Gov’t revenues drop 9% in 1st half

Government revenues during the first six months of the financial year 2000 dropped nine percent to $101.3 million from the average $111.45 million in the same period last year, according to a report obtained from the commerce department.

Officials said the first half decline in government earnings is a clear indication that the Northern Marianas economy continues to rally weaker than the pre-1997 period although most Asian economies have already bounced back.

Finance managers blame the significant drop in revenue collection during the first half of the Fiscal Year 2000 to the weak consumer confidence which continue to prevail on the island, aggravated by the sudden shift in the spending habits of CNMI visitors.

Records from the finance department submitted to the Central Statistics Division disclosed that average quarterly collection in FY 2000 also fell nine percent to $50.65 million from last year’s $55.725 million.

The CNMI government has reported a record-low in the amount of revenues collected from hotel occupancy taxes since 1996, averaging $2.8 million in the first half of the financial year 2000, which translates into about six percent fall from the year ago’s semestral average of $3 million.

Figures from the finance department, listed in the Quarterly Economic Review prepared by the Central Statistics Division, revealed hotel occupancy taxes contributed $6 million into the overall revenues generated by the CNMI government in Fiscal Year 1999.

A review of official government figures will show that the first half of FY 2000 was the first time since the financial year 1996 when semestral hotel occupancy revenues dipped below the $3 million-mark.

In 1996, per semester average amounted $4.95 million, or when more than 700,000 tourists visited the Northern Marianas for the whole year, helping hotels achieve an occupancy rate of 85.6 percent.

While the rate suffered a modest fall in 1997, dropping to 81.4 percent, hotel occupancy revenues soared $10.8 million or an average of about $5.4 million per six-month period.

The figure fell to a per semester average of $3.85 million, or $7.7 million for the entire 1998, when the Northern Marianas started feeling the pinch of financial upheavals in major Asian countries like Japan and Korea.

During the same year, visitor arrivals dropped by close to 30 percent to about 490,200 from the previous year’s 694,900 tourists. Arrival statistics slightly improved in 1999, reaching 501,800 travelers to the Northern Marianas.

Hotel occupancy rate fell seven percent to 58.9 percent in the second quarter of 2000, dampening moods brought about by the apparent growth manifested by the Northern Marianas tourism industry in the first three months of the year.

Akin to the drop in revenues, the administration of Gov. Pedro P. Tenorio slashed its expenditures by close to six percent in the second quarter of the current financial year, spending only about $52.3 million in the January to March period.

Intensified cost-cutting steps and tighter monitoring of unnecessary spending were the major factors that helped the administration slash government expenditures from $55.5 million during the first quarter of the FY 2000.

Mr. Tenorio’s efforts to maintain government spending within the available revenues by putting emphasis on the more important services and programs also pulled down the average quarterly allotment during FY 2000 versus the previous financial year.

Average quarterly allotment during the current fiscal year, based on the DOF figures quoted in the commerce department’s report on economic indicators, is $53.9 million, lower from the FY 1999’s $55.075 million.

This fiscal year’s quarterly spending was even lower than the level during the financial year 1996 when the CNMI government was spending an average of $55.4 million per three-month period.

In 1998, the average quarterly expenditures of the Commonwealth government amount $63.9 million, lower than the FY 1997’s average allotment of over $67 million.

In FY 1999, the Tenorio Administration managed to slash its expenses by more than $35 million, spending only $220.3 million, lower from the previous year’s $255.6 million.