“During the year, the CNMI’s expenses for governmental activities were $322.3 million, including expenses recorded for payments made or due to the autonomous agencies, and were funded in part by program revenues of $111.2 million, further funded with taxes and other general revenues that totaled $170.0 million. The difference between total revenues of $281.2 million and total expenses of $322.3 million is what resulted in the $41.1 million increase in net deficiency,” an audited financial report said.
For FY 2010, which starts on Oct. 1, the Fitial administration proposed a budget of $150.5 million.
But the chairwoman of the Senate Fiscal Affairs Committee, Sen. Maria Frica Pangelinan, D-Saipan, said the proposal does not factor in certain changes in the government’s finances.
“FY 2010 will incur deficit spending. Each of the last several years we have increased the government’s deficit in spite of whether an appropriations bill was in place or not. There are three main reasons: The DBP [defined benefit pension plan] employer contribution is not fully paid; revenues are less than estimated; and spending is in excess of revenues,” she said in a memorandum to the members of her committee.
“Each pay period that the full DBP employer contribution is paid, a deficit is incurred. For at least the last two fiscal years, one under continuing resolution and the other under P.L. 16-32, actual spending has been in excess of the amounts appropriated,” she added.
The senator said by law, the Legislature should have passed a new budget spending for the local government as early as Sept. 1.
To date, however, the House of Representatives where the budget bill should originate, has yet to introduce a budget measure.
Pangelinan said the proposed budget should be adjusted to reflect major changes in the CNMI government’s finances.
For instance, Pangelinan said the $5.1 million Compact-Impact reimbursements that the CNMI gets from the federal government for hosting migrants from the Freely Associated States will drop to $1.93 million this FY 2010.
She added that immigration personnel are funded for just five pay periods through Dec. 10, 2009 instead of 6.6 or until the end of the calendar year.
There are also potential revenues that have not been accounted for the identified resources like the Marianas Public Land Trust investment earnings.
“On the same subject of MPLT, the governor stated publicly that under P.L. 16-7 he had $1,995,000 transmitted to [the Commonwealth Utilities Corp.] in FY ‘09. Therefore the balance due CUC in FY ‘10 is now $1,405,000, not $1.7 million as stated in HCR 16-4. So, in FY ‘10 there should be another $295,000 coming to the general fund from MPLT in addition to any amount in excess of the governor’s estimate,” the senator said.
“Another issue regarding MPLT is the $4.1 million anticipated by the administration for FY ‘09. That issue has not been resolved, creating the potential for an additional $4.1 million being added to the FY ‘09 budget shortfall and which the legislature will be expected to deal with in FY ‘10,” she added.
Anticipated funds from the American Recovery & Reinvestment Act, or the stimulus law, foreseen to cover certain shortfall on the budget have also not been taken into account.
“Bear in mind these are funds that as yet have not been received and we have no clear accounting of how they will be applied. This is not a ‘windfall’ we can afford to bet on using when planning the FY 2010 budget,” she said.
