Report: NMI government overspent in FY 2018

THE Commonwealth government failed to meet its revenue projection in fiscal year 2018, but its overall expenditures exceeded the budget, according to the Department of Finance’s FY 2018 annual report.

The report was discussed during a meeting of the Senate Fiscal Affairs Committee on Wednesday.

The committee chairman, Senate Vice President Jude U. Hofschneider, said: “We want to look at what transpired over the last two fiscal years so we can see where we can make necessary adjustments in fiscal year 2019.”

In her report to the Legislature, Finance Secretary Larrisa Larson said the revenue collection for FY 2018 was $140,817,579 which was lower than the original projection of $145,260,125.

The expenditures totaled $166,728,296 or $22,692,654 over the budgeted allotment.

The revenue shortfall and over-expenditures resulted in a $25,910,717 deficit, the report stated.

The revenue collection plus “other financing” in FY 2018 totaled $224,210,850, but Larson said this does not include revenues reserved for debt service and “transfers” to various earmarks as mandated by law.

She said in FY 2018, “the Commonwealth continued to show signs of economic growth and recovery as evidenced by increases in collections in revenue in several categories, but there were some areas where the Commonwealth fell short of projection [and these] warrant closer review and observation in the year ahead.”

She said the business gross revenue tax projection of $83,500,000 fell short by $1,526,553. Larson noted that this projection does not include the BGRT collections from the exclusive casino gaming license holder.

She said they expected to collect $37,500,000 in wage and salary taxes, but the actual amount was higher by $5,924,573 for total collections of $43,424,573.

This is a significant increase in a category that had fallen significantly short of projections by approximately $3 million for several years in the past, Larson said.

“Growth in this area is expected to continue as employment opportunities and enforcement of tax laws and regulations continue to increase in the Commonwealth,” Larson added.

However, the collections of personal income taxes fell slightly below the projection of $3 million with $2,676,706 collected. Corporate income taxes were projected at $5 million, but fell below projection by $460,355.

Although excise taxes continued to be a strong source of revenue with a total collection of $40,184,466 or 17 percent of the total revenue, this collection also fell short of projection by $2,797,981, Larson said.

The revenue from the renewal of poker machines and collections from E-gaming were also below projection, she added.

Larson said the overall expenditures for FY 2018 exceeded total appropriations and allotments by $22,692,654 in the anticipated categories.

For personnel, the government overspent by $2,687,793; for obligations and “all others” by $18,962,125; and for utilities, by $1,042,736.

She said majority of the over-expenditure for the fiscal year was attributed to several factors, including but not limited to recovery activities in the aftermath of Typhoon Mangkhut, unbudgeted costs for medical referrals as well as Medicaid, and over expenditures on personnel in overtime pay for law enforcement agencies.

Typhoon Yutu hit Saipan and Tinian in October, the first month of FY 2019.

Larson’s report indicates that the government overspent in medical referrals by $13,158,509; Medicaid local expenses by $6,392,038;  Department of Public Safety by $1,854,594; disaster expenditures by $1,204,508; Department of Corrections by $1,137,728; Department of Fire and Emergency Medical Services by $672,255; Department of Finance by $249,755; and Rota by $220,752.

For FY 2017, an audit  conducted by Deloitte & Touche indicated that the overall expenditures of the government exceeded by $12.3 million.

But because of the $26.8 million in Saipan casino revenue, plus $8.3 million from “other financing sources,” the government’s savings in FY 2017 totaled  $32.3 million.

The biggest overspending in FY 2017 was in medical referrals, amounting to $9,030,858.

Hofschneider said he will call for another meeting to discuss the $7 million budget shortfall for FY 2019.