Yumul identifies $12.6M in potential savings

Rep. Ray N. Yumul said the government stands to save at least $12.6 million for the rest of the 2008 Fiscal Year if three recommended courses of action are implemented at once.

The House Way and Means chairman said he and his team of analysts have reviewed and analyzed the governor’s recommendations and have come up with the following estimated cost savings that the government would realize if immediately put into action:

-Reducing employer contribution to the Retirement Fund from 18 percent to 11 percent as requested by the governor. This is estimated to save $6 million on personnel costs;

-Passage of cost-cutting measures through the restoration of nine austerity Fridays ($2 million savings) and suspension of the remaining four non-paid legal holidays ($1.6 million savings) for the remainder of the fiscal year. Total estimated savings on personnel costs amount to at least $3.6 million; and

-Capping all government expenditures (remaining budget authority of about $105 million for the fiscal year) by prohibiting departments from spending all their allocations. At a minimum, this will save the government at least $3 million.

Aside from the three measures, the Saipan lawmaker also wants the Legislature to provide Gov. Benigno R. Fitial with the budgeting tools he needs, specifically the reprogramming authority in excess of 25 percent as authorized under the Planning and Budgeting Act in order to be flexible in moving limited funds to essential departments within the Executive Branch.

He also recommended that the Legislature continue that reprogramming provision pursuant to Public Law 15-71 for up to $4.4 million.

“All the above actions if taken together will reverse the spending trend and certainly will allow the government to get back on track to avoid drastic actions by the administration,” said Yumul. “These adjustments must be taken seriously and expeditiously as time is of the essence.”

As it stands, the government is expected to have a shortfall of $14.5 million, he said, echoing Senate Committee of Fiscal Affairs chair Sen. Maria Frica T. Pangelinan’s calculations in a report on the House-passed budget bill, H.B. 16-51.

Yumul said that, while the government is expected to have revenues of $166.4 million in FY2008 ($160 million in budget authority, $5.1 million in Compact Impact, and $1.2 million in $1.2 million), the expected expenditure is $180.9 million.

That is based on the October 2007-January 2008 spending trend of $39.1 million in personnel costs and $22 million in “All others.” If that rate is unchanged, the government is looking at spending $132.2 million in salaries for government employees and $48.6 million on “all other” costs.