2013 budget likely at $102M, again

The Fitial administration expects the fiscal year 2013 budget to remain stagnant at the fiscal year 2012 level of $102 million, according to special assistant for management and budget Virginia Villagomez.

And it’s not just the amount that is expected to remain static. According to Villagomez, the same austerity measures that are currently in place will also be retained.

That $102-million level is nearly similar to what the Commonwealth was generating some 22 years ago. Some lawmakers believe, however, that maintaining $102 million is still better than a lower budget, which could mean further work hour cuts and further reduced public services.

“Revenue projections for the budget year are not yet available; however, we expect it will be at the same level as the current year of $102 million,” Villagomez said in her budget call memo.

Austerity measures such as 16-hour cuts biweekly and unpaid holidays will still be in place in fiscal year 2013, which runs from Oct. 1, 2012, to Sept. 30, 2013.

Villagomez asked Executive Branch department and activity heads to prepare and submit their 2013 budget requests no later than Feb. 29. Extensions will not be allowed under any circumstances, she said.

They are asked to eliminate costs that are “unaffordable” and programs that are “unnecessary.”

The CNMI government’s budget peaked at $247 million in 1997 with both the tourism and garment industries in full throttle. Subsequent events such as the demise of the garment industry and the pullout of Japan Airlines ate into the budget until it reached only $191 million in 2006 and steadily dropped. By 2011, it was only $122 million before barely clinging to the $100-million mark of $102 million in the current fiscal year of 2012.

Villagomez said the Feb. 29 deadline to submit budget requests will give the Office of Management and Budget sufficient time to evaluate the requests and meet with each agency during the week of March 12 through March 15.

The governor has an April 1 deadline to submit a proposed budget to the Legislature.

Rep. Ray Basa (Cov-Saipan) said it would be too early for him as House Ways and Means Committee chairman to work on the fiscal year 2013 bill without actually receiving the governor’s proposed budget.

Basa noted that in fiscal year 2011, the administration’s revenue projection fell short by “only” $565,456.

“I think that’s pretty close to the projected revenue and so for the following fiscal year, the projections may be close to actual revenue,” said Basa, adding that it was the overspending that was the major reason for a budget deficit of over $25.8 million in fiscal year 2001.

Basa said he shares Tan Holdings president Jerry Tan’s optimism about the economy once additional airline seats from Japan are in place, and hopes that there will be more revenue available for government operations.

“I think there are signs that 2012 will be a lot better than 2011. We heard about additional airline seats from Japan as what Jerry Tan said, and we heard about exporting local produce to Guam through a cargo airline. If all those materialize, we will have more revenue for public service,” he said.

While there are lots of businesses that have shut down, Basa said that there are also new investments in the horizon.

Rep. Froilan Tenorio (Cov-Saipan), for his part, said if the projected revenues available for government operation remain the same, then the CNMI was able to survive the effects of the March 2011 triple disasters in Japan, which is the CNMI’s main tourism market, among other things.

But Tenorio said it is not enough that the CNMI maintains the same budget level.

“If that’s the same budget, it means austerity will continue. That’s not the way to run a government. We need to bring in new investors. Having casinos here will do that,” said the former governor and speaker. Tenorio strongly supports legalizing casino gaming on Saipan.

‘Remain vigilant’

OMB’s Villagomez, in her two-page budget call memo, said although they have seen some positive results in their preliminary analysis of first quarter collections-covering October to December 2011 or the first quarter of FY 2012-“we will remain vigilant in the upcoming months to determine if we will maintain our current level or make further adjustments to be able to balance our 2013 submission.”

She said agencies will be promptly informed if a substantial adjustment will be necessary within the next 45 days once the Department of Finance finalizes the actual revenue report.

“This past fiscal year, we learned how difficult it was to operate within the very limited resources available. With the exception of a few, some departments and agencies have demonstrated fiscal responsibility by controlling expenditures within means. This effort must continue as you formulate your budget and spending plans for fiscal year 2013,” Villagomez said.

Departments and agencies are asked to include the calculation of government contributions as follows: health insurance; life insurance at 1.6 percent; retirement-Defined Benefit Plan at 37.39 percent; retirement-Defined Contribution Plan at 4 percent; and Medicare at 1.45 percent.

Agencies are also asked to include a brief description of their programs, goals, and objectives, a complete justification of each budgeted category, their department’s accomplishments in the previous fiscal year, and their anticipated accomplishments in 2013.