Govt spending exceeds revenue

The government has spent $150 million so far for the current fiscal year ending on May 31, which is $11 million more than what it has collected during the period.

In an updated budget report to the Legislature dated July 1, Gov. Juan N. Babauta said that FY05 revenue collection ending May totaled $139 million, which he said was an increase of $6 million from last year’s collection due to “steady increase in business gross revenues.”

But he also said that FY05 General Fund expenditures amounted to $150 million during the period partly due to the expenses incurred after the onslaught of two major disasters last year, direct hiring of nurses, decrease in garment industry revenues, as well as the recent power crisis at the Commonwealth Utilities Corp.

He said these expenses were realized in the following areas: overtime compensation for the Department of Public Safety in view of the shortage of personnel, conversion of staffing services to direct hiring of nurses at the Commonwealth Health Center, and the decrease in revenues from the garment sector in view of the impact of the worldwide lifting of trade quotas.

“Most of these events happened about the same time late in FY04 and continued well into the current year while still implementing spending control measures on matters of less priority,” said Babauta.

In addition he said, the most recent declaration of state of emergency due to power crisis at CUC “also attributed a large sum of expenditures to the current operation of our government.”

Meantime, the governor told the Legislature that the administration’s proposed budget of $226 million for FY06, which was submitted on April 1 remains.

He also certified that based on existing resources, the government can only collect $206 million in FY06.

The governor reiterated his call on the lawmakers to pass his $20-million revenue generating enhancement measures to ensure that the government can properly deliver needed services.

Otherwise, he warned, “we would fall farther from the realities of the present circumstances our great Commonwealth is facing.”

He cited that the looming pullout of Japan Airlines would create additional negative economic impact.

He said this would be mitigated by the new Northwest Airlines flights to Saipan beginning on Oct. 1, 2005.

“However, I respectfully urge the legislative body as a whole to reconsider enacting those revenue generating measures recommended in my April 2, 2005 budget submission,” said Babauta.

The governor projects to collect an additional $20 million by implementing the following:

– Increase poker fee license by $6,000 to finance education and other basic services,

– Suspend appropriation of local poker fees and divert them to the general fund, and

– Suspend appropriations of Tobacco Control Fund and Tobacco Settlement Fund and use them for general expenditure.

The House Ways and Means Committee, meantime, has identified only $206 million for FY06, saying that it is what the government can realistically afford for next fiscal year.

The House leadership has indicated its opposition to the imposition of any tax or fee increases.