The CNMI government expects to see an 11.6-percent budget shortfall this fiscal year, and the Finance Department is recommending further adjustment to fund government operations and activities.
In a letter to House Speaker Blas Jonathan T. Attao (R-Saipan) and Senate President Victor B. Hocog (R-Rota), Gov. Ralph DLG Torres told the two legislative leaders that Finance Secretary David Atalig had advised that the expected budgetary resources be reduced by another $17.9 million or 7.3 percent. That would bring the reductions in the current fiscal year to about $29.9 million.
“This [$17.9 million] is in addition to the $12-million reduction reported in an earlier letter to the Legislature. Percentage-wise, the $17.9 million is a reduction in total [fiscal year] 2019 budgetary resources of 7.3 percent from the previous reduction,” said Torres in the letter.
“Combining the two reductions results in a total reduction of 11.6 percent from the original [fiscal year] 2019 budgetary resources. With the additional $17.9 million reduction, total budgetary resources for [fiscal year] 2019 must be reduced by approximately $29.9 million.”
The administration’s original estimated revenues for fiscal year 2019 was $258 million. This would go down to $228 million after the $30 million reductions in the first two quarters of the current fiscal year. The government’s revised budget authority is now at $141 million.
Finance had already projected a $12-million budget reduction, which was reported to the Legislature last March. Torres cited Super Typhoon Yutu as the major contributor.
“My administration explained that the devastating impact of Super Typhoon Yutu was a major contributing factor in the initial decline in projected revenues,” said Torres, who added that adjustments were necessary due to the decrease in revenues.
He expects revenue collection to pick up in the second quarter. “At the time of transmitting the prior letter, we were optimistic that revenue would rebound, as most of the damage from Yutu was remedied and the tourism industry was steadily regaining its footing. Unfortunately, this has not occurred to the degree necessary to stave off further reductions in expenditures and additional cost-containment measures.”
Torres said the decision was very difficult “but it is necessary in order to ensure the fiscal viability of the Commonwealth in the long term. We will continue to prioritize meeting payroll for our government employees, but we recommend all branches to take steps within their operational budget as a response to the current fiscal conditions.” “We understand that this reduction will have an impact on public operations and services, but we must…realign government spending with available resources.”
“We have already taken…steps to curtail costs, but it is imperative that we…identify areas that can be reduced [further],” added Torres.
Super Typhoon Yutu
He reminded everyone that Yutu was one of the reasons why the CNMI is currently in its current predicament.
Torres said the loss in economic activity in the first two quarters of the current fiscal year are still being felt by the CNMI to this day, with tourist arrivals dropping by 39.8 percent in March.
“In order to meet the demand of recovery, local resources had to be expended for the upfront costs of the storms’ impact. Evidently, it led to an efficient response and faster recovery through the expedient delivery of public services so that our people could feel whole again.”
He said the next step is sustaining economic recovery.