Gov’t asked to beef up measures to curb deficit • OPA reports lauds administration for putting fiscal house in order

The Tenorio Administration’s efforts to spend within the government’s available means pulled down the accumulated budget deficit by 10.5 percent from $76.3 million in 1998 to $68.3 million by the end of Fiscal Year 1999.

However, the accumulated deficit of $68.3 million continue to take its toll on the CNMI government’s General Fund which suffered a $39.8 million deficiency as of September 30, 1999, according to a comprehensive financial report prepared by independent auditing firm Deloitte & Touche.

The report disclosed that the biggest increase in deficit in terms of amount and percentage was in 1994 when it soared by $25.7 million or about 135 percent from the previous year. There were also significant increases in 1997 and in 1998 when the deficit increased by $22.5 million and $18.9 million respectively.

Public Auditor Leo L. LaMotte said the CNMI should continue to take steps to prevent additional increases in the deficit by controlling expenditures, adding that a critical factor to consider is actual government revenue.

“Government agencies must also be made aware by the Department of Finance and the Office of Management and Budget that the budget established by an appropriation law is not the only spending ceiling,” Mr. LaMotte said in a letter to Gov. Pedro P. Tenorio.

He pointed out that the Tenorio Administration should be commended for implementing the 13.4 percent across-the-board reduction in budget allotments during the second quarter of 1999 when revenue collection fell short of the projected amount.

If actual revenue is less than projected, the CNMI should immediately implement a budget adjustment process that should reduce budget allotments to a more realistic level, the public auditor said.

“We also observed in the past that the legislature has passed laws to reprogram and spend what were supposed to be unused funds appropriated in previous years,” he said.

Mr. LaMotte recommends that the legislature take caution in passing such laws because existence of a deficit means that no funds or cash was actually reserved in the CNMI treasury for such appropriations.

“The reprogramming will only result in spending current revenue collections and further increasing the deficit, The CNMI should take steps to retire the deficit by specifically allocating revenues for deficit reduction annually,” he stressed.

Meanwhile, the independent auditor’s report also revealed that the Commonwealth government’s assets have exceeded $1.1 billion by end-September 1999, with total liabilities of $469 million and total fund equity of $708 million.

Around $555 million of this amount are from other governmental reserves that include the NMI Retirement Fund, while $193 million are attributable to various autonomous agencies.

The report noted that when revenues dropped by 6.6 percent in FY-99, the administration managed to correspondingly reduce expenditures by over 12.9 percent.

While government expenses were forcibly lowered due to limited revenues, the audit report mentioned that austerity measures implemented by the administration contributed to the significant reduction in expenditures.