Govt deficit at $118.4M

The latest annual audit report showed that the CNMI government posted an outstanding budget deficit of $118.4 million ending Sept. 30, 2003.

The May 23, 2005 audit report by Deloitte & Touche obtained by Saipan Tribune showed that as of September 2003, the General Fund’s total “unreserved fund balance deficit” totaled $118.4 million—an increase of 13.3 percent from the prior year’s deficit.

The report said that during the period, the General Fund balance deficit increased by $13.06 million or 13.9 percent to a total fund balance deficit of $93.9 million, while the total “unreserved fund balance deficit” increased by $13.9 million or 13.3 percent for a total unreserved fund balance deficit of $118.4 million.

Authorities said this total amount represents the overall indebtedness and obligations of the government, including the accumulated debt it owes the NMI Retirement Fund, which now totals $84 million.

At the same time, the audit report showed that during the period, the CNMI’s total net assets decreased by $6.2 million or 20 percent.

It said that in FY 2002, governmental assets were worth $30.8 million, while in FY 2003, it was down to $24.5 million.

“The results indicate that the CNMI’s financial condition, as a whole, declined from the prior year,” said the report.

It said that total expenses for governmental activities amounted to $289.9 million, while total revenues collected was $283.7 million: taxpayers and general revenues ($178.4 million), grants and other contributions ($57.6 million), and charges and services ($47.7 million).

The report said that, as the CNMI completed FY 2003, governmental funds reported a combined fund balance deficit of $25.3 million. This deficit, it said, resulted mainly from the reversal of prior year Office of Public Auditor revenues and the creation of an allowance against receivables ($5.9 million), and anticipated income tax revenue from the Tax Rebate Fund ($5.2 million) not being available in the General Fund; expenditure of bond proceeds recognized in previous fiscal years ($5.9 million) in Department of the Interior projects fund; and expenditure of revenues recognized in previous fiscal year’s ($3.1 million).

Meantime, in capital assets, the CNMI posted a net increase of $18.4 million in FY 2003—or 14.2 percent over the previous fiscal year.

It said that the CNMI had $147.5 million invested in capital assets, including land, roads and bridges infrastructure, vehicles, and other machinery equipment, buildings, and various projects under construction.

“The significant increase in net capital assets is mainly due to several ongoing construction projects currently underway,” the report said.

At year end, it said the CNMI had $90.2 million in long-term debt outstanding, which represents a $1.4 million or 1.49 percent net decrease from the prior year, mostly from the net effect of some $1.65 million of debt principal retirement and a net increase in accrued compensated absences of $.29 million.

Overall, Deloitte & Touche said the local economy was slowed by the events related to Sept. 11, 2001 and made worse by the SARS epidemic.

It said this “follows the same trend as many of its Pacific neighbors and the United States in the economic downturn that left government officials scrambling to figure out ways to fund recurring appropriations.”

It said the prospects for FY 2004 “appear similar, with not much recovery in sight.”