Sablan: Budget cut will throw MVA off-balance

Marianas Visitors Authority board chairman Dave M. Sablan yesterday warned the Department of Finance against including MVA in the planned 13.41 percent budget cut because it would devastate the half-a-billion-dollar tourism industry.

“We might as well close shop if you don’t give us the money. MVA is a unique agency and a drastic cut in the budget would severely hamper its operation to entice tourists to come here,” he said. Failure of the MVA to promote the Northern Marianas in its market abroad would lead to the collapse of the island’s main source of revenue, he added.

Finance Secretary Lucy Nielsen explained to the MVA board how the administration’s austerity measure will be carried out as a result of diminishing government revenue in the second quarter of fiscal year 1999. Although Gov. Pedro P. Tenorio has already promised not to include the MVA in the budget cut, Nielsen said she is not aware of any agreement and that it was something which the board should clarify with the chief executive.

Nielsen explained that if the governor would exclude other agencies from the budget cut, this would result in higher reduction in appropriation for other departments which could reach as high as 24 percent. If the revenue collection improves, she said necessary adjustments in the budget would be made.

The Finance Department has yet to release some $1.7 million from last fiscal year’s appropriation to MVA. Of this amount, Nielsen gave MVA the assurance that she will work out with the Treasury the immediate release of some $1.2 million this month for its advertisement and operational expenses.

The governor had slashed the CNMI government’s budget for this fiscal year from $249.26 million to $216.75 million due to severe reduction in projected revenue.

MVA managing director Perry Tenorio said he believes the governor will keep his promise to spare the agency from the planned budget reduction but this would still depend on the whole economic situation of the CNMI.

The tourism agency is expected to receive an average of $1.75 million in its quarterly allocation from the $7 million approved budget for this fiscal year. However, if MVA is not exempted from the across-the-board budget reduction, it will only receive $5 million.

In a letter he sent to the governor, Sablan said the money which MVA receives for its operation depends on the revenue generated by the hotels specifically the percentage on hotel occupancy tax and income from the beverage container tax which have drastically dropped due to the downtrend in tourist arrivals.

A study on the financial impact of the budget cut conducted by MVA showed that it would only receive a total of $358,000 from the 25 percent share in container tax and $4.8 million from the 70 percent share on the hotel occupancy tax. As a result of the financial crisis, MVA has temporarily suspended the implementation of various projects.