Department of Finance officials led by Secretary Tracy B. Norita appear before the Senate Fiscal Affairs Committee in the Senate chamber on Tuesday.
FINANCE Secretary Tracy B. Norita said they were still “finalizing” the numbers in the financial report for the third quarter of the fiscal year but will submit a report to the Legislature, today, Wednesday, July 31, 2024.
She noted that the Q3 report follows the trend set in the Q2 report.
“We are not seeing too much collections like the hotel occupancy tax. We are still seeing challenges in the excise tax for the imports, which again, is an indication of the small businesses’ inability to import goods,” she told the Senate Fiscal Affairs Committee on Tuesday.
She said the deficit is “not as significant” as they feared it to be in the early part of the third quarter, “so for me, we still have the … fourth quarter to continue our collections. We are close. It is just a matter of tracking it to make sure that the other agencies also are pushing for revenue generation.”
In February, Norita said the CNMI government’s total tax and fee collections for the first quarter of fiscal year 2024 fell short of projected revenue by $5.3 million.
In May, she said the second quarter’s revenue shortfall amounted to $4.1 million.
On Tuesday, asked by Senate Floor Leader Corina Magofna about the state of the CNMI’s finances, Norita said, “We are slow in recovery.”
“It’s still a challenge,” she added. “We still monitor our cash, we monitor the ability to make payroll to make sure that all our obligations are paid timely especially our Settlement Fund payment, debt service payments. Still, it’s a challenge.”
But she believes the government is “within the budget” in terms of spending.
‘Help’
Norita, who appeared before the Senate committee with other Finance officials, said they “support” the governor’s $7.5 million budget proposal for Finance in fiscal year 2025.
But Revenue & Taxation Acting Director Pauline Kapileo said they also “need help.”
The department’s original budget request amounted to $14.6 million, $10.9 million of which is for personnel and $3.3 million for operations. The department’s current budget is $7.7 million.
In her opening statement, Norita said, “We do support the governor’s submission. We understand the current circumstances of the CNMI, we understand that these are challenging times and that we do have our needs that we showed in our request. However, we must support the governor’s submission based on the current circumstances.”
Kapileo, for her part, said Rev & Tax needs help so they can “meet the current challenges.”
“We … support the governor’s budget submission for FY 2025, but I am seeking help from you … senators …. We have a big mission not only for Finance but for all of us here in the CNMI,” Kapileo said.
“I am nervous facing you guys. Really. We need to hire people so that we can enforce the need to meet the challenges …. We need [our] personnel budget to increase at least by 20% or something. Help us to go out there and help you, the government, bring in what we need. We have been saying this repeatedly. We are so understaffed and underpaid,” she said, adding that to have effective tax enforcement “we have to ensure accurate reporting to reduce tax evasion, reduce revenue loss and increase the overall revenue.”
The committee chair, Senate Vice President Donald Manglona, noted that in the governor’s revised budget submission, $5.3 million was taken from the executive branch’s budget for personnel in order to pay the 25% due to the Public School System.
According to Finance, the job positions not funded under the FY 2025 budget include six for Finance and Accounting; 12 for Rev & Tax; six for Procurement and Supply; six for Customs and Biosecurity; six for the Office of Information Technology; and one for the Passport Office. However, Manglona said two positions were added to the Treasury.
Audit status
Senior Finance Analyst Ryan Camacho, in his presentation, admitted that “we are behind with the FY 2021 single audit so we have to play catch-up.”
The single audit, he said, was due on June 30, 2024, “so we are working to speed up our efforts in order to be compliant with federal regulations.”
He said they expect to publish the FY 2021 single audit on Aug. 9, 2024.
Camacho explained that part of the reason for the delay is they had to address $330 million in questioned costs that the auditors initially identified.
He said they were able to work with the agencies and everyone involved to bring down the questioned costs to about $53 million. It took them a while to accomplish this task, he said, because the officials and staff involved in the expenditures are no longer working for the government, and Finance had to find and reach out to them.
