Legislator shrugs off bankrupcy scare

Rep. Karl T. Reyes, chair of the powerful House Ways and Means Committee, yesterday expressed optimism that the government would still be able to function despite potential deficit reaching more than $100 million and budget shortfall swelling beyond $32.5 million.

“We are not heading into a bankruptcy in the sense that we will not be able to function,” he said, shrugging off mounting fears that the deepening financial crisis will cripple government operations amid plummeting revenue collections.

Although Gov. Pedro P. Tenorio’s administration has yet to finalize a report on its financial posture, independent estimates showed the commonwealth may accumulate an all-time high deficit of $100 million, almost double of initial projection amounting to $53 million.

But Reyes said officials are cautious about venturing into estimate or range until after the public auditor’s office has certified the report of an independent financial audit of the government undertaken by Deloitte & Touche.

“Government employees are getting afraid, businesses are getting worried,” the lawmaker said in an interview. “Those situations are what the governor wants to prevent, unnecessarily saying something and coming back to untangle it.”

Tenorio earlier has disclosed that cumulative deficit under the past administration ballooned to a record $53 million in FY 1997 from $32 million recorded the previous year.

The recently completed audit covered FY 1998, including three months in office of former governor Froilan C. Tenorio. Present administration officials have maintained their predecessors racked up millions of dollars in unpaid accounts as well as unaccounted tax rebate funds.

Reyes met with the governor and other finance officials on Monday to discuss the shaky financial state of the island government, but the representative declined to divulge details of the meeting.

He said that they will await actual figures on deficit and revenue shortfall before tackling what appears to be the most serious financial crisis to hit the commonwealth government in years.

Due to continuous plunge in the cash collections as a result of the slump in local tourism business and closure of several companies, Tenorio last month pushed down initial income estimate by $32.5 million from $249.26 million.

The latest figure, anticipated to decline further, will mean budget shortfall for fiscal year 1999 unless ongoing austerity measures yield substantial savings in government expenditures, according to finance officials.