Manglona wants govt’s annual expenditure capped at $190M

Sen. Paul A. Manglona (Ind-Rota) has introduced a legislative initiative to amend a section of the CNMI Constitution to cap the government’s annual expenditure at $190 million.

Manglona’s Senate Legislative Initiative 22-06, which he prefiled last Monday, will create a Budget Stabilization Fund, also called a rainy day fund, where any surplus revenue collected shall be deposited.

The senator told Saipan Tribune yesterday that the CNMI government is right now facing an unprecedented fiscal and economic crisis—which he blames on uncontrolled government expenditures in the last five years and the drastic reduction in revenues due to the COVID-19 pandemic—hence the need to create a rainy day fund that the CNMI could dip into if the CNMI encounters similar a crisis in the future.

“We all know our government needs to do a major readjustment in the CNMI budget,” Manglona pointed out.

In order to avoid repeating past mistakes and to put the government on a sustainable financial course, there must have effective financial control in place to reduce and eliminate operating deficit, and criminal penalties for budget over-expenditures, he said.

As outlined in Manglona’s proposed legislative initiative, the $190-million budget cap shall not be increased in any future fiscal year except for a minimum 3% annual budget adjustment. Any surplus revenue shall be deposited into the Budget Stabilization Fund, to be appropriated only in times of unexpected revenue shortfall or budget deficit, requiring an affirmative vote of three-fourths of the numbers of each chamber in a joint session of the Legislature.

Manglona said there is a critical need to review the entire fiscal operations of the government to assess the financial impact of this pandemic on not only the fiscal year 2021 budget but also on the upcoming fiscal year 2022 budget plan. Ultimately, he said, the fiscal response policies that will be adopted by the Legislature will have to balance the current revenues with the current government expenses, including the plan to eliminate the accumulated deficit of the government.

He said that after the implementation of its fiscal response package addressing the present financial crisis, the total government expenditure from local resources for both fiscal years 2021 and 2022 will be significantly less than $190 million.

Under the legislative initiative, an annual adjustment of up to 3% for each budget year is permissible provided that no less than 80% of the total anticipated revenue over authorized annual expenditure are allocated and deposited into the Budget Stabilization Fund.

Legislative initiatives require an affirmative vote of three-fourths of the members of each chamber present and voting. If the measure passes the Legislature, it will then be put to a vote at the next election, so people can approve or reject it.