Food For Thought 4-11-08
Hi friends, this is Harry Blalock; General Manager for radio stations KZMI & KCNM. It’s that time once again to take a look at the issues of the week, and to offer some Food For Thought.
As I was sitting at my desk writing my commentary, I got a call from Jeff Schorr who let me know that he was just notified by his office in Washington that the U.S. Senate passed the bill that would federalize our Immigration system here in the CNMI. This is the same bill that the Governor has been fighting vigorously, and that HANMI and the Saipan Chamber of Commerce have sent their representatives to Washington to lobby against. All the lobbying efforts were evidently totally in vain as the vote was 91 to 4; no one cared what they had to say. I have had the feeling for quite some time now that trying to fight against this was like trying to hold back a 20’ tsunami that was rolling up the beach. You can do anything you want, but it won’t matter or do any good whatsoever, it was going to happen for a number of reasons. Whether the bill has to go back to the House or not really doesn’t make any difference, they will pass it immediately, and the President has already indicated he would sign it into law. The federalization of our Immigration program is no longer something to be fought or debated, it is now a fact.
Let’s be honest, the CNMI does not exactly have a very good track record, we’ve gone back on our promises in the past to raise the minimum wage. Years ago our legislature passed a law that would implement increases of the minimum wage gradually bringing it up to U.S. levels. They did this right before we were supposed to go to Washington to deliver testimony to Congress in regards to a takeover of our labor laws and minimum wage. So the Saipan delegation which included business and political leaders was able to testify to the U.S. Congress that we had just passed a law that would raise our minimum wage in incremental stages until it reached the U.S. levels. As a result, the U.S. Congress shelved their plans to take over our labor laws and minimum wage since they believed we were trying to comply. No sooner did that happen than our legislature repealed the law raising the minimum wage, caving in to pressure from the garment industry about the effects raising the minimum wage would have on their industry. We showed the U.S. government at that point that our word and our laws meant nothing and that we couldn’t be trusted.
And our current leaders can’t just blame this whole thing on someone else claiming they had nothing to do with it, many of them were still in office back then. Governor Fitial was in the legislature at the time and several of those serving in the legislature currently were in it then as well.
Then instead of doing the right thing and implementing a plan to raise our minimum wage, we got bogged down in fighting over whether it should be broken down by industry and have different minimum wages for the different categories, or whether we should raise it across the board. Since we couldn’t manage to agree on anything, we did nothing, we just left the minimum wage alone and didn’t raise it at all. Instead we started a campaign of hiring lobbyists to fight off the threat of a federal takeover of our labor and immigration departments. We hired the firm that employed Jack Abramoff, and he became our new savior. He wined and dined the right people, and he even managed to bring Congressman Tom DeLay and some of his colleagues out here on a trip. Ben Fitial was in the legislature at the time and was instrumental in negotiating the multi-million dollar contracts that were used to hire Abramoff’s firms and fight off the federalization attempts. Ben made no secret of his ties to Abramoff at the time, calling him his brother. These actions infuriated certain people like Congressman George Miller who vowed to not let this issue go away, and continued to introduce it in the U.S. House.
The shift of power in the U.S. House and Senate, and the disgrace of former Congressman Tom DeLay, and the imprisonment of lobbyist Jack Abramoff all started an inevitable ball rolling that wouldn’t stop until it brought the CNMI under the U.S. minimum wage and federalized our immigration system. There are many other factors that come into play here as well, including the buildup of military forces on Guam, real or perceived security threats in the region and a system that hasn’t always done a very good job of policing itself.
Whether you agree with the federalization of our Immigration or not, I don’t think many people can argue with a straight face that we haven’t asked for this with our actions over and over in the past. This can simply be considered as the consequences of our actions and inaction over the years.
So what will this really mean for the CNMI, will it be good or bad, will it cost us access to the Chinese and Russian tourist markets? I don’t think anybody can really give you a straight answer to any of those questions right now. There are too many unknowns and variables in the legislation, too many “mays” and “ifs” in the legislation to really get a good read on it. Until the rules are promulgated and we see what really happens with our Chinese and Russian tourists, anything that anybody tells you will be basically speculation.
There is one good thing that I believe will come of this, and that is that it finally ends the uncertainly of potential investors. Now they will know what the situation is and they won’t have a threat hanging over their heads making them nervous above moving forward with their plans. To be honest, it may chase some of them away and make them want to locate elsewhere, but I’m sure there are others who may look at it as a positive development and may be willing to finally pull the trigger on investing in the CNMI. Let’s just hope it’s not too little, too late. The uncertainty of the whole thing has been absolutely killing us for the last couple of years, and I for one am glad that at least the uncertainty is now gone. As for whether it will ultimately be good or bad for the CNMI, we will all have to wait and see together.
