SAIPAN – The Marianas Visitors Authority is exploring the possibility of suspending some of its promotion and marketing programs with its offshore offices in Japan, South Korea and China.
At a special meeting Wednesday, the MVA board, presided over by Vice Chair Gloria Cavanagh, asked MVA Managing Director Priscilla Iakopo to make a "strong presentation" to the Department of Finance regarding MVA's financial situation, particularly its offshore offices.
Cavanagh said MVA may not be able to continue its offshore promotions in fiscal year 2020, which starts Oct. 1.
"We take away our power to promote, we take away our flights, we take away our money, our economy," Cavanagh said. "This is, as we've said it over and over again – this is not a way to get out of this. This puts us further and further."
Iakopo said MVA has already cut $900,000 from its offshore budget.
Cavanagh noted that MVA's budget is meaningless unless it gets the funds from the central government.
'Completely different from what we anticipated'
Board member Chris Nelson said if they don't receive MVA's share from the hotel occupancy tax collections, they may also have to reduce manpower, which will affect MVA's ability to carry out its mission.
"We've got to look at the offshore (marketing budget) and at least cut some spending – our budget is completely different from what we anticipated when we awarded those contracts," Nelson said.
Iakopo said the contracts are flexible and MVA can give up some of the programs depending on the availability of funds.
She said the marketing proposal for MVA offshore offices for fiscal 2020 is due Friday, adding that they will determine which plans can give MVA a higher return on investment.
MVA needs its offshore programs to revive local tourism and improve the economy, "but when there's a delay in the remittance of the hotel occupancy tax collections from the Department of Finance, MVA will not be able to meet its obligations to offshore partners," Cavanagh said.
As of July, MVA owed its offshore offices $1.2 million. Finance owed MVA $5.2 million as of June. But in July, Finance remitted a total of $880,000 to MVA – $400,000 on July 9 and $480,000 on July 31.
Offices 'may stop all their activities'
MVA board member Tom Liu said if the offshore offices "don't get paid, they may stop all their activities" that promote the CNMI.
At the meeting, the board approved the allocation of $260,000 to pay a portion of MVA's outstanding obligations to its offshore offices.
Cavanagh said the amount will come from MVA's $900,000 building fund, which is supposed to be restricted.
Board member Jerry Tan asked if the remittance of $880,000 in July is an indication that the Department of Finance can now make regular monthly remittances.
Iakopo said Finance may remit $250,000 on a weekly basis.
"But they can't guarantee it," she said. "I cannot safely say that we'll get $800,000 every month."
Cavanagh said the central government promised that once it gets $15 million from the Marianas Public Land Trust, the Department of Finance will be able to remit more money to pay MVA's offshore offices.