Deficit rises to $53M •With the crisis, governor expects deficit to grow even further

CNMI’s cumulative deficit almost doubled to approximately $53 million in FY 1997 compared to the previous fiscal year, and Gov. Pedro P. Tenorio feared this could lead to a financial collapse of the government.

The figure reflects an increase of $21 million in deficit incurred by the previous administration in FY 1996 at $32 million under former governor Froilan C. Tenorio.

According to the incumbent governor, the amount was based on the independent single financial audit of Deloitte&Touche which is now under review by the Office of the Public Auditor.

The report will be released next week.

“From all indications we have a $53 million deficit for fiscal year 1997,” Tenorio said in an interview, without providing details.

As early as December 1997, Tenorio’s key adviser Dr. Jose T. Villagomez had raised the alarm bell that the incumbent leader would inherit a bankrupt government due to what he claimed thoughtless spending of the past administration coupled by poor revenue collections and economic slump.

The audit report of Deloitte&Touche, however, far exceeded the estimates of the Teno-Pepero Executive Transition Team, which reviewed the past government’s handling of public funds, at $35 million.

A report by the transition team showed the ex-governor spent close to $13 million in government money for sole source contracts alone that covered consultancy and lobby services in Washington, lease of vehicles and purchase of water color drawings, among others.

It also said that $29 million intended for tax rebates was found to have been missing when it should have been at $31 million as of end-1997. According to the former governor, the special rebate trust account might have been used to retire portion of the $40 million deficit left by his predecessor, Larry Guerrero.

The ex-chief executive said he was able to reduce the deficit to $16 million, but left $27 million in outstanding obligation for various services that date back to 1995.

Due to shrinking cash resources, Tenorio expressed doubts whether his administration could retire the deficit in two years as mandated by law.

He predicted deficit for FY 1998 to go beyond $53 million.

“I assume that it’s going to be more in 1998 especially now that we’re seriously suffering from the Asian crisis,” Tenorio said, “We are facing a serious problem.”

Early this month, the governor unveiled a new spending plan for FY 1999, chopping off $32.5 million from the original budget limit of $248.26 million, or a decrease of 13.4 percent, to deal with the continuous decline in actual revenue collections.

Aside from reducing the appropriation package, the administration is pushing for the suspension of several legislation that would further deplete the local coffers in order to ease the serious cash flow confronting the island government.