CNMI Lawmakers Question Governor’s 2013 Budget Revisions

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‘Cautious optimism’ coupled with doubts over anticipated revenue

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, July 6, 2012) – In the Commonwealth of the Northern Mariana Islands, some lawmakers, businesses, and Delegate Gregorio Kilili Sablan (Ind-MP) himself have expressed doubts about Gov. Benigno R. Fitial's fiscal year 2013 budget revision from $102 million to $114.32 million on Monday. Finance Secretary Larrisa Larson assured the House Ways and Means Committee yesterday, however, that the additional $12 million is actually a "conservative" figure that still does not include much of the possible impact of the ongoing "aggressive" tax collection efforts.

Sablan said it seems that there is a sudden 12 percent increase in revenue, "during election year," even as businesses that pay the taxes are not seeing such an increase.

"That doesn't add up," Sablan told Saipan Tribune. "I have been having conversations with businesses still concerned about their declining revenues and reduced work hours, but apparently the government is the only one seeing a 12-percent increase. That's a huge bump in the budget."

Sablan said he supports the restoration of 80 work hours biweekly, but "how long is it going to last?" He hopes there is no "over-projection" in revenue.

Lawmakers themselves have reservations about the budget. Rep. Ray Tebuteb (R-Saipan) said people should approach the revised budget submission with "cautious optimism."

He said the government still has lots of unpaid obligations, including over $320 million to the Northern Mariana Islands (NMI) Retirement Fund and millions to private clinics serving Medicaid patients.

Rep. Edmund Villagomez (Cov-Saipan) said it was only after the Finance secretary met with the Ways and Means Committee that he considered the revised budget a realistic one.

"I am more comfortable now in supporting the concurrent resolution that the House may act on [today]. The Finance secretary said $12 million is a conservative figure," Villagomez said after the Ways and Means Committee held a closed-door meeting with Larson in the speaker's conference room.

Ways and Means Committee chair Ray Basa (Cov-Saipan) prefiled yesterday a House concurrent resolution capping the fiscal year 2013 budget at $114.32 million, based on the governor's revised budget.

House floor leader George Camacho (Ind-Saipan), also a member of the panel, said that Finance did not want to be "liberal" about the figures thus only the $12 million additional projected resources.

Just like Villagomez, Camacho said for the most part, the additional $12 million is expected from business gross revenue tax gains.

Camacho and Villagomez said aggressive enforcement of tax laws and rules and ongoing tax debt settlement negotiations are expected to add more to the projected revenue in 2013.

They cited as an example Tinian Dynasty Hotel and Casino's settlement of its over $30 million back taxes, by agreeing to pay $6.1 million. But the lawmakers said the discussions on tax collections were brief and general to avoid disclosing identities of specific taxpayers.

The governor said the revised budget also incorporates transitioning all active employees into the U.S. Social Security retirement program. If effectuated, this change reduces the employer contribution for all active defined benefit members from 37.39 percent to 6.20 percent and an increase for the defined contribution members from 4 percent to 6.20 percent.

Senate President Paul Manglona (Ind-Rota) said yesterday the $12-million increase seems believable because the administration would always give the low figure rather than the high figure.

"The Senate will work on the number that the House will give us. I urge the House to pass the concurrent resolution so that we know the level of resources we're working on and to give the Senate ample time to do its review of the concurrent resolution," Manglona said.

He said the government "needs to do more than that," referring to Fitial's plan of giving $11 million to the Fund, up $1 million from his original submission of $10 million. He said the same goes with the medical referral program and Medicaid, among other things.

The government's 2012 budget is $102 million. The governor submitted on March 30 a $102-million budget for 2013. He revised it on Monday, to increase it to $114.32 million.

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