Finance chief: Controlling costs protects govt operations

The cost-containment measures recommended by the Department of Finance would protect the daily operations of the CNMI government and prevent work-hour cuts, payroll delays, or furloughs, according to the Torres administration, which cited seven areas for its cost-containment measures due to a projected shortfall in revenues this fiscal year.

The shortfall is projected at 22 percent, according to acting Finance secretary David Atalig in an advisory to Gov. Ralph DLG Torres and Lt. Gov. Arnold I. Palacios.

Revenue collections is also projected to be less than projected expenses by 4.7 percent for the first quarter of fiscal year 2019.

“To ensure that we do not have any reduction in hours, delayed payroll or furloughs, it is important for the Executive Branch to make some cost-containment measures so we can continue to provide essential public services and avoid lay-offs, work reductions, etc.,” said Atalig.

He said the department remains upbeat, that fiscal conditions will improve in the third and fourth quarter months.

However, “it is prudent and financially responsible to implement cost-containment measures to non-federal funded programs and agencies until our revenue collections meet our targeted goals,” he had added.

Among the areas he recommended for austerity measures are personnel actions, overtime, travel, contracts and leases, purchase orders, utility, and fuel conservation.

All government agencies, branches, departments, offices, and relevant instrumentalities will freeze its hiring, re-hiring, reclassification, reassignments, within-grade increases, and the like; overtime will only be for those who are in law enforcement, fire protection, emergency management, and medical services.

Travel outside the CNMI would also not be allowed at the expense of the CNMI government unless approved in advance by the Office of the Governor.

No new contracts and leases will be entered or renewed unless approved by Torres.

Open purchase orders will be disapproved and POs that will exceed $2,500 will also not be allowed unless related to fixed costs and other essential supplies like telecommunications, medical, and public safety equipment.

The administration has also directed department heads to impose utility conservation and other cost-cutting measures by reducing electricity consumption, and water, sewer, and telecommunications services, with simple steps like making sure all lights are turned off and there are no leaks or are fixed, and unused telephone lines are disconnected.

Fuel-saving measures will also be implemented. All government vehicles must be used for official purposes only.

“Department and activity heads will take immediate actions to reduce the consumption of fuel. Vehicles must be used strictly for program purposes, and we encourage coordination within and between offices to reduce vehicular trips throughout the day.”

“Any requests for authorization as required above, or requests for exceptions to these expenditure control measures, should be submitted to the Office of the Governor,” he added.

Atalig also clarified that the cost-containment measures will not be permanent. Things would go back to normal once things improve in the coming months. “As secretary of Finance, I can make recommendations to lift any austerity or cost-containment measures should our collections and projected revenues are met.”

When asked how much is the CNMI government’s projected working budget for fiscal year 2020, Atalig said: “Any items regarding the projections for FY 2020 should be directed to [Office of Management and Budget] special assistant Vickie Villagomez. I believe the current outlook is at least a 10- to 15-percent reduction from current budget.”

Proactive approach
Floor leader Rep. John Paul P. Sablan (R-Saipan) said in an earlier interview that the cost-containment measure—freeze hiring and wage increases—is one way that the administration can act after the revenue shortfall, especially in the first quarter of the current fiscal year. “It was unfortunate in the final months of 2018 because of [Super Typhoon] Yutu.”

“Things are picking up in the second quarter but Yutu practically made a lot of businesses un-operational. One classic example is three hotels were destroyed. After Yutu, every day the hotels don’t operate, we don’t have the taxes that are supposed to go to the general fund of the government.”

Sablan told Saipan Tribune that the administration and the Legislature should work closely in coming up with a fair and balanced budget. “We have to analyze all shortfalls. We have to know what are the federal assistance that came in. We have to factor all of those and see if it does subsidize the revenue shortfall.”

“The governor took a more proactive approach. This is not the time to be raise salaries or hire more people. We are hopeful, as a government, that we can recover in the third and fourth quarters. And business activity picks up so we could continue to collect taxes. A lot of conservative measures must be taken.”