Despite having thought that the CNMI’s budget for fiscal year 2025 would reflect a reduction following the closures of Hyatt Regency Saipan and Asiana Airlines, the Department of Finance and the Office of the Governor has submitted a revised budget that did not reflect a reduction.

Last July 1, the Office of the Governor submitted a revised FY25 budget to the Legislature, however, the CNMI’s revised budget of over $158,614,274 reflected no reduction rather reappropriations.

“In accordance with Article III, Section 9 of the NMI Constitution and 1 CMC § 7201(e), I submit the proposed budget revision for the Commonwealth Government and Related Agencies for Fiscal Year 2025 beginning Oct. 1, 2024, and ending Sept. 20, 2025. As mandated by the CNMI Constitution, the budget submitted herein is balanced such that the total amount of proposed expenditures does not exceed the total estimated resources available for appropriations. The gross budgetary resources reported by the Secretary of Finance and available for general appropriation for Fiscal Year 2025 remain unchanged at $158,614,274. The gross amount is adjusted to reflect earmarked funds, debt service, and other legally obligated set-asides, resulting in available resources for appropriation of $111,474,011,” Gov. Arnold I. Palacios said in a letter to House Speaker Edmund Villagomez (Ind-Saipan) and Senate President Edith DeLeon Guerrero (D-Saipan)

Although the budget currently remains unchanged, Department of Finance Secretary Tracy Norita told Saipan Tribune adjustments can be made well into the fiscal year based on revenue collections.

“The FY25 [budget] is already reduced from the current year. We base our projections on actual collections and can always be adjusted during the budget year. That way we follow the actual impact to revenues,” she said.

In his letter addressed to the Legislature, Palacios further stated that positive economic developments are underway in the CNMI, including escalated construction work from military activities on Tinian, multiple government projects to improve primary and secondary roadways, and several other capital improvement projects that will continue or be completed in 2025.

“Northern Marianas College, for example, anticipates the completion of its $33-million Student Center in FY2025, and expects to begin the construction of two other new buildings in 2025. There are other projects throughout the Commonwealth: in addition to Route 206 (Tinian), which was recently completed, we anticipate other major project completions in FY 2025 to include the Garapan Revitalization Project, Beach Road Improvement Project, and Route 36 Kalabera Road. The Lieutenant Governor and I are working with cabinet members to expedite other projects that are pending and will contribute to the economic resources of the Commonwealth,” he said.

Palacios also stated that the Department of Finance, Division of Revenue & Tax, and Customs and Biosecurity are actively monitoring construction shipments and taxable activities to boost revenue collections.

“DRT’s Collection Branch recently provided outreach services in partnership with the University of Baltimore School of Law Taxpayer Clinic and Azarvand Tax Law to assist taxpayers in the collection process, reviewing over 90 tax cases amounting to $4.85 million in tax receivables. As demonstrated in the collection of $14.6 million in the past year by the Tax Collection Taskforce, this administration remains committed to strong tax enforcement and compliance to ensure steady revenue collections,” he said.

Palacios further said that from the beginning of this administration, he and his team have moved aggressively to stabilize the government’s fiscal condition.

“We have implemented austerity hours, canceled contracts, released hundreds of employees, eliminated vacant FTEs, and directed government departments to reduce fuel and utilities costs. This government, especially the executive branch, is already operating on a skeletal budget. Further cuts will further jeopardize vital public services and create ripple effects throughout the local economy,” he said.

“To restore the government’s fiscal health and protect essential services, our efforts to reduce costs must be complemented by revenue generation. The importance of passing revenue-generating legislation cannot be overemphasized. We stressed this urgency in our original budget transmittal on April 1, 2024. With the Legislature’s support, we can, together, revisit existing outdated statutes and propose amendments to adjust rates and modernize tax and fee structures established-in some cases-more than two decades ago,” Palacios added.