House Ways and Means hears Finance budget; officials say audit lag, tax-system rollouts and staffing shortfalls risk operations

The House Committee on Ways and Means heard a budget presentation from the Commonwealth Department of Finance on an internal budget submission and the governor’s proposed funding on a morning hearing called by Representative J.P. Sablan.

Department of Finance Secretary Tracy Narita told the committee the department requested roughly $15.8 million for operations but that the governor’s proposal would keep funding at about $10.8 million. She said the department is continuing rollout of a modernized tax system and Tyler Munis post‑implementation work while trying to close long‑running single‑audit gaps.

The department emphasized three priorities: systems, service and people. Secretary Narita highlighted the Revenue Management Information System (RMIS), noting the tax system’s phase‑2 launch for individual income tax and that the department “has already issued more than $23,000,000 in tax refunds.” Director Daniel Alvarez, who oversees Revenue and Taxation, said the department expects to complete RMIS phase 3 later this year to add enforcement, audit and a citizen portal.

But directors said funding and staff shortages put maintenance and continuity at risk. Director Bernadita Palacios (Financial Services) and others told the committee the department remains behind on audits; Narita said the office is finishing fiscal 2022 audits and is pursuing an expedited “catch up” plan that would require tighter coordination with the Office of the Public Auditor, OMB and other agencies to become current within 24 months.

Office of Information Technology Director Frank Celes described OIT’s cost‑cutting and consolidation efforts (moving agencies from DSL to fiber, consolidating email services on cnmi.gov and implementing multifactor authentication for financial users) and warned of personnel losses. Celes said OIT has lost several experienced staff in the past year and that specialized certifications are needed to maintain servers and the FMIS environment.

Several directors flagged workforce challenges. Reyna Camacho of the Employee Experience and Development Section said a recent survey showed 6 percent of department employees intend to retire within a year and 38 percent are considering retirement within three to five years; the section is pursuing succession planning, mentoring and cross‑division rotations to preserve institutional knowledge.

Committee members pressed the department on vacancies and on how it will prioritize limited funds. Secretary Narita said filling vacant positions is the first priority for lapsing balances, then reclassifications and corrections for employees with completed desk audits. She also said many modernization projects depend on federal grants whose expiration could halt maintenance or new modules.

On cybersecurity, Director Celes said OIT is using a state and local cybersecurity grant that has roughly two years remaining to train staff and improve protections. Representative Marissa Flores pressed whether the government’s systems are fully protected; Celes answered they are protected “somewhat” but not 100 percent. Flores urged the Department to pursue outside partners, including military partners, to meet broader infrastructure needs.

Committee members also discussed accounts and interagency arrangements: Narita confirmed the department is working to comply with 1 CMC 2803(c) by funding specific Department of Public Lands accounting positions within Finance to serve as co‑trustees of the DPL operations fund; the change requires moving those accounting positions into Finance’s budget so their duties comply with the statute.

Why it matters: Lawmakers were given a consolidated picture of technical progress — a new tax system and continuing Munis rollout — paired with resource and staffing risks that, if not resolved, could delay audits, impair federal reporting and interrupt operations that affect payroll, vendor payments, tax processing and federal drawdowns.

What officials asked for: Committee members and the department discussed keeping vacancies funded while OPM processes eligibility lists; continued federal grant support (including from the Office of Insular Affairs for audit work); and targeted funding to sustain RMIS cloud operations, cybersecurity and mission‑critical equipment.

The hearing concluded with the secretary thanking members for consideration and urging continued support as the department moves through a multi‑year modernization and audit‑catchup effort.