Financial planners to craft payment plan

The cash-strapped government is considering a payment plan to settle some $6 million in Earned Income Credit due to taxpayers which release has been pushed back again due to lack of funds, according to Lt. Gov. Jesus R. Sablan.

Sablan said Friday details of such plan are being worked out by Finance Secretary Lucy Nielsen and Michael Sablan, the governor’s special advisor on budget and finance, to meet the government’s cash obligation despite shrinking resources.

“We owe you people that money. But give us a chance to pay up in the form of installment payment…that will not dry up the coffers,” Sablan told in an interview.

The payment plan, he added, would allow the government to stretch its tight budget as well as ensure that essential services provided to the community are not disrupted.

Due to a shortfall in the special rebate trust account, repayment of rebates for last year’s tax was delayed. In the past, EIC, rebates and refund were released in the month of May in lumpsum, but this year the finance department started issuing rebate checks only last August.

Finance officials previously said the three will be issued separately to enable them rebuild the special account, which had been found almost depleted after the new administration took over.

Money in the rebate trust account amounted only to $2 million when it should have been at $31 million as of end-1997.

The release was further delayed due to amendments in the tax laws late last year that expanded the tax rebate base.

Meanwhile, Gov. Pedro P. Tenorio said in an interview over the weekend that he had met with Nielsen to determine new ways that will strengthen the existing austerity program in a race against time to come up with $18 million for this month’s salary of government employees.

According to the governor, collections are being monitored while expenditures will be under tight watch “to make sure that we’re able to pay our payroll and to pay our vendors.”

Declining revenue collections due to business slump is making it difficult for the government to meet its cash obligations further complicated by growing deficit, which stood at $53 million in Fiscal 1997.

To deal with the worsening financial problems, the Tenorio administration has put in place a wide-ranging cost-cutting steps and has reduced FY 1999 spending level.

And due to a 13.4 percent anticipated drop in cash collections, Tenorio is planning to widen the austerity policy that will include pay cuts and reduced working hours in the government.