DOF: CNMI’s fiscal house now in order

More than two years since the Tenorio Administration inherited an enormous budget deficit amidst dropping government revenues, the Commonwealth’s finance managers revealed the CNMI’s fiscal house has been fixed although earnings continue to be lower compared with the 1997 level.

Finance Secretary Lucy Nielsen said the CNMI is starting to reap the fruits of measures installed since Gov. Pedro P. Tenorio assumed the gubernatorial seat in 1998, through stabilizing revenue collection and prompt release of tax refunds and rebates this year.

She noted the administration’s ability to restructure the government’s overall spending, from close to $270 million in Fiscal Year 1997 to only about $207 in 1999, representing a drop of a little over $60 million.

Pointing out that the government is now being run at lesser cost to CNMI taxpayers, Ms. Nielsen said the Administration has managed to maintain vital public services with hardly any trace of interruption.

The government went on with its austerity program that was complemented by the implementation of the Financial Management Improvement Plan which provided the smooth transition to performance-based budgeting system that helped improve accountability.

In the last fiscal year, the Tenorio Administration slashed its spending by more than $35 million, operating at about $220.3 million which is also lower from the previous period’s $255.6 million.

Mike Sablan, the governor’s special consultant for budget and finance, said the quality of the delivery of basic social and public services did not suffer despite the drastic cut in expenditures since the austerity measure primarily focused on non-essential spending.

A big slice of the savings went to a program aimed at eliminating the cumulative budget deficit. The government is hoping to reduce the budget deficit by another $10 million this fiscal year.

The $80.6 million budget deficit was down to $70.7 million by end of Fiscal Year 1999. Government officials attribute the landmark reduction to drastic austerity measures instituted by the Tenorio Administration.

Last year was also the first time government revenues edged up since visitor arrivals began dipping in 1997, with collection in key duty areas like hotel occupancy, excise, and bar & jackpot taxes showing strong improvements.

Sans stringent cost-cutting steps which were established by the Tenorio Administration, the deficit could have ballooned $133.4 million in FY 1998.

The governor’s finance managers are looking at a three-pronged approach that would assist the government in reducing the cumulative budget deficit — elimination of wasteful spending, economic revitalization efforts, and passing economic development legislation.

Finance officials said funding problems faced by the Commonwealth, especially on government agencies responsible in the delivery of essential services, is associated with the existing budget inadequacy.

General funds reached an all-time high of $248 million but public spending also shot up to record $268.1 million under the administration of former Gov. Froilan C. Tenorio.

Aside from the institution of belt-tightening measures, the government is also seriously considering proposals to institute more revenue-generating measures that would replenish depleting public coffers.