‘Retirees’ 25% pension completely dependent on casino BGRT in FY23’
In fiscal year 2023, 25% of government retirees’ pensions would be completely dependent on the casino Business Gross Revenue Tax, according to Finance Secretary David DLG Atalig.
In his fiscal year 2023 general revenue estimates submitted to the Office of Management and Budget on March 22, 2022, Atalig noted that should this source of revenue (casino Business Gross Revenue Tax) reach a standstill, it would be essential for the CNMI to focus on other avenues for revenue generation.
Imperial Pacific International (CNMI) LLC closed its casino in Garapan starting March 17, 2020, as part of the effort to control the COVID-19 outbreak. On April 22, 2021, the Commonwealth Casino Commission board indefinitely suspended IPI’s gaming license until it complies with CCC’s orders pertaining to five complaints filed by the CCC executive director.
The estimated gross operating resources for fiscal year 2023 is $150,415,492. Minus $49,062,925 in debt service payments, that means the net budgetary resources for fiscal year 2023 is only a little over $101 million (specifically $101,352,567).
Atalig said these estimates do not include business gross revenue tax from Saipan’s exclusive casino licensee, Imperial Pacific International (CNMI) LLC.
He noted that the estimates assume continued suspension of the statutorily earmarked provisions.
Atalig said the estimated general revenue for fiscal year 2023 anticipates continued stagnation in all revenue resources in the post COVID-19 environment as global travel restrictions ease and tourism supply rebuilds at an uncertain pace.
He said the net available resources increased by 2.5% from the fiscal year 2022 budget, Public Law 22-08, due largely to a gradual increase in tourism.
“Our forecasts factor in historical contexts when the CNMI did not have the casino industry and the tourism sector was not at its peak,” he said.
Atalig said Finance will continue to work with federal partners, community stakeholders, and industry leaders to ensure that the CNMI rebound from the pandemic quickly and sustainably.
Atalig said that, as of March 22, 2022, Finance is in the process of assessing the post COVID-19 economic impact. Although the CNMI will benefit from federal assistance and tourism resumption, he said Finance reserves the opportunity to provide an update as additional information is received.
Atalig said one outcome on a proposed solution from the Fiscal Response Summit in April 2020 was additional revenue-generating measures.
He said it was proposed that, by implementing new rates and taxes, gross government resources can increase by an estimated $6.3 million.
The Fiscal Summit Proposal for a “sin” tax for sugar beverages, alcohol, etc., has an estimated effect of $3.39 million, and a 1% increase to cigarettes (tobacco) products has an estimated effect of $2.92 million, bringing to a total of $6.32 million in estimated effects.
Atalig added that Finance supports legislative action on updating the Hotel Occupancy Tax for the 21st century by adopting a Transient Accommodation Tax. “This would help narrow the technological gap and provide modern support for tourism in the CNMI,” he said.
The Secretary said the overall effects of these revenue generating activities are dependent upon numerous factors such as legislative action, administrative employment, and behavioral economic climate.
He said due to the high variability, Finance did not take into consideration these estimates for fiscal year 2023.
Atalig said the Governor’s Council of Economic Advisers has continued to provide expertise in their fields, aiding in the recovery of the CNMI economy by spearheading discussions for both the public and private sectors with the creation of the Public and Private Partnerships program, which was created with a goal to maintain and rehabilitate the CNMI’s tourism and recreational areas such as walkways, parks, and gymnasiums.
Atalig said this type of program plays a pivotal role with the goal of helping the CNMI move forward.
He said due to the lack of historical data, Finance did not take into consideration these programs for fiscal year 2023.
With respect to the travel bubble program with South Korea, Atalig said it has established the CNMI as a safe destination for tourists. “This shows a promising competitive advantage that we have over other tourist destinations and should help move the CNMI into a post-COVID era,” Atalig said. Again, due to the lack of historical data, Finance did not take into consideration this program for fiscal year 2023.
Atalig said in addition to the American Rescue Plan becoming law, Finance estimates an additional $32 million available to be refunded to taxpayers in Earned Income Tax Credit for next fiscal year. Finance also did not take into consideration this legislation for fiscal year 2023 due to the lack of historical data.
Atalig said that American Rescue Plan Act funds will allow the CNMI government to continue to have 80-hour work weeks and prevent furloughing employees. ARPA allows the CNMI government to supplement personnel costs that cannot be covered under the general fund. Atalig said that ARPA funds must be accounted separately from the general fund. Finance also did not take into consideration this legislation for fiscal year 2023 due to ARPA rules.