Govt sees FY06 revenue to drop to $205M

Acknowledging the impact of the garment industry’s decline, the Babauta administration now projects a reduced revenue of $205 million for fiscal year 2006.

This projection was discussed during yesterday’s Cabinet meeting held at the Governor’s Office.

“That’s taking into consideration a drop in user fees,” said press secretary Peter A. Callaghan.

The government collects an average of $30 million in user fees a year.

Overall revenue from the garment sector, which is about $65 million a year, translates to 30 percent of the government’s revenue.

During yesterday’s meeting, finance and budget officials said the government can supplement the expected drop in revenue by implementing new measures, including the reprogramming of money from the Tobacco Control Fund as well as increasing the license fees for poker machines.

The annual license fee for each poker machine is $12,000.

During a recent deliberation on a poker zoning bill, some House members favored raising the poker license fees, citing that the current fee level has failed to stop people from going into the poker business. A lawmaker said that, from 242 machines during the 12th Legislature, the number of machines on island now total 1,100.

Finance Secretary Fermin Atalig said earlier that if user fee collection declines by over 20 percent this fiscal year, the government may resort to cutting the rebate percentage and suspend the use of certain funds, such as the Tobacco Control Fund.

“There are other areas we are looking at, like maybe we can ask the Legislature to cut the rebate percentage. That’s an option. Likewise, the earmarking can be suspended so that all funds will be diverted to the general funds,” said Atalig.

Office of Management and Budget director Ed Tenorio was quoted as saying during yesterday’s meeting that the fiscal year 2004 expenses “matched the revenues.”

“Budget announced that they closed out fiscal year 2004 with expenses matching the revenues. Well, excluding unfunded liabilities, revenues met expenditures in FY04,” said Callaghan.

The government has been operating on a $213 million continuing resolution.

The Babauta administration had originally submitted a $226 million budget plan for FY 2005. This was cut by the Legislature to $217 million—a level that was unacceptable to the administration, prompting it to veto the bill in January.