES Act deposit was made, the governor didn’t care to use that money to shore up the government’s sinking financial ship (more on that below), or to help retirees, or to bolster public education, or to ensure payroll and benefits for public employees. Almost all of the money from that first deposit went to hundreds of sole source contracts and purchase orders with companies directly tied to the administration. That was the first time Torres administration officials and cronies got rich off the pandemic.

And Wil Castro and gang were not the first from Guam to get in on the action, either. Several Guam companies were among the sole source vendors raking in millions from the first deposit of funds. If you recall, Kandit highlighted the sale of flimsy blue face masks to the Commonwealth government for three dollars a piece!

Because lawmakers in the CNMI House of Representatives had seen the misuse and waste of the smaller CARES Act pot, they demanded that the legislature have oversight of the spending of the much larger ARPA pot of money. The democrats and independents indeed passed a measure in the House, but it was defeated in the republican-led CNMI Senate.

The rest, as the saying goes, is history. And so is the money, apparently.

Transition committee officials for Governor-elect Arnold Palacios are trying to figure it out, but according to these sources, there is a real fear Mr. Torres has spent nearly all the ARPA funds. The accounting of the Commonwealth’s treasury is in such disarray, that officials are having difficulty nailing down a correct figure, but sources say there is a deficit of some $80 million in ARPA funds. How did the Torres regime run a deficit on federal funds? Good question. It’s likely the regime has outstanding payables to vendors of the several ARPA federal programs, and that the government obligated way more money than there was available in ARPA through contracts and purchase orders.

But even before ARPA and CARES, there has been the General Fund under the Torres regime. The latest estimate (the administration has not allowed for audited financials of the past two fiscal years, go figure) is that since 2015, Gov. Torres has accumulated a $314 million deficit. That is about six times the cost to operate the Commonwealth government after backing out debt service on bonds, and obligations to the pension fund.

Among the required budgetary set asides is to pay people back for overpaying income taxes: tax refunds. At the start of 2022, several CNMI residents began complaining they had not received their refunds. It would come as no surprise at all if the Commonwealth government is months and maybe even more than a year behind in paying tax refunds.

And that’s not to mention the question of whether other obligations to the school system, matching funds to federal grantors, and vendor payables are being met timely. Doubtful.

A financial crisis of this magnitude leaves the incoming governor very little choice but to make drastic cuts to the operation of the government, sell government assets, raise taxes, or a combination of these solutions. Another solution may be a revenue-backed bond to consolidate the Commonwealth government’s debts. And that’s only if creditors are willing to forgive the Commonwealth government for the grave financial sins committed under the Torres regime. Part of the risk New York and San Francisco evaluate when determining bonds and interest rates is whether the voters will elect another financially-incompetent or corrupt governor.

As the higher taxes come, or the the job or wage loss, or the cutback of government services, remember every illegal plane trip the governor and his wife took on first class travel tickets that you paid for. Remember the people who said, ‘Oh, but he’s the governor, he should fly first class’ (never mind that it’s illegal?), and then think how many jobs could have been saved.

Remember the Sony headphones and the Bose speakers, the wheelbarrow and the chainsaw, the hunting knife and stove, the laptops, the phone cords, the thumb drives, the Cheetos and everything in between that the governor purchased using your money while on those illegal trips… inventory that his special assistant for administration was never able to account for under oath during the impeachment hearings. How many hours of work could teachers be paid with that money that was clearly stolen from the Commonwealth?

Remember the $70 million the Torres regime allowed the big casino to skate on paying in taxes and fees. That cash alone could float the Commonwealth government for a year.

Remember the hundreds of thousands of dollars in power and water bills Mr. Torres and his family racked up and charged to you, the taxpayer. Imagine; that would have paid your utilities bills for 1,000 months.

Remember the millions the Torres regime gave in sole source contracts to Guam companies in exchange for supplies the Commonwealth didn’t need. That money could have saved the lives of people who died without proper medical attention, and college scholarships for your children.

Remember the BOOST program, and how the Torres regime simply enriched itself while thousands of small businesses suffered. How many private sector employees could have benefitted, instead of the governor’s cronies?

Remember the corruption, and how the Torres regime intoxicated the people with it right before the election just so he could win and remember always that we are ever just one election away from another regime taking power.

Just because the Commonwealth got rid of its corruption pimp at the last election doesn’t mean there isn’t already someone drunk with power or drooling for money who hasn’t already set his or her eyes on power, lurking among the people with all the right words and promises.

We, in the Mariana Islands, unfortunately are addicted to corruption. Thankfully in the CNMI the people have chosen to end the party. The hard road of recovery starts now. There will be sacrifice. There must be discipline. We must be committed with the new governor to repair what is broken and build better lives for all the people, and not just the select few.

It is our prayer that as we journey on this road of recovery, when the lure of greed and power tempts any one of us, we have the strength, the courage, and the integrity not to feed the addiction.