‘Q1 collection not enough to lift austerity’

The Office of the Governor does not expect the revenue collections in the first quarter to be enough for the CNMI government to be able to do away with austerity measures—at least for the first few months of fiscal year 2020. That’s from October to December 2019.

But that is the nature of first quarters of every year, according to a statement from the Torres administration. It said the Department of Finance projects relatively lower collections in the first quarter of every fiscal year due to the cyclical nature of businesses and seasonal activity of certain industries.

“…The current collection rate is not enough to lift the current austerity measures within the first quarter of fiscal year 2020,” the administration said. “Because revenue collections remain a concern as we enter the new fiscal year, the administration will continue its 72-hour work schedule for the first quarter in order to monitor cash flow, continue essential public services, and prevent furloughs.

It promised, though, that the Torres administration will revisit the government’s cash position toward the end of the first quarter to determine the probability of restoring work schedules back to 80 hours.

“Maintaining financial responsibility now by continuing the 72-hour work schedule will ensure that every government employee keeps their job, while eventually getting the CNMI back on track to pre-Super Typhoon Yutu levels,” Gov. Ralph DLG Torres noted in the statement.

Finance Secretary David Atalig, according to the statement, noted that the CNMI is still affected by significant recovery costs as a result of the 2018 typhoon season, loss of economic activity from businesses affected by the typhoons, low tourism arrivals, and the variable costs of medical referral, healthcare, and public safety.

“The CNMI is experiencing fiscal constraints caused by various factors. In fiscal year 2018, the CNMI incurred deficit spending from the general fund of approximately $19 million from medical referral, healthcare, and public safety, which are historically variable costs in order to meet the needs of our community. The natural disasters experienced in September and October 2018 required the government to undertake extraordinary expenditures of approximately $50 million yet to be reimbursed by our [Federal Emergency Management Agency] partners,” Atalig said.

Combined with the loss of economic activity and business gross revenue taxes after Super Typhoon Yutu, fiscal year 2019 revenues fell short by about $19 million. The CNMI government stands at a deficit of $89.9 million at the start of fiscal year 2020.

Atalig noted that additional financing from the 2019 Marianas Public Land Trust loan and additional support from the Legislature to appropriate additional funding for general fund obligations have significantly improved the CNMI’s growing negative position.