Deficit outstrips savings •Pay cuts to be taken as a last resort, says Sablan

The financially-troubled government is expecting to save some $15 million from a new austerity package it plans to put in place in anticipation of further drop in revenue collections, but the amount is not enough to cover the 13.4 percent reduction in FY 99 spending level.

According to Gov. Pedro P. Tenorio, more belt-tightening will have to be done in order to stay within the revised appropriation package of $216.75 million for the current fiscal year.

“Our projection is a $32 million decline in collections…so we have to find ways where to reduce,” Tenorio said in an interview, “So far we cannot meet the $32 million,” he added, in justifying a new package of cost-cutting steps his administration is considering to cope with declining revenues and ballooning deficit.

The government is projecting a sharp decline in actual revenue collections from business gross revenue, NMTIT, hotel room occupancy, bar and general excise taxes as a result of poor tourist arrivals and slump in business activities.

The other day, the governor, along with Lt. Gov. Jesus R. Sablan, unveiled a four-point proposal to legislators, a plan designed to boost the existing austerity program implemented early this year to pare down expenditures after inheriting a nearly bankrupt government.

Under the new plan, which is expected to draw opposition from government workers, the Tenorio administration is proposing a cut back in salaries of highly-paid employees, reduction in man hours and suspension of benefits to avert potential layoff. Implementation of such plan, however, requires legislative nod.

Senate Vice President Thomas P. Villagomez earlier said the government suggested a 5-10 percent cut in the salaries of employees under government payroll.

But the governor explained that pay reduction will be proportionate to pay level. “The higher the salary, the higher the percentage reduction and it will decrease as we go along. And those people barely making a living will not be affected,” he said.

He also stressed that cutback in working hours will be selective in order not to disrupt critical services provided to the community, particularly in education, law enforcement and public health.

Last resort

In a separate interview, Michael S. Sablan, special advisor on finance and budget to the governor, eased fears of possible pay cuts, which he said will only be implemented if other measures have been exhausted.

“We’re assuming that the downtrend in revenue collections will continue. What we’re doing now is in preparation for that,” Sablan explained, “Pay cuts are temporary and last resort.”

According to Tenorio’s key financial adviser, the new cost-cutting steps were put forward not only to bring down expenses to the revised spending limit but as well as address the cumulative deficit, which the governor said stood at $53 million as of FY 1997.

Since the new administration took over in January, government expenditures have been trimmed down by $19 million from previous year’s level as a result of stricter fiscal policy.

However, he assured the public that any cutback in government expenditure will not affect key services provided to the community. “We are not going to compromise public health, public safety and education.”

He said officials of the Department of Finance have been meeting with various departments and government agencies to help them come up with possible measures to prune down spending.

“We want to assure the taxpayers that the administration is doing its best to stay within the spending limit and address the cumulative deficit,” Sablan said.