Deficit beyond expectation: Sablan

With a record $57 million deficit adding to CNMI’s long list of financial woes, Gov. Pedro P. Tenorio’s special advisor on budget and finance yesterday called for tighter fiscal discipline to keep government expenditures low and contain the deficit.

Michael S. Sablan made fresh calls for extreme caution in spending public funds in light of a single audit report released yesterday by Deloitte & Touche which showed a $22.5 million increase in deficit in FY 1997 from the previous fiscal year.

Bulk of the deficit, the reports says, was incurred by the office of former governor Froilan C. Tenorio whose actual expenditures exceeded amount budgeted for that fiscal year by $10.09 million.

Under the NMI Constitution, the government must retire the deficit next year, but local officials are not optimistic that the negative unreserved fund balance could be wiped out with the continuous plunge in revenue collections.

“Regardless of the constitutional restriction on deficit, it is still prudent management to spend within our resources. “It is not a question of how much revenues we receive but it’s a question of discipline,” Sablan said.

In view of the anticipated 13.4 percent drop in revenue collections for the current fiscal year because of the economic slump, the governor has lowered the government’s budget plan to $216 million and has put in place an austerity program. Plans are also underway to widen the belt-tightening measures that may include government pay cuts and reduced working hours.

Sablan echoed the concerns previously raised by the governor that the deficit could exceed beyond $57 million in Fiscal 1998, which includes the last three months in office of the ex-governor.

There were speculations that before the former local chief executive stepped down from office he renewed a number of contracts covering various services.

“The amount of the deficit was more than we expected,” said Sablan, who headed a transition committee that reviewed the past administration’s handling of public funds, “We knew there was a severe problem but not this size.”

“Our concern now is how much more did the deficit grow from October, November, December…This is a situation where a lot of expenditures were paid that drained the cash accounts,” according to Sablan.

The governor earlier said that his government paid some $27 million to settle the outstanding obligations left by his predecessor and raised another $28 million to pay out tax rebates for the pervious tax year, and these two alone could push the deficit beyond $100 million in FY 1998.