FOR 2ND QUARTER OF FISCAL YEAR 2021
The overall revenue collections in the second quarter of fiscal year 2021 was $21,590,135, which is 2.56% more than the forecasted amount of $21,051,941, according to Finance Secretary David DLG Atalig in a report to the Legislature.
In his financial information for second quarter of FY 2021 with an ending report date of March 31, 2021, Atalig attributed the $538,194 increase mainly to the Pandemic Unemployment Assistance that taxpayers had received.
The Northern Marianas Territorial Income Tax collections of personal income amounted to $9,447,767. Atalig attributed this to the taxes received from PUA funding and Federal Pandemic Unemployment Compensation funding dispersed to recipients.
On the other hand, the wage and salary tax collections stood at $4,450,173 or approximately 25.93% less than the forecasted amount of $6,007,844. He said corporate income tax collection was valued at $287,176 compared to the forecasted amount of $613,819. Atalig said Business Gross Revenue Tax collection was $10,875,500, which is approximately 20.32% less than the forecasted amount. He said excise tax collections yielded $6,079,375 or 27.36% less than the forecasted budget.
Atalig noted that actual expenditures showed several sections that had exceeded the appropriated budget.
He highlighted the $1,234,717 appropriation to the Department of Public Safety, which was exceeded by the actual expenditure amount of $2,837,826—a 130% increase. He said this is attributed to DPS’ response to the COVID-19 emergency.
Atalig said the 25% retiree pension expenses amounting to $6,834,003 for first and second quarters were transferred to the Federal Emergency Management Agency Community Disaster Loan. The CDL, he said, will cover the remaining expenses for the 25% retiree pension for fiscal year 2021.
Atalig also noted the $5,172,872 expense for the Government Health and Life Insurance employer and retiree share of $2,308,391 and $2,864,481, respectively, which exceeded the appropriated amount of $1,919,210 by $170%.
On the CNMI’s economic outlook, Atalig said while federal assistance in the form of PUA has supported consumption expenditures despite the widespread impact of COVID-19 on the CNMI labor market, the data from second quarter showcases continual impacts on the wider economy outside of domestic consumption.
“In normal circumstances, the tourism industry increases overall demand for goods and services in the CNMI by greatly expanding the consumers present on the island at any given time,” he said.
Atalig said this increase in population caused by transient visitors provides additional consumption, increased business revenue and a demand to necessitate further import to serve as the basis for excise taxation.
Atalig said with the announced partial resumption of tourism through a proposed charter flight from South Korea, levels of commercial activity are anticipated to increase.
However, he said, the restrictions placed on travelers and the size of the planned resumption will not be sufficient to realize pre-COVID-19 levels of economic activity anytime soon.
Further, the recent changes in the eligibility criteria for PUA relief may have pronounced impacts on business gross revenue receipts as businesses may not be able to retain the employees necessary to support operations, he said.
Under the current guidance provided to the CNMI government, employees under reduced work hours or who have been furloughed from employment are no longer eligible for PUA payments.
Atalig said with the anticipated influx of funding from the American Rescue Plan Act, the CNMI government can expect to have furloughed employees back to work and all government employees back to 80 hours.
He said businesses may choose between resuming regular employment schedules, reducing hours leading to less disposable income for employees and terminating eligibility for PUA, or terminating employment and thus providing former employees with eligibility into the program.
“The individual consumption patterns that arise from any of these choices will likely have an impact on revenue garnered through the remaining quarters of this fiscal year,” Atalig said.