CNMI GOVERNMENT OVERSPENT BY $25 MILLION IN 2011

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Deficit occurred despite austerity measures

By Emmanuel T. Erediano

SAIPAN, CNMI (Marianas Variety, Jan 3, 2012) – Despite its "austerity" measures, the CNMI government overspent $25 million in fiscal year 2011, Gov. Benigno R. Fitial reported on Saturday.

In his report to Senate President Paul A. Manglona, Ind.-Rota, and Speaker Eli D. Cabrera, R-Saipan, the governor attributed the $25,806,718 deficit to the $25,241,262 excess in expenditures and the $565,456 shortfall in revenue.

In FY 2010, the government fell short of $2 million in projected revenue and overspent more than $16 million resulting in an $18.5 million deficit.

Fitial blamed this deficit to the lack of austerity measures. A 16-hour cut per payroll was implemented by the government in FY 2011.

The FY 2011 budget law appropriated $132 million which Fitial later reduced $122 million due to a $10.5 million shortfall.

The current budget is down to $102 million.

In his FY 2011 report, Fitial said government expenditure for personnel exceeded $4.1 million while the obligations under "all others" were $21 million more than what was appropriated.

The revised allotment for personnel expenses was $89.1 million but the government spent $93.2 million. The allotment for "all others" was $32.8 million but $53.8 million was spent.

The bulk of the expenditures, the governor said, went to Commonwealth Health Center operations, medical referrals and the Medicaid matching requirement, which Fitial described as "higher than normal."

The government’s utility cost was $9.9 million — $2 million more than appropriated.

Revenue collections and other sources minus debt services and transfers totaled $121.4 million. This, Fitial said, was short by over half a million dollars.

He said a significant decline in business and economic activities caused the business gross revenue tax to go down by $1.3 million and income tax collections by $2.3 million.

The shortfall in revenue, Fitial said, would have been $3.3 million if not for the "favorable" collection activities that offset it.

The excise tax, the liquid fuel tax, the beverage container and other tax categories reduced the shortfall to $2.1 million.

The government charges for services yielded $163,000 while the $900,000 interest from the Marianas Public Land Trust further reduced the shortfall to $565,456.

Former governor and now Rep. Froilan C. Tenorio, Covenant-Saipan, in a telephone interview said the Legislature "did not do a good job in reviewing the budget."

He voted against the FY 2011 budget bill, saying it was not balanced.

Tenorio said he doubted the administration’s budget submission but the House went ahead and supported it.

"We did not scrutinize it. I knew it was not balanced," he said.

To achieve a balanced budget, Tenorio proposed to cut the allotments for Tinian and Rota whose senators opposed the Saipan casino bill, which he believes will generate more revenue for the CNMI.

To avoid another deficit in FY 2012, Tenorio said, "we need immediate additional revenue now, not later."

The Senate, he added, must pass the Saipan casino bill. Then, he said, the Legislature should reduce the rebate rates which will result in higher income taxes.

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