DOF recommends spending within means

As economic forecasts remain bleak for the Northern Marianas, the Department of Finance is suggesting that the CNMI government continue to spend within the projected available resources in an apparent move to continue significant reduction in outstanding budget deficit.

Acting Revenue and Taxation Director Dora S. Taitingfong said this is the reason why the finance department is recommending a Fiscal Year 2001 budget ceiling that is only about $5 million higher than the submitted proposal for this fiscal year.

Finance Secretary Lucy Nielsen said the government is anticipating to generate no more than $216 million in total local revenues in the next fiscal year. DOF is proposing a ceiling of $216 million for FY2001.

“The $216 million projected revenue does not include additional funding that we expect to receive through grants from the federal government. The projected amount will be sourced locally,” Ms. Nielsen said.

This, even as Department of Finance records disclosed a 4.8 percent increase in revenues generated from business gross to $42.7 million during the period covering October 1999 to May 2000, from last year’s $40.8 million.

Business analysts said the growth in business gross revenues in the first eight months of FY 2000 may indicate of stronger consumer confidence, following years of holding back on their spending due to financial uncertainties brought about by the economic crisis.

In the last three years, both local and foreign consumers have slowed down on their spending. During that time, tourists, who are mostly Asians, were spending less because the weaker value of their currency against the United States dollar, while NMI consumers were wary over the stability of their employment.

The apparently stronger consumer confidence also pushed the government’s excise tax collection during the same period by 10.4 percent to $14.4 million from last year’s $13.0 million.

By the end of FY 1999, the Commonwealth’s excise tax collection dropped by over $4 million to $19.9 million from $24.3 million in FY 1998. Still four months to go before the end of the current fiscal year, the CNMI is only about $5 million short at meeting last year’s level.

Gov. Pedro P. Tenorio, taking the cue from the continued economic uncertainty in the CNMI, has transmitted a lower fiscal year 2000 budget request to the CNMI Legislature in line with the government’s $206 million projected revenues for the same period.

In addition to the $206 million earnings, the Board of Public Lands was anticipated to generate some $4.1 million for the next fiscal year which represents over 50 percent million decline from the previous year’s $6 million.

The government is now operating at a budget much lower than the 1997 levels in the Tenorio Administration’s desire to cut the outstanding cumulative budget deficit and spend within the anticipated available revenues.