Budget deficit down to $66M

The Tenorio Administration’s three-pronged approach to reduction in the government’s budget deficit is slowly paying off, as it managed to trim down the funding deficiency by a significant amount towards the end of financial year 2000.

From more than $80 million in 1998, the government’s cumulative budget deficit is now down to $66 million, thanks to the administration’s tighter cost-cutting measures, economic revitalization efforts and passage of business-friendly legislation.

“As a result of these efforts, government spending was reduced by about $50 million from FY 1997 to FY 2000; the $80 million deficit accumulated by previous administrations was reduced by $14 million; and revenues for the first time since 1997 have begin to increase,” said Mr. Tenorio.

Although the financial year 2002 budget proposal does not include funding for the administration’s deficit reduction plan, Mr. Tenorio said increase in earnings other than the projected revenue will be appropriately channeled to the program.

“If revenues increase, the administration hopes that the Legislature will support the application of these additional resources for further deficit reduction,” the governor added.

The administration is counting on the trend set by austerity measures during the previous fiscal year which allowed the government to reduce waste and excessive spending by $53 million.

“With the continued support of the private sector in economic planning and development activities, the legislature in passing vital legislation, and the community in supporting improved government efficiency, the deficit can be reduced to manageable levels,” Mr. Tenorio said.

Financial year 1999 was the first time government revenues edged up since visitor arrivals began dipping in 1997, with collection in key duty areas like hotel occupancy, excise, and bar & jackpot taxes showing strong improvements.

Sans stringent cost-cutting steps which were established by the Tenorio Administration, the deficit could have ballooned $133.4 million by end of FY 1998.

The governor’s finance managers have established a three-pronged approach that would assist the government in reducing the cumulative budget deficit — elimination of wasteful spending, economic revitalization efforts, and passing economic development legislation.

The administration plans to:

• use some $6 million from the Capital Improvement Projects bond financing for refundable local funds used to pay direct CIP costs in the last year;

• save at least $4 million by examining obligations that are no longer valid, reducing outstanding receivable and other commitment;

• use additional revenues generated from increased government efficiency and business activity, as well as economic diversification that include the setting up of free trade zones.

With less than a year until the new administration assumes position, the Tenorio Administration is not likely to completely retire the budget deficit although the governor has issued strong statements indicating his plans leave the office with it significantly reduced.

Finance officials said funding problems faced by the Commonwealth, especially on government agencies responsible in the delivery of essential services, is associated with the existing budget inadequacy.

“Success will be determined by our resolve to spend money on deficit reduction first. This [deficit] is the cause for our current problems and will continue to be until the deficit is eliminated or at least reduced significantly,” a report from Capitol Hill said.

General funds reached an all-time high of $248 million but public spending also shot up to record $268.1 million under the administration of former Gov. Froilan C. Tenorio.