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FY 2019 shortfall: over $16M

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THE revenue collections based on the revised projection for fiscal year 2019 fell short by $16.47 million, the Department Finance stated in its year-end report to the Legislature.

FY 2019 covered the period from Oct. 1, 2018 to Sept. 30, 2019.

In the report, Finance Secretary David DLG Atalig said the shortfall could have been $46.6 million.

From $258 million, the FY19 budget projection was reduced to $228 million due to the “unanticipated and devastating shutdown of the CNMI economy, significantly affecting economic activity in the first quarter of FY19.”

In September and October 2018, the three main islands of the Commonwealth — Rota, Tinian and Saipan — were devastated by Typhoon Mangkhut and Super Typhoon Yutu.

Atalig said “despite the relatively speedy recovery of essential services and major industries, revenue and other financing collections did not meet projections.”

The calculations of the total FY2019 revenue amounted to $211,522,968 only, Atalig said.

The CNMI government “received…7.3 percent [less than the] revised estimates (and $46.47 million [less than the] original estimates.)”

Atalig said the $78.8 million business gross revenue tax collection was $1.8 million less than the revised projections.

“But it is critical to note, however, that this projection did not include the BGRT collections from exclusive gaming licensee, Imperial Pacific International,” he added.

The wage and salary tax collection was on target, except for a slight shortfall of $604,840, Atalig said. The total wage and salary tax collection reached $40.6 million.

But the personal income tax collection of $2.3 million was below projections, Atalig said.

From the record-high collection in 2017 of $49.5 million, the excise tax collection totaled $42.2 million in FY 2019, which fell short of the original and revised estimates but represented a 5 percent increase from the prior fiscal year.

Medical referrals

On Tuesday morning, Gov. Ralph DLG Torres met with the members of the House and Senate leadership to discuss possible ways to reduce government spending.

Among the items they discussed were the “unbudgeted” medical referral costs that totaled $15.3 million in FY19.

House Ways and Means Committee Chairman Ivan Blanco said the governor wants to ensure that medical referral assistance “is still there” while reducing “runaway” costs.

Senate Floor Leader Justo S. Quitugua, who chairs the Senate Committee on Health, Education and Welfare, was not in the meeting, but he said he is aware of the situation, and in their last committee meeting, they discussed the “uncontrollable” costs of medical referrals.

He said he has scheduled a follow-up meeting with officials of the Medical Referral Office and Commonwealth Healthcare Corp. to discuss ways to reduce the costs while improving medical referral assistance.

There are many causes of the increase in medical referral costs, and most of them can be avoided, Quitugua said.

He noted that the stipend for a medical referral patient is $25 a day, and another $25 for an escort.

Quitugua said there are also unexpected circumstances that unnecessarily prolong the patient and the escort’s stay on Guam, for example.

“Instead of staying there only for one week, patients had to remain there for another two weeks or one month due to miscommunication or errors in making appointments with doctors,” he said. “There are so many other causes that can extend the stay of medical referral patients off island and increase the costs. But many of these issues can be addressed.”

Other obligations

In his report to the Legislature Finance Secretary Atalig said after factoring debt service payments and earmarked funds, the available resources for appropriation and budgetary action in FY 2019 amounted to $125.3 million.

Overall, he said, the expenditures/obligations for the fiscal year exceeded total appropriations and allotments by $71.7 million.

The government, he added, overspent by $30.2 million for personnel and $32.4 million for “all others.”

The government at the same time recorded $190,433 savings in utility expenditures, he said.

Majority of the deficit spending for FY19 “is attributed to several factors including, but not limited to, recovery activities in the aftermath of Super Typhoon Yutu, unbudgeted costs for medical referrals, and over expenditures on personnel overtime cost for law enforcement agencies, as well as operations of the Department of Public Safety,” Atalig said.

The other government expenses in FY19 included payments in settlements and judgments involving various court cases, he added.

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