Govt overspending offset by revenue gains in 3 months

Preliminary data shows that in a three-month period or during the first quarter of fiscal year 2012, the CNMI government spent some $1.5 million more than what it set aside for utilities and medical referral alone.

But Lt. Gov. Eloy S. Inos said over-expenditures in some areas were cushioned or offset by actual revenues that exceeded the estimates. Under a $102-million budget for FY 2012, the government is supposed to stay within a $25.5-million budget every quarter.

Inos, who oversees government finances, said the Department of Finance is now finalizing the first quarter 2012 spending and collections, which the Senate Fiscal Affairs Committee is also waiting for.

He said the government spent over $2 million for utilities in October to December 2011, or almost double the allotted $1.250 million allotted for power, water, and wastewater services for the three-month period.

Medical referral expenses also exceeded the allotment by some half a million during the same period.

So utilities and medical referral expenses alone exceeded allotments by some $1.5 million.

But Inos said actual collections from business gross revenue taxes exceeded the estimate, helping to offset overspending in other areas.

Inos said the holiday season and the monthly payment of business gross revenue tax may have helped boost collections in the first quarter.

However, the government saw a decrease in salaries and taxes, attributed to the exit of many foreign workers as a result of a slow economy and immigration issues.

But the first quarter data is not representative of the entire fiscal year, he cautioned.

For FY 2013, the Fitial administration is looking at a budget of also $102 million.

Inos, at the same time, is expected to talk about the projected budget for FY 2013, federal grants and issues related to the Federal Insurance Contribution Act taxes, among other things, at the Saipan Chamber of Commerce’s general membership meeting on Wednesday.

Inos will be one of the two Chamber guest speakers, along with CNMI Neighborhood Watch’s Frank Camacho.

Richard Pierce, Chamber executive director, said yesterday that the Chamber wants to hear “how taxes collected from businesses and corporations will be best utilized in providing essential services required for continuing to conduct business in the CNMI.”

“The idea to ask the Lt. Governor to speak on the budget comes from a suggestion from a Chamber member. Hong Kong historically asks the Ministry of Finance to report to the business community on Hong Kong’s annual budget submission,” Pierce told Saipan Tribune.

The Chamber, the largest business organization in the CNMI with some 150 members, said there’s also an interest in hearing how, and how much, federal grant funding has been circulated in the CNMI.

“As a result of dwindling government revenue, there has been an increased focus by the CNMI government on how to best generate new revenue sources. And, that’s good. Some in SCC have stated there should be a shift away from increasing taxes and permitting where it increases the cost of doing business, toward something that is traditionally considered to be cost increases passed onto consumers for goods not essential. For instance, alcohol, tobacco and gaming,” he said.

Pierce added that the obvious choice is to create new business opportunities via outside investment entering the CNMI.

“That’s hard right now, but there are some possibilities on the horizon,” he said.