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FY 2020 budget down to $77.1M

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FROM $148.8 million, the CNMI government’s budget amount for the current fiscal year is down to $77.1 million.

In his letter to the Legislature on Sunday, Gov. Ralph DLG Torres said the need to update the revenue estimates “is a result of escalated adverse impacts from the current Covid-19 outbreak.”

This “has dramatically increased the cancellations of visitor arrivals, further distressing our revenue collections.”

In view of the anticipated additional impact, the governor said the revenue estimates for FY 2020 need to be cut by an additional 20%.

The governor told Speaker Blas Jonathan Attao and Senate President Victor Hocog that based on the revised projections submitted by the Department of Finance, his administration anticipates an $82.7 million reduction in the current fiscal year budget.

In an interview, House Ways and Means Committee Chairman Ivan Blanco said the governor informed them “that we must remain practical in our approach to realign government spending with available resources.”

The first budget cut announcement was made in February when the governor informed the lawmakers that the FY 2020 budget needed to be reduced to $106 million from $148.8 million.

Blanco said that the latest budget cuts, while drastic, “are necessary to keep critical public services open during this economic downturn.”

He said in the coming months, he expects that the numbers “may need to be revisited [again] in light of the anticipated federal dollars approved for the insular islands like the CNMI due to the economic effects of Covid-19.”

The governor said the impact of the pandemic on the CNMI economy included a reduction in business gross revenue by $26,563,219; wage and salary tax by $12,083,960; corporate income tax by $9,419,227; excise tax by $15,723,582; hotel occupancy tax by $9,684,156; license, fees and miscellaneous revenue by $5,035,432; and other taxes by $4,249,763.

“The aforementioned reduction in projected resources requires corresponding adjustments in the budget authority for the balance of this fiscal year. The budget authority under Public Law 21-08 must be adjusted downward by $82,759,339, which must be absorbed by the budget authority remaining for the fiscal year. Therefore, pursuant to 1 CMC §7604 (c)(4) and Public Law 21-08, I will immediately commence a proportionate reduction of 48% in the continuing budget authority of all branches, its offices, departments, agencies, and relevant instrumentalities, which are subject to appropriation,” the governor said.

“While Lt. Gov. Arnold I. Palacios and I are cognizant that fiscal conditions may or may not improve in the following months, it will be prudent and financially responsible to implement further cost-containment measures to all programs and agencies until revenue collections meet targeted goals. We understand that this reduction will have an impact on public operations and services, but we must remain practical in our approach by realigning government spending with available resources. We have already taken the necessary steps to curtail costs, but it is imperative that we again work collaboratively to examine operations and activities and identify areas that need to be reduced,” the governor said.

In addition to the cost-containment measures, which included a 16-hour reduction in the work hours of government employees, the governor said he and Lt. Gov. Palacios have personally met with all department heads to find ways to convert as many locally funded personnel to federally funded positions to alleviate the strain on the general fund.

“We have also asked our grantees to communicate their interest in amending existing grants to reprogram additional funding to personnel to support the conversion of additional locally funded employees,” the governor said.

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