Governor sets meeting to fine-tune budget

Gov. Pedro P. Tenorio meets today with members of the Governor’s Council to finalize preparation for the Fiscal 2000 spending package which is due for submission on April 1 to the Legislature.

The governor yesterday said the meeting has been scheduled to inform municipal mayors of the administration’s plan to slash next year’s budget because of shrinking cash resources.

“I will bring to the attention of the council that we should be mindful of the resources that we have now,” Tenorio said. “We have to expend money within our means.”

The government plans to adjust downward the proposed budget in line with the 2 percent anticipated decline in revenue collections to $206 million that will oil the Commonwealth’s operations in the new millennium.

Although the projected decline is still preliminary, the budget cut reflects a 15 percent reduction in the spending limit from original resource projections of $242 million approved by legislators in September. But continuing decline in revenue collections had forced Tenorio to revise the spending plan to $210 million, or a 13.4 percent decrease.

Bulk of the decline in revenues, administration officials explained, will come from poker license fees, which under a new law, must be shared between the central and local governments.

According to Tenorio, a lower appropriation will allow his administration to meet a constitutional requirement for a balanced budget and keep the deficit from rising.

But some skeptics say anticipated revenues to be collected in the next fiscal year are unrealistic considering the expected decline in user fees the garment industry will pitch in to the local coffers.

According to garment representatives, the slowdown in production could go beyond initial estimate of 25 percent because of the sharp drop in orders from US buyers worried over the $1 billion class action lawsuit. The decline in orders is also expected to trigger massive job cuts in the sector.

In 1998 direct taxes paid by apparel makers to the island government represented a record of 23.5 percent of the total operational budget of the Commonwealth. On top of this, the garment industry provided 53 percent of the revenues of the ports authority and 20 percent of the utilities corporation.

The proposed spending level is part of a package of measures the administration has put in place to deal with the economic crisis haunting the CNMI since late 1997 when a currency crunch struck Asia, once home to some of the fastest growing economies in the world. Japan and South Korea, two of the region’s economic giants hardest hit by the financial fallout, used to be the Commonwealth’s key providers of tourists and fresh capital.

The region-wide financial fallout has plunged the islands into its worst economic crisis in nearly 50 years, pulling down revenue collections and forcing establishments out of business.

Revenues collected during the first quarter of FY 1999 had dropped from year-ago figures. Excise taxes from perfume, cosmetics and leather goods – the favorite gift items purchased by tourists – decreased during the same period due to a downtrend in the tourism industry and changing buying habits of the once high-spending Japanese visitors.