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Revised budget is $9.1M above expected revenue
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Posted on Nov 16 2008
The Senate passed on Friday a compromise budget bill that allows the government to spend $9.1 million over its projected resources in the 2009 fiscal year.
The budget bill, drafted by a joint committee of House and Senate members, appropriates $172.6 million for government operations and other obligations during the period between Oct. 1, 2008 and Sept. 30, 2009.
The conference committee report says the proposed appropriation contains several compromises between the two legislative chambers that have caused the budget to exceed estimated resources by $9.1 million. The compromises include requiring the government to pay the NMI Retirement Fund at the actuarially recommended rate of 37.4 percent and eliminating the governor’s cost-cutting proposals, specifically the so-called “austerity Fridays”—biweekly shutdown of government offices—and a no-work-no-pay policy on legal holidays.
According to the conference committee report, the government, simply by continuing to operate on the FY2008 spending plan, will already have overspent by at least $2.2 million by Dec. 1, 2008. This projected shortfall comes on top of the estimated $9 million deficit incurred last fiscal year.
The committee expects that additional funds will be available to cover for these shortfalls. One possible resource is the “cover-over” taxes that the CNMI expects to recover from the federal government later this year. The report says that any new funds received on top of the $172.6 million appropriated in the bill will be set aside first to address the deficit incurred in FY2008, and then to augment the resources for FY2009.
“The Joint Conference Committee agreed that the actual amount of revenues received in FY2009 will change, and therefore some latitude in the specificity of appropriations is justified,” the report states.
The committee report also highlights the options available to the governor for controlling spending to avoid an operating deficit in FY2009. These options include pay cuts and a mandatory contract provision that limits government liability in the event of work reductions, shutdown, furlough or other fiscal austerity measures.
