Agencies given free hand on cuts

Gov. Pedro P. Tenorio has left to department heads and mayors the decision whether implement salary cuts or reduction in manhours to help the cash-strapped government cope with a lower spending package for Fiscal 2000.

The Tenorio administration is planning to submit approximately $210 million proposed budget, of which an estimated $4 million would come from public land leases.

The 2000 spending plan is 2 percent less than the current revised budget limit of $210 million. Although the projected decline is still preliminary, the cut reflects a 15 percent reduction in the budget package from original resource projections of $242 million approved by legislators in September.

In Friday’s meeting of the Governor’s Council that included mayors, finance officials and representatives of the Carolinian Affairs, Tenorio exhorted local officials to “implement what is necessary” to deal with lesser budget.

“I leave it up to the mayors and other agencies the direction they wish to take. They already know how much funding they are going to get so they should make the necessary adjustments,” the CNMI leader said in an interview.

Because of continuing decline in revenue collections, CNMI officials are bracing for cutback in work hours, percentage reduction in personnel costs and possibly layoffs.

Every year, the Commonwealth spends about 60 to 70 percent of its annual appropriation for the salaries and benefits of government workers. The island government is the single biggest employer in the Northern Marianas with more than 4,000 workers under its payroll.

So far only the municipality of Tinian has adopted a shortened work schedule since January when quarterly allotment advise was cut 13.4 percent.

While all departments are facing budget cuts, the governor spared the Public School System and the Departments of Public Safety and Public Health, three agencies he considered critical. PSS and DPS will receive additional funding next year, while DPH’s budget will remain at current level.

“Unfortunately some of the government agencies will have to sacrifice so we can keep these vital services for the community,” Tenorio said.

In a separate interview, the governor’s financial advisor on budget and finance, Michael S. Sablan, prodded various departments and agencies to be more prudent in expending public funds in light of the projected decline in revenue collections.

“If the revenue collections continue to decline then we may have to adopt these measures on a case by case basis,” Sablan said, referring to plans to cut jobs and salaries. “It’s an option we may have to take if we don’t control our expenditures.”

According to Sablan, revenues to be collected between April and July will have to be carefully monitored in order to determine whether there is need to further adjust the proposed budget.

The government has yet to factor in potential losses in user fees to be collected from apparel makers in view of the slowdown in garment production.

According to garment representatives, the slowdown in production could go beyond initial estimate of 25 percent because of the sharp drop in orders from US buyers worried over the $1 billion class action lawsuit. The decline in orders is also expected to trigger massive job cuts in the sector.

In 1998 direct taxes paid by apparel makers to the island government represented a record of 23.5 percent of the total operational budget of the Commonwealth. On top of this, the garment industry provided 53 percent of the revenues of the ports authority and 20 percent of the utilities corporation.

The region-wide financial fallout has plunged the islands into its worst economic crisis in nearly 50 years, pulling down revenue collections and forcing establishments out of business.