Gov. Eloy S. Inos submitted on Friday a $123.4 million proposed “balanced” budget for fiscal year 2014 that consolidates some agencies, privatizes both parks maintenance and sports administration, removes all deputy positions and vacant and new posts except those announced, and eliminates travel funds.
At the same time, the governor urges the Legislature to pass revenue-generating measures to help further fund public services.
The $123.4 million spending plan is an almost $10 million increase from the fiscal year 2013 budget of $114 million, fueled by tourism growth.
Inos’ budget sets aside $20 million for the NMI Retirement Fund, double the current appropriation of $10 million.
The governor also gives the Public School System $33 million. This is $3 million more than the current funding.
Inos also funded all police officers and firefighters at 86 and 106 regular hours, to comply with the Fair Labor Standards Act.
General fund subsidy to the Commonwealth Healthcare Corp. is at some $1.9 million.
CHC expects its revenue to reach $32 million in fiscal year 2014, and this is not part of the governor’s budget because CHC controls its own revenue.
“Our goals while developing this budget proposal are to allocate sufficient funds to extend the operations of the existing retirement programs, reduce costs, and increase efficiency of government operations,” Inos said in his letter to presiding officers of the Legislature.
The administration also directed departments to assess their programs and eliminate operational redundancies, promote energy conservation, and curtail or eliminate non-essential spending, including cuts in overtime costs.
The Legislature received the budget submission Friday afternoon, days ahead of the governor’s May 1 deadline.
Senate President Ralph Torres (R-Saipan) said yesterday he will begin reviewing the governor’s budget, while House Speaker Joseph Deleon Guerrero (IR-Saipan) said he has yet to see the proposal.
The Legislature has until Sept. 30 to pass a budget, or there will be a government shutdown by Oct. 1, the start of fiscal year 2014.
The Inos administration expects to generate $145.954 million in fiscal year 2014—from Oct. 1, 2013, to Sept. 30, 2014.
Of this amount, $123.4 million is available for government operations after deducting debt service, earmarked funds, and other legal obligations.
The $145.954 million anticipated budgetary resources comprises: $64.183 million or 44 percent from business gross revenue tax; $36.3 million or 25 percent from income taxes; $19.5 million or 13 percent from excise taxes; $15.3 million or 10 percent from other taxes; $6.57 million or 4 percent from fees; $1.5 million or 1 percent from charges for services; and $2.601 million or 2 percent from other revenue.
The anticipated revenue gain for 2014 comes from increases in business gross revenue tax and hotel occupancy tax.
“Tourism has steadily been showing promising signs of growth and the Commonwealth has realized significant increased tax collections in this industry,” the governor said.
The Marianas Visitors Authority projects continued growth in tourism throughout 2014 and such forecast is factored into the budget proposal, Inos added.
Inos, a former Finance secretary, said tax collections from businesses also continue to show increase and with more anticipated enforcement actions, “the increased resources reflected in this proposal are further supported.”
The budget continues to suspend earmarks from nonresident worker fund fees to the Northern Marianas College and PSS, and 10 percent of gaming jackpot tax to PSS. It also continues to suspend 10 percent of general fund poker fees to human resources development fund and 50 percent to the Fund.
The administration expects $1.4 million from the transitional Commonwealth-only worker, or CW fund, $1.93 million from Compact-Impact funds and $5.26 million from public lands.
Inos proposes to transition the Workforce Investment Agency into the Department of Labor.
The governor also proposes to eliminate and transition the Division of Sports and Recreation from the Department of Community and Cultural Affairs into the Northern Marianas Amateur Sports Association, or NMASA.
The budget package also transitions the Workers’ Compensation Commission into the Department of Commerce pursuant to Public Law 17-88.
It also transitions the Office of Personnel Management on Saipan, Tinian and Rota into the Civil Service Commission.
Inos said his budget proposal also anticipates the transfer of the Group Health and Life Insurance Program from the Fund to the Department of Finance.
