‘Impending economic storm’

Finance Secretary David DLG Atalig said the cancellation of flights from China, and now Korea, which are the top CNMI markets, prompted them to revise the annual revenue estimates for fiscal year 2020 from an initial projected decrease in gross revenues of $39.20 million to $48.38 million decrease.

In a letter to Gov. Ralph DLG. Torres last Thursday, Atalig disclosed that gross revenue estimates for the current fiscal year are now expected at $184.83 million, which is a decrease of $48.39 million from the $233.22 million appropriated under Public Law 21-08, the budget law for fiscal year 2020.

Atalig said earmarks of $26.55 million, and debt service and Settlement Fund payment of $51.58 million combine to reduce general fund resources by $78.13 million.

Thus, he said, total resources available for appropriation—also called the annual operating budget—goes down 28.3% to $106.70 million.

Atalig said that in his previous report last Monday, Feb. 3, they projected a decrease of $39.20 million in gross revenue and a 25.3% decrease in the annual operating budget. He said this analysis factored a loss of the China market and some slight reductions on the neighboring countries.

After discussions with key stakeholders and in light of the recent coronavirus outbreak, it now appears that the impact on the tourism sector is greater than initial projections, he said.

“The increased cancellations on flights from China, and now Korea, which together make up more than a majority of our market, further distresses our revenue collections in the near and foreseeable future,” Atalig said.

He said Finance will continue to impose strict cost containment initiatives while simultaneously looking to implement mitigating programs and fiscal services.

Calling it an impending economic storm, the official said that Finance, together with the public and private leaders of the CNMI, and its people, will come together to face it.

In his Feb. 3 financial report to Torres, Atalig said fiscal year 2020 started the year with the continuing recovery of the CNMI economy, following the devastating effects of events beyond its control, which significantly affected major economic activities during the first quarter of fiscal year 2019.

He said per the 2020 Appropriations Act (P.L. 20-8), the annual revenue estimates are approximately $233 million, with a first quarter revenue forecast of $54,270,882.

Atalig said despite the relatively speedy recovery of essential services and major industries, revenue collections did not meet the first quarter projection; calculations of total revenue amounted to $49,906,693.

He said the CNMI received less than forecasts of $4,363,189 or 8%.

Atalig said the Business Gross Revenue Tax collected for the first quarter was shy of projections by $356,922, which in total amounted to $18,463,393.

Atalig noted that this projection does not include the BGRT collections from the exclusive gaming license of the Imperial Pacific International (CNMI) LLC.