THE CNMI government’s revenue collection for the first quarter of fiscal year 2021 suffered a 3% drop only, thanks to the federal Pandemic Unemployment Assistance and Federal Pandemic Unemployment Compensation funds, Finance Secretary David DLG Atalig said in a report to Speaker Edmund S. Villagomez.
The government’s two major spending items in the first quarter of FY 2021 were Retirement pension payments and Department of Public Safety’s expenditures for the Covid-19 pandemic response, Atalig added.
He said for the first quarter of fiscal year 2021 or from Oct. 1, 2020 to Dec. 31, 2020, the revenue forecast was $27,084,633 while the actual collection was 3% less or $26,272,094.
The wage and salary tax collections amounted to $4,194,321 or 26.7% less than the projection, Atalig added.
But, the Northern Marianas Territorial Income Tax collections for the first quarter of FY2021 amounted to $4,897,912 while the forecast was $287,081 only.
The $4.6 million increase in personal income tax collection “is directly attributed to the taxes received from the Pandemic Unemployment Assistance funding and Federal Pandemic Unemployment Compensation funding dispersed to recipients,” Atalig said.
Corporate income tax collections, he added, totaled $775,969 compared to the projected amount of $440,661.
Atalig said the gross revenue tax collection for the first quarter of FY 2021 was $12,189,852 or 6% less than the estimated amount, while the excise tax collections totaled $6,910,876 or 20% less than anticipated.
Atalig said it is important to note that the revenues appropriated for these different categories do not include any of the general and special earmarked resources pursuant to Public Law 21-35 or the FY 2021 Budget Act.
Pension payments,
disaster expenditures
Expenditures on several sections exceeded the appropriated budget, Atalig said.
The most prominent deficiency, he added, is the 25% retirees pension payment for which “$3,432,270…was amassed despite lack of appropriations.”
Then there’s the $4,633,141 expense for the Government Health and Life Insurance employer and retiree share that exceeded by 143% the appropriated amount of $1,919,210.
As for disaster expenditures, they amounted to $2,257,040, an amount that was not appropriated.
DPS, which was appropriated $1,234,717 for the first quarter, spent $3,044,371, an excess of 147%. “Again, this is attributed to the department’s expenditure for Covid-19 response,” Atalig said.
For the first quarter of FY 2021, he added, what was appropriated is 24% less than actual expenditures.
Unanticipated expenses, as well as underbudgeted accounts, “[have] left a significant deficiency regarding expenditures versus appropriations for Q1,” Atalig said.
Economic outlook
While federal assistance in the form of PUA and FPUC supported consumption expenditures despite the widespread impact of Covid-19 on the CNMI labor market, the data from the first quarter also showcased continual impacts on the wider economy outside of domestic consumption, the Finance secretary said.
“In normal circumstances, the tourism industry increases overall demand for goods and services in the CNMI by greatly expanding the consumers’ presence on the island at any given time. 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 proposed charter flights from South Korea, levels of commercial activity are anticipated to increase; however, 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,” he added.
PUA eligibility
Moreover, Atalig said, “Recent changes to the eligibility criteria for PUA relief may have pronounced impacts on business gross revenue receipts as business may not be able to retain the employees necessary to support operations.”
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.
“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 to provide former employees with eligibility into the program,” he added.
Atalig said, “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.”
