Fitial slashes govt budget

Faced with dwindling government revenues and the lack of an updated budget, Gov. Benigno R. Fitial announced yesterday a 5.5-percent budget cut against all agencies during the rest of the 2009 fiscal year.

According to Fitial, the proportionate cut will help the government, which expects to collect $156.7 million, to finish the fiscal year in the black.

In a special budget message to the Legislature, Fitial said the across-the-board reduction will go into effect tomorrow, Jan. 1, 2009, when the second fiscal quarter will begin. The message does not mention any exemptions for critical services such as education, health care, and public safety.

The governor said he has already instructed Finance officials to implement the reduction and to “spread the concomitant effect of the allotment authority for the remaining three quarters of the fiscal year.”

Fitial urged the Legislature to enact laws to help reduce current expenditures and to generate additional revenues.

“Measures imposing austerity Fridays, non-paid holidays, and a reduced employer contribution rate to the Northern Mariana Islands Retirement Fund’s defined benefit plan would provide much needed relief in terms of managing the meager local resources needed to fund critical public services,” he said.

He also asked for full and flexible reprogramming power to all expenditure authorities. He said this would help affected agencies make decisions based on their respective priorities.

“I regret that we have to take the actions proposed in this special budget message,” Fitial told Senate President Pete P. Reyes and House Speaker Arnold I. Palacios. “I ask for your cooperation and that of your colleagues in addressing the critical needs of our community even under the most difficult circumstances.”

The budget message follows the governor’s veto of the Legislature-passed appropriations bill for FY2009. Fitial pointed to an $8.7-million drop in the Department of Finance’s revenue projection in disapproving the budget plan. He noted two major sources of the revenue decline: the impending closure of three of the four remaining garment manufacturers on Saipan and Northwest Airlines’ plan to stop the Osaka-Saipan route in March 2009.

This decreased revenue projection for FY2009 reflects the downward trend also seen in government collections last fiscal year. Finance Secretary Eloy S. Inos has reported that the government earned $4.5 million less than expected in FY2008. The declining income, compounded by $13.6 million in overspending, caused the government to incur an $18.1 million deficit last year.

The CNMI government also failed to enact a budget for FY2008. Because of that, the government went on “continuing resolution,” spending at the prior year’s level of $160.1 million. However, the government collected only $155.6 million, and spent $173.7 million, according to Inos’ preliminary report.