Commonwealth of the Northern Mariana Islands

The fiscal condition of the government of the Commonwealth of the Northern Mariana Islands (CNMI) has been rapidly declining since the garment factories on Saipan began shutting down in 2005 and the last one closed its doors in 2009. In the exhilarating days of the late 1990s, with thirty-five garment factories and 700,000 tourists a year, annual government revenues reached $250 million. It is anticipated that revenue this fiscal year (Oct 2011-Sept 2012) will be down to somewhere between $92 million and $102 million.

As could be expected, adjusting to such a reduced revenue stream is a very difficult thing to do after having lived so comfortably. As a result, a great deal of time and rhetoric has been devoted to the issue of whether casinos should be allowed on Saipan. When the government was unable to settle debates over the fiscal year 2011 budget (Oct 2010-Sept 2011) by the 30 September 2010 deadline, it was completely shut down in compliance with a constitutional amendment recently approved by the voters that "states that the government may not draw funds from the general fund, with the exception of certain essential services, if no appropriations act is in effect" by the beginning of the fiscal year (Saipan Tribune, 1 Oct 2010). Since the legislature did not pass the budget before 1 October, all government offices except for essential services were closed while the House and the Senate worked out their differences. During that period, some members of the House of Representatives threatened that if the Senate did not join them in approving casinos on Saipan as a revenue measure, the House would not consider any bill emanating from the Senate. In response, the Senate refused to pass bills sent to them by the House of Representatives; in addition, because the governor was siding with members of the House, the Senate refused to hold advice and consent hearings for gubernatorial appointees. Public pressure was the only thing that got members of the legislature to pass a budget two weeks into fiscal year 2011, which allowed the government to get back into full operation. The Senate stood its ground on being anti-casino, which should come as no surprise since both Tinian and Rota have casinos (struggling just to stay alive) that would be threatened by additional casinos on Saipan. Most direct flights from Japan to Saipan, Tinian, and Rota have been discontinued. The casino hotel in Tinian owes $30 million in back taxes to the commonwealth government and, unless there are some immediate changes in airline services, the Rota resort casino will probably not last another six months.

Largely because of the increased costs of doing business, several airlines have canceled flights from Japan and have reduced flights to and from other destinations. On the other hand, there are two new ventures that have yet to prove themselves viable. Fly Guam has been operating charter flights to and from Hong Kong via Saipan three times a week. They plan to inaugurate flights to Australia and are exploring possible routes from central Russia. At the present time they are only flying one 240-seat Boeing 737 but are expecting to acquire a second plane in the near future. During April and May 2011, Fly Guam was offering discount rates of $450 for return flights between Saipan and Hong Kong, with an additional 25 percent discount available for senior citizens.

Every service on Rota and on Tinian is in crisis, creating an economic disaster for the two islands. Existing hotels are struggling to survive, with many people leaving the islands permanently. At the same time, a brand-new luxury resort is being constructed by Triple J in Chalan Kanoa on the beach in southwest Saipan, using pre-stressed reinforced concrete slabs to create the walls.

Several other companies, including Korean investors, have expressed interest in reviving La Fiesta Mall in San Roque; according to government estimates, it would cost upward of $5 million just to rehabilitate the structure. Other investors, including two casino developers, are trying to revive their construction permits to build on Tinian...