The governor’s budget also privatizes the functions of the Division of Parks and Recreation, by outsourcing grounds maintenance services for all parks and recreational areas. The division is under the Department of Lands and Natural Resources
“A privatization plan is being developed to mitigate potential impacts prior to its implementation,” the governor said.
He added that employees affected are encouraged to become entrepreneurs who will have an opportunity to participate in competitive solicitations to perform grounds maintenance services as part of the Tourism Task Force Initiatives to keep the CNMI well-manicured.
Parks and Recreation director Eli Cabrera, a former House speaker, said he has yet to see the budget proposal.
Based on the budget submission, DPR’s budget for personnel is “zeroed out” for 2014, but its “all others” is at over $468,000, a reduction of over $146,000 from the current level.
Other agencies are urged to evaluate existing programs that may be downsized or considered for outsourced activities to realize savings while continuing to meet program objectives.
This is also seen as a way to develop the private sector capacity.
The governor’s budget applies the federally mandated 50-cent minimum wage increase effective Sept. 30, 2013, for those currently earning $5.55 an hour.
It also decentralizes utility expenses into the respective departments.
The budget also removes all deputy positions and all vacant and new positions except those announced.
The governor also proposes to reduce “all others” allocation, specifically removing local travel funds and imposing travel restrictions.
How much are they getting?
The Executive Branch’s total budget is $34.209 million, up from $30.359 million mostly to increase funding for the Fund and other public services.
The proposed budget for the Judicial Branch is $4.243 million, up from $3.739 million.
The proposed budget for the Legislature is $5.28 million, from $5.23 million.
For Rota, the proposed budget is $5.357 million, up from $4.420 million
The proposed budget for Tinian is $5.916 million, up from $4.620 million.
The Saipan Mayor’s Office’s budget is at $1.345 million, compared to $1.165 million currently.
The governor’s proposed budget for the Northern Islands’ Mayor’s Office is $373,754, up from $334,158.
Boards and commissions’ budget is proposed at $1.203 million, compared to the current $1.083 million.
Medicaid reimbursement is at $4.301 million, up from $3.928 million.
Northern Marianas College is at $5.029 million, up from $4.511 million.
MVA is at $1.161 million, down from $2.007 million, but MVA is set to get an increase from other sources such as a portion of the increase in hotel occupancy taxes since April 1 this year.
The proposed budget for the Board of Education remains at $172,257.
IN A NUTSHELL
-Highlights of the governor’s FY 2014 budget of $123.4 million:
-Retirement Fund: $20 million, up from $10 million
-Public School System: $33 million, up from $30 million
-Northern Marianas College: $5.029 million, up from $4.511 million
-All sworn police officers and firefighters funded at 86 and 106 regular hours
-Commonwealth Healthcare Corp. government subsidy remains at over $1.9M
-Consolidation of Workforce Investment Agency and Department of Labor
-Transitioning of the Division of Sports and Recreation from the Department of Community and Cultural Affairs into the Northern Marianas Amateur Sports Association, or NMASA
-The Workers’ Compensation Commission is merged into the Department of Commerce
-The Office of Personnel Management is transitioned into the Civil Service Commission
-The functions of the Division of Parks and Recreation are privatized, by outsourcing grounds maintenance services for all parks and recreational areas.
-Decentralization of utility expenses into respective departments
-Removal of all deputy positions, and all vacant and new posts except those announced
-Cut in “all others” allocations, specifically removal of local travel funds and imposing travel restrictions
-Executive Branch: $34.209 million, up from $30.359 million
-Judiciary: $4.243 million, up from $3.739 million
-Legislature: $5.28 million, up from $5.23 million
-Rota: $5.357 million, up from $4.420 million
-Tinian: $5.916 million, up from $4.620 million
-Saipan Mayor’s Office: $1.345 million, up from $1.165 million
-Northern Islands’ Mayor’s Office: $373,754, up from $334,158
-Medicaid reimbursement: $4.301 million, up from $3.928 million