Governor’s FY2026 budget projects $147.5 million available; officials flag $15.5M excise-tax drop and pension-bond risk

The House Ways and Means Committee heard a presentation April 7 on the governor’s proposed FY2026 budget, which projects about $147.5 million in net revenue available for appropriation under a scenario that assumes the administration secures a pension-obligation bond. Committee members pressed finance and budget staff for underlying data, including construction-tax, excise-tax and hotel-occupancy receipts, and for a contingency plan if the bond is not issued.

The proposal, presented by Office of Management and Budget staff, shows a net available appropriation of about $147.5 million. "There is a net revenue available for appropriation of about a hundred and $47,500,000," said Ms. Villagomez of the Office of Management and Budget. Secretary of Finance reiterated the top-line figure and the assumptions behind it, saying the administration prepared two forecast scenarios tied to bond financing. "If we are unsuccessful, that brings us to scenario 2, where the full obligation ... drops our available budgetary resources to a hundred and 23,900,000," the Secretary of Finance said.

Why it matters: the forecast underpins agency spending and program allocations for the coming fiscal year and depends on a planned pension-obligation bond (or similar financing). Committee members repeatedly requested line-item and source-level detail to evaluate risks to services and priorities if the financing is not realized.

Most important figures and voting note: the administration’s projection includes $147.5 million available for appropriation in the preferred financing scenario; a $15.5 million estimated decline in excise-tax collections; $5 million of new construction-tax revenue; and restored earmarks totaling about $13.8 million that the administration proposes to suspend and thereby include in the general fund for appropriation. The committee adopted the agenda at the meeting’s start; the record shows the motion was seconded and "motion adopted," but no roll-call vote was recorded in the transcript.

Allocations and exclusions described by presenters: OMB staff said the FY2026 plan maintains a 25% allocation to the public school system plus an additional 2% to support 180 instructional days, and provides $2 million additional to Northern Marianas College. The presentation cited 1 CMC 13 31 regarding a statutory minimum allocation for higher education. Officials listed items they did not include in the budget request: about $4.2 million of a requested $5.6 million for the health-network program; roughly $10.1 million of requested 25% pension payments to retirees; $876,000 requested for inmate meals; and $29 million in MAP pension payments that the administration expects to address through a bond structure rather than pay from FY2026 resources.

Taxes and receipts discussed: finance officials said the excise-tax projection is based on FY2025 actual collections and that their forecast reflects a roughly $15.5 million reduction from prior estimates. The department said it removed 30 businesses that filed closure notices from forecasts of business gross receipts (BGR) and income taxes; the aggregate tax impact of those closures, across income and BGR categories, was described as about $1.15 million. Officials said a single large importer contributed materially to past excise-tax collections but that the $15.5 million excise decline represents behavior across many taxpayers, not only that one importer.

Construction tax and military projects: the forecast includes $5 million in additional construction-tax revenues associated with government and federal construction, with a targeted increase tied to military projects on Tinian. Finance staff said they used published contract and obligation data (for example, on USAspending) and outreach to known contractors in forming that projection.

Hotel-occupancy tax: the Marianas Visitors Authority’s forecast was incorporated. Finance said FY2024 hotel-occupancy collections were about $6.4 million and that MVA projects $8.8 million for FY2026; collections reported to date in the current fiscal year total about $2.6 million.

Earmarks and suspensions: the administration’s proposal lists 13 earmarks to be suspended and included in the general appropriation, which officials said results in roughly $13.8 million being available to the general fund in the submission because the earmarked percentages are not removed from gross projections. Committee members asked for an itemized calculation showing how restoring those earmarks would reduce the general fund.

Federal grants and reimbursements: the administration noted roughly $1 billion in active federal grants to the Commonwealth across programs and capital projects; members asked for a rollup of expected reimbursements for the fiscal year and the pass-throughs tied to FEMA Public Assistance projects. Officials said they would provide the requested breakdowns.

Risk and next steps: the governor’s proposal is explicitly conditional on securing pension financing; the administration described two forecast scenarios and said it is working with bond underwriters and CEDA. Committee members requested additional data — construction-tax by island, excise-tax collections year to date, CIQ/Customs receipts, and the projected impact of restoring suspended earmarks — and staff agreed to provide those figures later.

Quotations and attributions in this account are taken from the committee transcript and from presentations by Office of Management and Budget and Department of Finance staff. No final budget votes or appropriations were taken at this meeting.