By Emmanuel T. Erediano
[email protected]
Variety News Staff
GOVERNOR David M. Apatang said the CNMI government ended fiscal year 2025 with a revenue surplus despite ongoing challenges in the tourism sector, attributing the “favorable variance” between projected and actual collections largely to one-time income sources, including Marianas Public Land Trust investment earnings and penalties collected from the bankrupt casino operator.
In his FY 2025 annual report to House Speaker Edmund S. Villagomez and Senate President Karl King-Nabors, dated Dec. 31, 2025, the governor said cumulative actual gross revenue collections as of Sept. 30, 2025, totaled $172 million — $12.4 million, or 8%, higher than the original forecast of $159.6 million.
“The favorable variance was primarily attributable to non-recurring revenue sources, including the $4.6 million transfer of MPLT investment income applied to debt service and a $2.3 million one-time payment from casino penalties and interest received during the fourth quarter,” Apatang said.
Overall, the governor said revenue performance resulted in a $3.7 million surplus. Without the MPLT transfer and penalties collected from Imperial Pacific International, cumulative collections would have remained generally consistent with projected estimates.
Revenue performance
The governor reported that total income tax collections reached $119 million, exceeding projections by $23.4 million and accounting for approximately a 24% increase in total cumulative gross revenues.
Revenue “overperformance” was recorded in the following categories:
• Business gross revenue tax or BGRT collections totaled $72.6 million, exceeding projections by $10.3 million, or 16%. The construction, gasoline service station and retail food store sectors were the largest contributors, collectively accounting for 39% of BGRT collections.
• Wage and salary tax collections reached $34.7 million, surpassing projections by $6.6 million, or 24%.
• Personal CNMI territorial income tax collections totaled $6.5 million, exceeding projections by $4.9 million, or 289%.
• Penalties and interest on delinquent taxes amounted to $2.7 million, exceeding projections by $2.1 million, or 415%, primarily due to a one-time casino settlement payment.
• Licenses, fees and other revenues totaled $16.5 million, exceeding projections by $4.5 million, or 37%, driven largely by charges for services and other miscellaneous revenues.
At the same time, the report noted revenue underperformance in several categories:
– Excise taxes totaled $20.7 million, underperforming projections by 46%.
– Hotel, bar and beautification taxes fell short by $1.5 million, or 20%.
– Beverage container tax collections were $437,343 below projections, or 28%.
– Amusement machine licenses underperformed by $582,188, or 13%.
– Other revenues fell short by $135,490, or 9%.
Major contributor to excise tax decline
Apatang said business closures in 2025 were a major contributor to the decline in excise tax revenue. The closure of businesses such as Duty Free Shopping in Garapan, which imported high-value luxury goods, resulted in significant losses in customs duties and excise taxes, according to the report.
Reduced tourism activity, fewer imports, changes in consumer purchasing behavior, reduced airline services and fewer flights also contributed to lower excise collections, the governor said.
“The impact was further compounded by the closure of several hotels, which reduced visitor capacity and overall tourism spending,” he said. “With fewer flights, passenger arrivals and cargo volumes declined, reducing the amount of dutiable goods entering the islands.”
The governor also noted that the growth of e-commerce shifted consumer purchases away from local retail and wholesale businesses, reducing the volume of traditional commercial imports processed locally and further lowering excise tax collections.
Expenditures
After accounting for debt service and earmarked funds, the governor said total resources appropriated for FY 2025 amounted to $133.5 million, while total expenditures reached $131.4 million. Overall spending and obligations remained within appropriated limits, he said, resulting in a $2.1 million surplus due to Medicaid reimbursements.
According to the FY 2025 expenditure report, the CNMI government spent $4.1 million of the $6 million in Medicaid reimbursements, leaving a balance of $1.6 million.
Tourism challenges
Apatang said FY 2025 was marked by a convergence of external challenges that significantly constrained tourism recovery. Unfavorable exchange rates in Japan and South Korea weakened outbound demand, while global aircraft delivery delays limited available airline fleet capacity and route expansion throughout the region.
At the same time, seat dumping into Guam under Korean Air–Asiana merger requirements intensified competitive pressure, diverting capacity away from the CNMI. These conditions were compounded by the temporary suspension of CNMI EVS-TAP processing for Chinese visitors, increased regional competition driven by aggressive subsidy programs, and ongoing uncertainty in international aviation markets.
Locally, the governor said the CNMI continued to face structural challenges related to tourism product depth and readiness. The islands lack sufficient new and refreshed attractions, services and experiences to meet the evolving expectations of modern travelers, who increasingly seek sustainability, heritage tourism and authentic community engagement.
Addressing these challenges, he said, requires continued airline negotiations, strategic support to maintain limited air service, engagement with federal agencies, and a renewed focus on product development to strengthen long-term destination competitiveness.
Visitor arrivals
Visitor arrivals in FY 2025 reflected the constrained air service environment and broader external pressures affecting the Pacific region, the report said.
A total of 1,442 flights operated during FY 2025, providing 253,407 available seats — down from 335,840 seats in FY2024 and well below pre-pandemic levels. Total visitor arrivals declined to 160,640 from 237,498 in FY2024 and 607,593 in FY2018.
Despite capacity constraints, airlines maintained an average load factor of 77%, indicating efficient utilization of existing seats.
South Korea remained the dominant source market with 111,560 arrivals, or 69%, followed by Japan with 10,864 visitors, or 7%, and China with 10,764 visitors, also 7%, following the suspension of EVS-TAP processing earlier in the year. Visitors from other markets totaled 27,452, or 17%, reflecting continued diversification despite overall declines.
Emmanuel “Arnold” Erediano has a bachelor of science degree in Journalism. He started his career as police beat reporter. Loves to cook. Eats death threats for breakfast.
