Q3 revenue 1.46% higher than forecast due to PUA

The CNMI’s revenue collection for the third quarter of fiscal year 2021 is $27.74 million, which is 1.46% higher than the forecasted amount of $27.34 million. The Department of Finance attributes this to the Pandemic Unemployment Assistance that taxpayers received.

It’s not all roses, though, and Finance Secretary David DLG Atalig cautions that the highly infectious delta variant of the COVID-19 virus—which is blamed for the recent surge of infections in Guam and other parts of the United States—could still wreak havoc on the CNMI’s economy.

In his third quarter financial report with an ending report date of June 30, 2021, that he submitted to House of Representatives Speaker Edmund S. Villagomez (Ind-Saipan), Atalig stated that prior to the onset of the delta variant, the economic outlook for the resumption of tourism was promising. Now the delta variant could impede the CNMI’s economic outlook in the future, said Atalig.

The secretary said the partial resumption of tourism through the Travel Bubble agreement with South Korea is predicted to result in increased levels of commercial activity in the CNMI; however, the restrictions placed on travelers and the size of the planned resumption will not be sufficient to realize pre-COVID-19 levels of economic activity anytime soon.

Atalig said that, in Quarter 3, Wage and Salary Tax collections stood at $7.82 million or approximately 18.91% more than the forecasted amount of $6.57 million.

He said the Quarter 3 Northern Marianas Territorial Income Tax collections of personal income amounted to $4.69 million, which he directly attributed to the taxes received from PUA funding and Federal Pandemic Unemployment Compensation funding dispersed to recipients.

He said Corporate Income Tax collection was valued at $1.45 million compared to the forecasted amount of $498,400.

Atalig said Business Gross Revenue Tax collection is $11.80 million, which amounts to approximately 19.89% less than the forecasted amount.

He said Excise Tax collections yielded $7.18 million or 27.43% less than the forecasted budget.

The secretary said the CNMI received the completed Federal Emergency Management Agency Community Disaster Loan in Fiscal Year 2021 Quarter 3 in the amount of $88.73 million. He said with this CDL grant revenue, the CNMI was able to reimburse the CNMI general fund for prior expenses, and this allowed the Commonwealth to fund prior and current obligations and appropriations to government entities and vendors.

At the Senate’s session yesterday, Sen. Edith E. DeLeon Guerrero (D-Saipan) said she is not too sure if the $88.73 million is the entire principal amount of the loan from FEMA, or is that a remainder of the principal amount of the note.

“So I would like to request a much more greater detail reporting on this particular loan for the Commonwealth,” she said.

The senator said she is sure that the entire Senate wants to know how much exactly the CNMI owes vendors and other government entities with respect to prior and current obligations. (Saipan Tribune will publish Thursday more of DeLeon Guerrero’s comments)

Atalig said that funding for education, medical referral, retirees, and other programs would have been severely crippled without the FEMA CDL.

He said the 25% retiree pension expenses amounting to $4.49 million for Quarter 3 were funded by the FEMA CDL, and that CDL will cover the remaining expenses for the 25% retiree pension for fiscal year 2021.

The secretary noted the $20.20-million expense for the Government Health and Life Insurance employer share and retiree share. He said this includes current year and prior year payments due to GHLI vendors.

Atalig also highlighted the $24.20 million expense (FEMA reimbursable) for disaster response. He said the CNMI must record these expenses prior to FEMA reimbursement.

Atalig said that, while PUA has supported consumption expenditures despite the widespread impact of COVID-19 on the labor market, the data from Quarter 3 shows continual impacts on the wider economy outside of domestic consumption.

In normal circumstances, the tourism industry increases overall demand for goods and services by greatly expanding the consumers present on the island at any given time, Atalig said. He said this increase in tourists provides additional consumption of goods and services, increased business revenue and a demand to necessitate further import to serve as the basis for excise taxation.

Atalig said recent changes in the eligibility criteria for PUA relief may have pronounced impacts on business gross revenue receipts as businesses may not be able to retain the employees necessary to support operations.

He said under the current guidance provided to the government, employees under reduced work hours or who have been furloughed from employment are no longer eligible for PUA payments.

“This would reduce our wage and salary tax collected,” Atalig said.