CNMI deficit down to $225.1M

Amid political and economic controversies comes the good news: A newly released financial report shows that the CNMI government’s audited net deficiency or deficit went down by 4.4 percent or from a restated $235.4 million in fiscal year 2011 to $225.1 million in fiscal year 2012 because of tourism growth, the elimination of the pension liability after reaching a retirement settlement deal, and a continued drop in government spending.
Prospects also appear bright for fiscal year 2013, the report says.

In previous years, the net deficit reached over $300 million.

The retirement settlement agreement led mainly to the restatement of the net deficit to the $200 million-plus mark.

These are contained in a March 2014 Deloitte report on the audit of the CNMI government’s fiscal year 2012 financial statement, including the Department of Finance’s management discussion and analysis. The Office of the Public Auditor contracted Deloitte for the audit report.

“For the fiscal year ended Sept. 30, 2012, the CNMI’s total net deficiency decreased by $10.3 million, to a net deficiency position of $225.1 million, which represents a decrease of approximately 4.4 percent from the restated net deficiency position at the beginning of the year,” Finance said.

The report says economic factors continue to play a large role in developing the tax and other revenue budgets for the CNMI’s general fund.

“The local economy, expanding by the effects of an increase in tourism, has followed a trend of increasing revenues. The prospects for fiscal year 2013 appear similar,” the report adds.

Lawmakers said yesterday they have yet to fully review the financial report so they could not comment on the findings yet.

Gov. Eloy S. Inos, meanwhile, said he is about to submit his proposed fiscal year 2014 supplemental budget to the Legislature. This will be turned in ahead of his submission of his proposed fiscal year 2015 budget to the House and Senate, the deadline for which is April 1. The new budget plan could also be $123.4 million.

Numbers

The audited fiscal year 2012 financial report says total revenues of $241.3 million and total expenses of $231 million resulted in the $10.3 million decrease in net deficiency.

“The results indicate the CNMI’s financial condition, as a whole, improved in the current year compared to the previous two years. Significant changes from 2011 in the Statement of Activities include increases in income, gross receipts, excise, hotel and other taxes resulting from an increase in visitor arrivals to the CNMI and a surge in the tourism industry,” the report says.

For budgetary reporting purposes, general fund revenues were higher than final estimates by 11.7 million, or 9.6 percent.

Reported actual expenditures, meanwhile, exceeded final estimated appropriations by $2.1 million, or 1.8 percent.

These amounts do not include transfers to and from other funds, nor does it include the receipt or use of long-term debt proceeds.

The financial report is designed to provide citizens, taxpayers, customers and creditors with a general overview of the CNMI’s finances and to show the CNMI’s accountability for the money it receives, Finance said.

This also comes at a time when the CNMI plans to float a pension obligation bond, although there’s no telling yet whether it would be $60 million, $80 million, or $120 million. Also before the governor now is a major revenue-generating bill allowing casino gaming on Saipan. But the bill’s language and the way it was handled at the Legislature are drawing community concerns.