CNMI sees over $3M revenue shortfall this fiscal year
The Department of Finance’s third quarter report has reflected an over $3-million revenue shortfall for fiscal year 2024 which will result in a reduced budget across the board for all government entities.
In a letter to Senate President Edith Deleon Guerrero (D-Saipan) and House Speaker Edmund S. Villagomez (Ind-Saipan), Gov. Arnold I. Palacios stated that due to Finance Secretary Tracy B. Norita’s third quarter report (which indicated a $3.4 million revenue shortfall in the current fiscal year), there will be a budget reduction across the board for the current fiscal year.
Specifically, in her quarterly report to the Legislature last week, Norita said the cumulative revenue forecast for the first three quarters of the year was $124 million, but the actual collection was only $120.5 million.
The third quarter of the fiscal is from April 1 to June 30, 2024 and the current fiscal year ends on Sept. 30, 2024.
“Although collections in the remaining months of the fiscal year may offset these shortfalls, it would be prudent to initiate a conservative reduction in the budget authority to mitigate the anticipated fiscal year-end deficit,” said Palacios.
In his letter, Palacios said pursuant to 1 CMC Section 7604©(4) (or the Planning and Budgeting Act), he is mandating an immediate proportionate reduction in the allotment authority of all branches, offices, departments, agencies, and instrumentalities of the Commonwealth which are subject to appropriations.
“The effect of this reduction will be reflected in the budget authority remaining for the fiscal year,” he said.
The Office of Management and Budget has revised the remaining budget allotments from August to September 2024, amounting to $16.6 million.
“The proportionate reduction will result in a total budgetary decrease of over $2.3 million or 2.15%. This cut will offset the third quarter lapses of over $1.2 million as of June 30, 2024, as reported by Finance,” he said.
Palacios said this reduced budget allocation will have an impact on government operations and services.
“However, the current financial condition of the CNMI requires that we quickly realign government spending with available resources. To meet this challenge, it is imperative that agencies and activities examine their operations and identify areas where they may be reduced or eliminated altogether, while we maintain the reduced work week at 70 hours,” he said.
Palacios is urging lawmakers to pass tax-hike measures.
“This administration is committed to collaborating with the Legislature to increase government revenue and avoid further fiscal challenges. We must work together to enact measures that will both protect the livelihoods of our government employees as well as the critical services upon which our entire community depends,” Palacios said.
For its part, the House of Representatives Ways and Means Committee is finalizing the FY 2025 budget measure, which reflects the governor’s revised budget proposal.
The committee will come up with a final draft of the FY 2025 budget bill this week.
Arnold I. Palacios
