Gov’t. spending down significantly

While the Tenorio Administration’s cost-cutting measures allowed the continued delivery of basic social services to the Northern Marianas community, the austerity program can only go to a certain extent unless supplemented by concrete actions that would spur growth in the turtle-paced rally of the local economy.

Faced with the task of efficiently running the government through limited funding, the Commonwealth is also rushing to identify potential business activities that may save further collapse of the economy in order to nourish public coffers.

Government officials are wary that the anticipated demise of the garment manufacturing industry on Saipan would give the local economy harder blows considering its proven resilience against the effects of the downturn in major Asian economies which sent CNMI’s tourism sector into an all-time low.

“The economic challenge faced by the Northern Marianas requires more than just austerity measures,” said Budget and Finance Consultant Mike Sablan in an earlier interview.

This, even as he acknowledged that the austerity program instituted by the administration of Gov. Pedro P. Tenorio resulted in major reduction in government spending that range from as low as nine percent to as high as 50 percent.

In the period covering Fiscal Years 1997 to 1999, Mr. Sablan noted that the Tenorio Administration managed to cut personnel expenditures by nine percent; professional services by 50 percent; travel expenses by 24 percent; communication costs by 32 percent; and lease vehicles by 27 percent.

The cost-cutting measures were installed following the 20 percent drop in overall government revenues in the same period mainly because of the significant plunge in visitor arrival figures since the onset of the Asian financial crisis.

Mr. Sablan explained that the 20-percent drop in overall government earnings was a bit low than the anticipated fiscal impact of the recession, thanks to the resilience of the apparel manufacturing industry which posted growth while all the other sectors were on the downside.

In fact, user fee collection from apparel exports have registered consistent growth since 1990 at only $6.3 million. The figure first reached the double-digit mark in 1996, recorded at $18 million, growing again in 1998 at $36.9 million and is anticipated to increase to $36.9 million this year.

Records from the finance department also revealed that user fee collection account for only about five percent of total government earnings in 1990. By end-1999, user fees collected from apparel exports account for 19 percent of total Commonwealth revenues.

The consisted increase in user fee collection has offset the major decline in revenue collections from all other business sectors in the CNMI, when hotel tax collection dropped by a whooping 35 percent.

The strength of garment manufacturing sector in the Northern Marianas mitigated the impact of the two-year economic crisis, government officials and economic experts said.