Sablan: Spending exceeded revenue by $98 million
The CNMI had a $98-million deficit in fiscal year 2019, according to the report submitted to the Legislature by the Department of Finance.
About 63% of this is attributed to disaster-related expenditures, in the aftermath of Super Typhoon Yutu, with the rest divided among medical referrals, law enforcement, and other obligations.
Unpaid allotments also totaled $9,297,472, with a majority of it, $4.9 million, owed the Marianas Visitors Authority, $2.8 million owed the Commonwealth Health Care Corp./Division of Public Health, and $1.2 million owed the Northern Marianas College.
According to Rep. Tina Sablan (Ind-Saipan), the House minority bloc has requested for a detailed breakdown of the over-expenditures.
“We did see there’s a spreadsheet attached to the [Finance] secretary’s report that indicates which agencies were spending well beyond what was budgeted but we need a lot more detail,” Sablan said. “We also need more details about the disaster-related expenditures and how much of that are we getting reimbursed for, and how much of that is the CNMI share and how much of that is for things like illegal overtime that we will not get reimbursed for. People deserve to know that as well.”
The minority has also called for financial oversight, citing that they have been raising the alarms early on in the year on the austerity measures imposed on the CNMI government, despite having no clear picture of the true state of the government’s finances.
“Now, here we are, at the beginning of this new fiscal year, and we know that spending was out of control and that our projections were off,” Sablan added. “The next step is getting more information from Finance when our Ways and Means chairman comes back. I’m hoping that we can have a meeting with the [Finance] secretary and with the Office of Management and Budget, and really get to the bottom of where we went wrong and where we go from here.”
Every year, the Finance secretary is required to report to the governor and the Legislature the overall picture of expenditures versus revenue collections for that year.
“We looked at the reports for the last three years—2017, 2018, and 2019—and what we found, according to the reports from the Department of Finance, is that the CNMI government has consistently overspent and more than that, tripled the overspending from year to year,” Sablan said.
“From 2017, the government overspent more than $8 million. We spent more than we collected. In 2018, we spent more than $26 million—overspent by $26 million, and then in 2019, according to the report that was released on Dec. 31, we overspent by $98 million.”
That means the CNMI is in violation of the Constitution, which mandates that the deficit be retired the following year, Sablan added.
“If there’s a deficit one year, we need to retire the deficit in the second year,” she explained. “That hasn’t happened in the history of the Commonwealth as far as I know, but what we know for sure is that we are in violation of that and try to rein in spending.”
Commonwealth Constitution Article 10 (Taxation and Public Finance), Section 6, states that if an operating deficit is incurred in the fiscal year, the government shall retire the deficit the following year.
There should be realistic projections of what the revenue collections will be, and a realistic understanding of what could be afforded in terms of government operations and providing services, Sablan said.
“There’s a lot of talk about generating revenue. That’s the majority’s objective at this point. All of these revenue-generating bills, which tends to mean higher taxes, higher fees. We, in the minority, want to see better enforcement,” Sablan said.
“What we are pushing for is a government that can live within its means, and that it carries out the laws and collects taxes so that services can be provided and we’re not wasting any money.”
The legislator added that there is a need to support agencies that have to actually carry out enforcement, such as the Department of Finance.
“These are, in some ways, very structural issues. These are problems with the system. But at the end of the day, we are talking about mismanagement. We’re talking about public funds being misspent and overspent.”