Reyes expects budget to fall to $180M

The budget proposed by Gov. Pedro P. Tenorio for Fiscal Year 2000 may dip to $180 million which could force the government to further cut down personnel costs, the chair of the powerful House Ways and Means Committee warned yesterday.

In an interview with reporters, Rep. Karl T. Reyes said revenues anticipated to be collected next year by finance officials could likely fall below the $206 million as projected in the budget package submitted early this month to the Legislature.

He maintained the administration has yet to fully estimate the decline in the collections from user fees paid out by garment manufacturers who have warned earlier of business slowdown in the next few months due to increasing global competition and the impact of the recent lawsuit.

“If nothing would offset the garment revenues, I’m afraid (the budget) will go down to less than $200 million,” Reyes said.

Collections from user fees are expected to slip between 20 to 25 percent over previous level on the heels of the filing of the $1 billion class-action suit against Saipan’s apparel industry which has scared some buyers, according to garment leaders.

This would mean the government needs to revise its spending package for the next fiscal year, unless the tourism industry — the island’s economic backbone — sees a miracle to edge up sharply to boost the local coffers.

Departments and agencies will have to suffer cuts anew, particularly in personnel which eats up about 78 percent of the total proposed budget or some $164.73 million.

“I don’t think it is the intent of this government to lay off people,” Reyes said, adding reduction of work hours for the nearly 5,000 employees is the best option by the Tenorio administration to slash spending.

Finance officials have estimated more than $41 million in revenues for this year from user fees which increased over the previous year after the government raised it from 3.5 percent to 3.7 percent last July in an effort to improve its cash flow.

The fee is assessed on each merchandise manufactured in local garment factories and shipped to buyers in the United States. User tax represents about 20 percent of the total CNMI revenue estimates for this year.

The Legislature has until September to approve the proposal submitted by the administration on April 1.

Reyes’ committee is tasked with the budget deliberation before it goes to the legislative floor for voting, which under the Constitution must be completed before the current fiscal year ends on September 30.

The FY 2000 spending package has already reflected a drop of about two percent from the revised budget last year, which he attributed to the continuous harsh economic conditions on the island brought about by the fallout of recession in Asia, NMI’s main tourism market.