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Across board cuts follow low revenue projections

By Haidee V. Eugenio SAIPAN, CNMI (Saipan Tribune, Mar. 13, 2010) - Gov. Benigno R. Fitial has ordered an immediate across-the-board 7.25 percent cut in the current budget of the Commonwealth of the Northern Mariana Islands (CNMI) government agencies and offices, with the revision of projected revenues for Fiscal Year 2010 to just US$137 million.

"As community leaders, the people of the Commonwealth are relying on us to make the proper decisions in reducing the overall cost of government operations," he said in a March 9 letter to House Speaker Froilan C. Tenorio (Cov-Saipan) and Senate President Paul A. Manglona (R-Rota).

The original estimated resource for FY 2010 was US$150.500 million, with US$148,083,551 to be spent for government operations.

Due to a projected decline in revenue, Fitial adjusted this amount to US$137,350,000, representing a 7.25 percent reduction that he said "must be absorbed by the budget authority remaining for the fiscal year."

"Therefore, pursuant to 1 CMC 7604(c)(4), I am mandating immediate proportional reduction of 7.25 percent in the continuing budget authority of all branches, offices, departments, agencies, and instrumentalities of the Commonwealth, which are subject to appropriations," Fitial said.

Acting Finance Secretary Robert Schrack, in a March 2 memo to then acting Gov. Eloy S. Inos, reported a projected shortfall of US$13.15 million for FY 2010.

The original projected shortfall was US$15.4 million, including an US$11.4 million reduction in anticipated business gross revenue tax receipts, and a downward adjustment in the "other internal resources" category to accurately reflect the treatment of some US$4 million in American Recovery and Reinvestment Act's State Fiscal Stabilization Fund.

But the US$15.4 million in projected shortfall has been offset in part by the increase in actual and projected revenues of US$2.25 million from nonresident worker fees related to the delay in the implementation of the federalization law, the Consolidated Natural Resources Act (CNRA).

The implementation of the CNRA or U.S. Public Law 110-229 was delayed from June 1, 2009 to Nov. 28, 2009.

The projected shortfall has therefore been reduced to US$13.15 million.

The governor said the effect of the reduction will be reflected in the budget authority remaining for the fiscal year.

Fitial acknowledged that the reduced budget allocation will have significant impact on government operations and services but said the CNMI's current financial condition requires quick realignment of government spending within available resources.

"In order to meet this challenge, it is imperative that agencies and activities examine their operations and identify areas where cost may be reduced or eliminated altogether," Fitial told the presiding officers of the Legislature.

Fitial said the government must continue to provide essential services related to public health and public safety, but there are many areas of operations where costs can be curtailed.

A spreadsheet from Finance that was attached to the governor's letter to the Legislature showed the money allotted from October 2009 to March 2010 to government branches and agencies, as well as the un-allotted budget authority.

The Legislature, for example, has been allotted US$3 million for the first two quarters of FY 2010, and an un-allotted budget authority of more than US$2.681 for the last two quarters as a result of the reduced budget authority.

The Executive Branch has been allotted over US$35 million in the first two quarters; it will now have only US$30.2 million for the last two quarters.

The Judiciary also has to live within US$1.56 million in the third and fourth quarters, compared to the US$1.7 million allotted during the first two quarters.

Fitial earlier urged lawmakers to pass the austerity bill that would close government offices for one day every pay day and during all remaining legal holidays in FY 2010 to save the government some US$4 million.

However, the House on Thursday "filed" the Ways and Means Committee's report recommending passage of House Bill 17-22. This effectively killed the measure after some 30 parents, teachers, and other education officials from Saipan, Tinian and Rota urged lawmakers not to pass it.

Fitial expressed disappointment with the House's decision, adding that he will meet again with lawmakers. An austerity bill can still be introduced in the House.

The austerity bill called for an eight-hour reduction in government work hours per pay period, from 80 to 72. This will be further reduced to 64 work hours per pay period if there is a legal holiday.

Each payroll costs the government US$280,000.

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