Palacios: I believe we will make up budget shortfall
Gov. Arnold I. Palacios said he isn’t too worried about the recently reported budget shortfall for fiscal year 2024, stating that he believes the over $3-million shortfall will be made up during the final quarter of FY24.
In an interview with Palacios, he shared that since June, the CNMI administration has been tracking revenue collections but since June, revenue collections did not reflect the forecasted projected revenue collection resulting in an over $3 million shortfall.
“What we passed this fiscal year, with the forecasted projected revenue, we were tracking it every month since June. We were not tracking as projected by $3 million,” he said.
However, Palacios notes that he is not too concerned as he believes the CNMI will make up for the shortfall in the final quarter of this fiscal year.
“I’m not too concerned about it. I’m basically mandated by law that whenever revenue dips by $200,000 or goes up by $200,000, I need to advise all branches of government, then put out a proportionate hold on the allotments. If we make it up in August, we will let it go. It’s just something I had to do but I really believe we will make up the $3-million shortfall. I believe we will make that up in the fourth quarter. According to revenue and tax, August is usually a high revenue collections month,” he said.
According to a previous article on the Saipan Tribune, the Department of Finance’s third quarter report 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), 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 7604c(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.
Arnold I. Palacios
