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Governor reports overspending, lower revenue

By Haidee V. Eugenio SAIPAN, CNMI (Saipan Tribune, Jan. 4, 2011) – A day after submitting his written State of the Commonwealth report, Gov. Benigno R. Fitial also gave the Legislature a more detailed annual financial report showing that the Commonwealth of the Northern Mariana Islands (CNMI) government overspent more than US$16 million because of excess personnel costs at the Departments of Public Safety and Public Health, among other things, as well as actual revenue that's US$2 million lower than projected in Fiscal Year 2010.

The overspending and lower revenue resulted in a deficit of US$18.586 million in Fiscal Year 2010, which he mentioned in passing in his Dec. 30 State of the Commonwealth report.

"This condition was attributed to US$2,318,800 less in revenue collections than estimated and US$16,267,504 in excess expenditures over appropriations contained in P.L. 16-32," Fitial said in his Dec. 31 financial report to Senate President Paul Manglona (Ind-Rota) and House Speaker Froilan Tenorio (Cov-Saipan).

Fitial blames excess personnel costs to a lack of austerity measures during Fiscal Year 2010.

"If the 16 hours per pay period of austerity measures included in the administration's budget submission had been implemented, the estimated US$15.856 million in savings would have essentially balanced the budget despite the hospital, medical referral and utility over expenditures," he said.

Revenue collections and other financing sources in Fiscal Year 2010 totaled US$145.221 million, which was US$1.224 million less than projected.

This was exclusive of those reserved for debt service and other transfers.

A significant decline was experienced in income taxes collections at US$4.741 million less than estimate.

"This resulted in total tax collections falling US$4.877 million short of the estimate," said the governor, who is expected to be back on island today after attending yesterday's inauguration of Guam Gov. Eddie Calvo.

The governor said license and fees, charges for services, and other revenue collections exceeded the estimate by a combined US$3.653 million.

This is mainly due to hospital and collections exceeding the estimate by US$4.257 million offset by shortfalls in interest collected and lottery revenue.

Other financing sources and uses totaled US$1.094 million under the estimate due to unbudgeted court ordered transfers and hotel and alcohol container taxes to the Northern Mariana Islands (NMI) Retirement Fund.

Fitial said these unaudited amounts have been provided to auditors who are currently working on the financial activity for Fiscal Year 2010 which closed on Sept. 30, 2010.

Fitial said overall, the excess spending were because of personnel costs of US$6.6 million, excess expenditures of US$7.2 million in operations, and utilities costs of a little over US$2.5 million.

The excess personnel costs were primarily attributable to the hospital, US$4.2 million, and Department of Public Safety, US$3.4 million.

The governor also said the US$9.7 million in excess expenditures under the operations category was primarily attributed to hospital operations (US$6.3 million), medical referral costs (US$4 million), and increased local CNMI share of Medicaid spending (US$3.1 million).

The unfunded and unremitted portion of the employer contributions to the NMI Retirement Fund calculated at some US$7.85 million has not been accrued and therefore, does not affect the expenditure amounts reported, he added.

Lawmakers received the financial report only yesterday afternoon and could not comment on it yet.

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