7-month revenue only at $107M
The CNMI government collected only $107.3 million in the first seven months of fiscal year 2004, making it impossible for the Babauta administration to justify its proposed $226 million budget for fiscal year 2005.
In a report submitted by the Department of Finance covering the period from October 2003 to April 30, 2004, the total collection of the government amounted to only $107.32 million, which is way below the $213 million projected by the department for the entire fiscal year.
According to House Speaker Benigno R. Fitial, the House leadership is currently holding a series of meetings with Finance Secretary Fermin Atalig and other officials to look into the revenue resources of the government as part of the ongoing discussion on the proposed 2005 budget proposal.
“The administration should take notice that we don’t have $200 million right now. We [need] to sit down with the administration so that we could agree on reasonable resources,” said the speaker.
He stressed that the House continues to look for reasonable additional resources that the government can tap into to enhance its revenue collection.
Fitial said he wants the department to continue providing the House leadership with data on the government’s revenue resources and the cost of debt service.
The situation prompted the House to adopt House Concurrent Resolution 14-1, which sets the total anticipated resources for fiscal year 2005 at only $190 million, with the requirement that expenditures for FY 2005 should not exceed that amount.
The resolution, offered by Committee on Way and Means chair Norman Palacios, provides that subsequent bills making appropriations for FY2005 shall not approve expenditures for the operation of the CNMI government that would exceed the $190 million limit until such time that additional taxation is approved, additional revenues are received, or the Governor revises his estimates to anticipate financial resources in excess of the estimates.
According to the House leadership, the governor can resubmit his budget plan if he identifies and collects A supplemental budget for the fiscal year; it said the Saipan Legislative Delegation would also continue to assist the governor in finding ways on how to increase the government’s revenue resources.
Still, Fitial said, the Legislature will not support any additional taxes so long as the economy is bad.
In its report, the Finance Department said the available sources of income and revenues for fiscal year 2005 would come from income taxes, excise tax, liquid fuel tax, beverage container tax, garment user fee, hotel occupancy, bar tax, beautification tax, licenses and fees, charges for services, nonresident workers fee fund, deportation fund, local revenue, tobacco control fund, tobacco master settlement fund, and other revenues from penalties, interest income, business privilege fee, lottery revenue, and net of bond proceeds.
In his budget proposal, Gov. Juan N. Babauta estimates the total revenue and resources for FY 2005 to be $226.3 million, net of debt services, of which $212.6 million would be collected from existing sources, including the Nonresident Workers Fee Fund, the Tobacco Control Fund, and the Tobacco Settlement Fund, and approximately $13.6 million would come from the revenue enhancement and cost-cutting plan outlined in the Integrated Fiscal Plan of the administration.
The projections also showed that from $30.1 million in FY2004, garment user fees would increase to $34.44 million in FY2005. The government also listed other sources of revenue that it expects to generate some $18.86 million, an increase of over $7 million from this year’s $11 million.
The Department of Finance projects General Fund resources for 2005 at $209.78 million—some $4.36 million less than the revenue collections in FY 2003.
“The reason for this projected decrease in available resources is the increase in debt service—a $60 million capital improvement bond-that begins in FY2005. This was previously an interest payment but will now be a payment on both interest and principal,” Babauta said.
The governor explained that because of the debt service, there would be a $1.305-million decrease in the General Fund. The debt service for the land compensation bond would also begin in FY2005.
