In his annual financial report to the Legislature, Gov. Benigno R. Fitial presented positive news that he attributes to several cost-cutting measures and more stringent controls over government spending.
In his annual financial report dated Dec. 31, 2012, and submitted to the Legislature yesterday, Fitial said that fiscal year 2012's net effect of both revenue and expenditures resulted in a slight surplus of $56,256 for the fiscal year.
Revenue collections totaled $102,288,584, about $288,582 above projected revenues for the fiscal year, he said.
The government's total expenditures, however, exceeded the amount set under the budget law, Public Law 17-55, by $232,328, for a total expenditure of $102,232,328. The fiscal year budget was $102 million.
The budget law requires the governor to submit an annual financial report to the Legislature within 120 days following the end of the fiscal year.
Fitial said that revenue collection has improved and that they expect it to improve further as each collection point is closely monitored and reviewed to maximize the government's collection efforts.
He said enforcement actions also continue despite the limited funding for the Enforcement Unit at the Division of Revenue and Taxation.
“We will take all the necessary steps to continue our progress toward our goal of realizing a thriving economy for all the people of the Commonwealth,” he said.
The governor said revenue collections and other financing sources recorded for the year, not including those reserved for debt service and transfers out, totaled $123,149,909 or $2.47 million more than projected.
Despite the tough economic climate facing the CNMI, Fitial said the Business Gross Revenue Tax showed a significant increase of $3,863,515 over projections.
In contrast, wage and salary taxes fell short of projections by $1,579,929 or $22,920,07 in overall collections.
Income tax collections for both personal and corporate income taxes also continue to fall short of estimates, with shortfalls of $2,257,045 and $534,699, respectively.
Fitial said overall collection of income taxes in the Commonwealth totaled $81,013,996, with the strong collection of Business Gross Revenue Tax reducing the impact of the shortfalls in this revenue category.
The Commonwealth's excise tax exceeded projections by 14 percent and collected $19,153,517. “This resulted in a surplus over projections of $2,353,517,” the governor said.
Favorable collection activities also occurred in the Liquid Fuel Tax, Beverage Container and Other Tax categories, which resulted in a surplus in overall tax collection of $3,567,997.
Licenses and fees collected totaled $6,683,482.
Shortfalls in poker machine
Shortfalls occurred in the area of poker machine renewals by $696,000 and business license fees by $202,982, Fitial said.
He said the collection of indirect cost charges fell short of estimates by $1,029,433, but is expected to be recovered at a later date upon receiving approval of an actual indirect cost rate.
“Currently, the Commonwealth is using an interim rate that should be adjusted in the near future after necessary approvals are granted,” he said.
Expenditures and DPS overtime
The total expenditures/obligations for the fiscal year exceeded total appropriations and allotments by $232,328.
Fitial said total personnel expenditures for the year exceeded budget allotments by $511,778, while total expenditures and obligations under the “all others” category were well within appropriations by $279,450, resulting in a net expenditure/over obligation (or deficit) of $232,328.
“The bulk of the expenditures for the fiscal year were attributed to excessive expenditures in operations, directly related to utility consumption and Department of Public Safety overtime,” he noted.
Fitial said the factors setting off the utility expenditures amounting to $9,383,333 were triggered by the rising cost of fuel and further exacerbated by a budget shortfall.
In addition, he said, non-general fund sources amounting to $754,783 through the Solid Waste Program absorbed departmental utility expenditures as expense transfers.
Rota and Tinian net overrun
Fitial said the net overrun in the First Senatorial District (Rota) amounting to $69,195 relates to personnel expenditures.
The net overrun in the Second Senatorial District (Tinian) amounting $30,910 was attributed to overtime within the DPS.
The overtime expenses, Fitial said, exceeded $201,930 for the department alone.
However, lapsed funds within the Office of the Mayor of Tinian and Aguigan and other departments within the senatorial district absorbed the excessive expenditures, reducing the total net overrun to $30,910, he added.
Medical referral and Medicaid expenditures
Fitial said the overrun in expenditures for medical referral amounting to $4,790,059 was triggered by an increase in the number of patient referrals requiring critical care abroad.
He said qualifying expenses amounting to $2,165,721 were defrayed using expense transfers to outside sources deriving from the Tobacco Control and Tobacco Settlement.
Fitial said the reprogramming authority granted to him pursuant to Senate Joint Resolution, 17-22, SD1, covered a significant amount of $2,491,147.
Fitial said excessive expenditures in Medicaid reimbursements amounting $3,056,193 was a result of the increase in the number of qualified Medicaid and indigent patients.
“Of this total amount, $359,496 was defrayed through expense transfers using the tobacco settlement revenues and $329,832 was offset by reprogramming of lapses,” he added.