Senators alarmed by proposed 40-hour pay period as Finance warns CNMI has no fiscal cushion

The Senate Fiscal Affairs Committee last May 14 opened deliberations on Gov. David M. Apatang’s proposed fiscal year 2027 budget amid warnings from Finance Secretary Tracy Norita that the Commonwealth government is operating without any financial safety net as it confronts declining revenues and mounting post-disaster costs.

Norita and special assistant for Management and Budget Vicky Villagomez presented a budget outlook projecting approximately $157.7 million in revenues, with mandatory obligations consuming more than one-third of available funds and leaving only about $64.1 million for broader government operations.

The proposal currently assumes a reduction to 40 hours per pay period for general fund-supported government employees in order to balance the budget.

Villagomez told lawmakers the administration had little choice under current projections.

“Of this amount, $37.7 million, approximately 25%, is allocated to the Public School System, while $64.1 million remains for distribution across the government,” she said. “The limited funding capacity restricts the government’s fiscal flexibility as it continues to confront pressures from Super Typhoon Sinlaku aftermath, volatility in tourism markets, rising operational costs, and uncertain airline service.”

Villagomez confirmed the proposed work-hour reduction would apply across the board.

“Yes, sir, it’s across the board on general fund-supported employees,” she said.

Senators voiced deep concern over the impact the proposal would have on already struggling government workers still recovering from Super Typhoon Sinlaku.

Sen. Paul A. Manglona said many government employees were already alarmed by reports of a possible 40-hour pay period and urged the administration to revisit the proposal before submitting a revised budget in July.

Sen. Francisco Q. Cruz echoed those concerns, warning that many employees would struggle to pay their bills if the proposal moves forward.

“If you cut 50% of their hours, if they have car loan or home loan, they might have problem with their obligation,” Cruz said.

He added, “We cannot see 40 hours for government employees because everybody have their obligation. The gasoline is so high, everything’s going up.”

Norita acknowledged the government’s worsening financial position following the typhoon and warned lawmakers that the CNMI lacks reserve funding to absorb emergencies.

“We don’t have a cushion and we don’t have a rainy-day fund,” Norita said during discussions on disaster response and emergency expenditures.

Finance officials told lawmakers the government’s disaster operations account was already approximately $883,000 in the negative as recovery operations continue across Saipan, Tinian and Rota.

Villagomez said the administration is aggressively pursuing federal reimbursements and a possible Community Disaster Loan to stabilize cash flow.

“We really need this cash infusion into the Commonwealth so that we will not delay payment to our vendors and as well as our emergency responders,” she said.

The administration also confirmed it plans to submit a revised budget proposal by July 1 after more complete post-typhoon revenue data become available.

“So we have an opportunity to submit a revision to the budget on July 1st, so we are going to work on that proposal to take into account the impact of Typhoon Sinlaku,” Norita said.

Lawmakers also questioned Finance officials about pending appropriations, PSS funding calculations, retiree health insurance costs, construction tax projections, Federal Emergency Management Agency reimbursements, tax refund processing delays, and the large amount of money leaving the CNMI through remittances overseas.

Senate vice president Sen. Corina Magofna noted that more than $1.3 billion had left the CNMI through remittance transfers from 2007 to 2023 and urged stronger safeguards to retain more money within the local economy.

The hearing marked only the start of what lawmakers expect will be weeks of negotiations and revisions before a final FY 2027 budget is adopted.