FY06 budget to be unveiled today

Gov. Juan N. Babauta will hold the annual executive council meeting to unveil his administration’s budget request for fiscal year 2006.

The meeting, which is prescribed by law prior to the submission of annual appropriations to the Legislature, will be held at 8am at the Governor’s executive conference room.

All the four mayors and other executive officials are expected to attend the meeting.

The Executive Branch is mandated to submit its annual budget request on April 1.

Governor’s Office officials declined to reveal details of their new budget submission yesterday but in a Cabinet meeting earlier this month, the administration projected a reduced revenue of $205 million for FY 2006.

This is due to the projected decline in revenues from the garment industry, which is undergoing downsizing as a result of the worldwide lifting of trade quotas.

The CNMI government collects an average of $30 million in user fees from the garment sector a year.

Total revenues from the garment sector, which is about $65 million a year, translates to 30 percent of the government’s revenue.

With the projected budget decline, the Department of Finance and the Office of Budget and Management are looking at possibly reprogramming money from the Tobacco Control Fund as well as increasing the license fees for poker machines to supplement the budget.

Earlier, Finance Secretary Fermin Atalig said that if user fee collection declines by over 20 percent this fiscal year, the government may resort to cutting the rebate percentage and suspend the use of certain funds, such as the Tobacco Control Fund.

Last year, the Babauta administration submitted a $226 million budget for FY 2005, including a $13 million Integrated Fiscal Plan which consisted of proposed fee and tax increases.

The House of Representatives rejected the IFP and endorsed only a $213-million spending level, which reflects the continuing resolution level.

The Senate later increased it to $217 million following the passage of two revenue enhancement bills and the projected $1.5 million additional funds from increased labor fees.

The Legislature eventually agreed to pass a $217 million budget for FY 2005 but this was vetoed by the governor in January this year, citing, among others, that the budget level does not respond to the government’s actual needs.