It is possible that there might be those who got the impression from my commentary last week that I think all the problems at Commonwealth Utilities Corporation should be blamed on the legislature. I believe the legislature has to own up to its responsibility for the utility company’s current financial woes as a result of their moronic law to lower the rate the utility charges to residential customers. They created a huge mess, and I don’t believe they have ever taken responsibility for their role in it. But let’s be perfectly clear, that is only the tip of the iceberg when it comes to problems at the utility.
From some of the facts that are starting to come out and come to my attention now, I don’t think there can be any disputing the fact that the utility has been mismanaged for years and years, and our current problems are a compounding of all the incompetence over the years. You may get tired of hearing me talk about the utility company over the next several months, but I truly believe it poses one of the biggest challenges to survival of the CNMI, and therefore it needs to be discussed, exposed and addressed.
When talking about problems at the utility, it’s difficult to know where to start, there are just so many different topics and areas that need to be addressed. One of the first things I guess that deserves to be considered is whether CUC really has to charge as much as they are trying to just because of the cost of fuel? While it’s true that the cost of fuel has been skyrocketing and the cost of power needs to be tied to the cost of the fuel, it is also true that our engines and generators have been so poorly maintained that the efficiency on most of them is at about 40%. Not only does that mean that we’ve had to use over twice as much fuel to operate them as we should have, but also that we’re burning through 3 times as much lube oil as we should. In other words, CUC is throwing away money in fuel and lube oil all because they have not properly maintained the generators. So they could be charging about half as much as they want to charge and still be recouping their costs, if they would just operate the generators as they are supposed to be. They have tried telling me that there is no mismanagement at the utility, but that is just blatantly not true, and there are a myriad of facts to back that statement up.
One of the other things that has been suggested is burning dirty oil, which is much cheaper and would lower the cost of operating the units substantially as well. There are a lot more hoops we would have to jump through with the EPA to make that happen, but it is definitely a possibility, however not one that seems to be seriously considered by CUC. Why did they let our generators get in this condition in the first place instead of keeping them properly maintained? I really don’t believe our generators have been properly maintained for many years, but it is a fact that during the last administration Governor Babauta instructed CUC to stop spending money maintaining the generators since he was planning to privatize it anyway. I guess he might have believed that a private company would put in new generators anyway, so why throw money away on the old ones. There are so many flaws in that thinking I’m not even going to try addressing them all, but if you want to know how our generators wound up in the condition they are in, that’s where the lion’s share of the blame lies. So do you really think he deserves another chance to mess things up even worse? I think he’s going to give you the opportunity to vote for him in the next election if you still haven’t learned your lessons.
But there is also plenty of blame to go around inside the utility as well. They have not run it properly for as long as I can see. Let me just give you one example, Telesource charged CUC about $15 million dollars to build a power plant on Tinian which included an itemized list of all improvements. During an auditors visit many years ago, it was discovered that Telesource neglected to construct a used oil incinerator which was valued at about $350,000 and was listed on the itemized list of improvements to the facility. After being provided notice of the missing equipment, Telesource told them that they took care of the used oil problem themselves and therefore there was no need for an incinerator. There are a couple major problems with this though, #1 – CUC has already paid for the unit listed on the schedule of values in support of their contractual obligations. And #2 – when CUC takes back the power plant, it should not have to incur the cost to have the used oil shipped off island since the incinerator is already listed as an asset of the power plant, and has already been paid for. The cost to purchase and install this equipment would be considerably higher today than it was 10 years ago when the agreement was entered into with Telesource, and there are newer emission regulations in place today which would push the costs even higher. You would think that CUC would be pressing Telesource to purchase and install this incinerator since they are contractually obligated to do so and since CUC has already paid for it, but no, they are not pressing the matter and it appears that they are just willing to let it disappear. That means that CUC will either have to purchase an incinerator themselves after they take over the power plant, or that they will have to pay to have the oil shipped off island. But why, since they’ve already paid to have an incinerator installed? Is that what you consider proper management and oversight?
And the incinerator on Tinian is just one of the many examples of mismanagement and wasted money at this government owned and operated utility. I will be sharing many more examples in the coming weeks of just how bad things have gotten at the utility and of how they seem either incapable or unwilling to run things properly and professionally. Maybe it’s time that the federal government take-over not only our Immigration but also our utility company. Frankly I don’t blame the federal government for not being willing to bail out the utility, why throw more money away on an organization that has shown itself to be incompetent and incapable of running itself in a responsible manner. If there are to be more federal takeovers on the island, I’m praying that the next one will be of CUC.
Food For Thought is now available online at www.fftsaipan.blogspot.com and if you want it by e-mail distribution please send me an e-mail at email@example.com
I’m Harry Blalock, thanking you once again for giving me a generous slice of your valuable time, and allowing me to share my Food For Thought.