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10/23/2025 - The precipitous drop in construction tax and how CNMI government operations are affected by the federal shutdown were discussed during a joint session of the House Standing Committee on Ways and Means and Senate Standing Committee on Fiscal Affairs last Oct. 22 at the House chamber on Capitol Hill.
While tackling the revised fiscal year 2026 budget submission of the Executive Branch, Sen. Francisco Q. Cruz asked Finance Secretary Tracy B. Norita about the forecasted 90% dip in construction tax collection for fiscal year 2026.
Norita said Finance “significantly reduced because of the lack of collection in construction tax.”
Division of Revenue & Taxation director Daniel Alvarez explained further, “The law was passed in January. It hasn't even been a year yet. What DRT is doing right now is just, you know, sending out notices and doing outreaches. Once the year is over, our examiners will start to conduct audits on missed filings and on the projects.”
He added that the $5-million projected collection on construction tax was under the assumption that every company that had construction projects was going to file and pay their taxes.
“However, that was not the case this year,” said Alvarez.
Cruz then appealed to Finance to improve their tax collection efforts, especially on the reported $800-million military development on Tinian, because he doesn’t want government employees to suffer the consequences of government employees going into austerity.
Norita said the fact remains that there is no collection for construction tax in fiscal year 2025 to support the level of $5 million.
“We're saying this is a conservative amount that we've included, considering that we had, you know, education outreach, and we are making connections with other agencies to increase enforcement. But until we see contractors paying this tax, we cannot consider increasing the projection. But at this time, we stand at $500,000,” she explained.
Office of Grants and Management administration Epi Cabrera also gave his 2 cents worth on the subject, saying that his office has several promising projects in the pipeline that could move the needle on construction tax collections.
“We do have several federal projects that are in line to come out, especially the [Broadband Equity, Access, and Deployment program] and several of our outdoor recreational park projects. They're significantly promising. We just need more project managers to be on top of the workload,” he said, while adding that the austerity measures have also affected his office.
The joint session also dealt with the current federal shutdown, which entered its 21st day yesterday, with Sen. Donald Manglona asking how it has affected the CNMI’s general fund resources.
Cabrera said the CNMI is lucky that the effects haven’t reached the islands yet.
“From prior meetings, what I've heard from the [Nutrition Assistance Program] section is that there is a kink in the agreement that may delay the November payouts for food stamps, although they have that EBT system. I believe that the first month will be okay, but they still have to do their due diligence in trying to get that agreement so that all the funds will come out on time.”
He also shared that the Office of Grants and Management’s solar grants have seemingly taken a backseat as more diesel power-based projects have been getting approved ever since the administration of President Donald J. Trump came to power last January.
“There are different directions from the different administrations, so we're just trying to follow suit with all those grants that we have,” he said.
Norita chimed in that the federal shutdown has, more or less, delayed the processing of grants from the U.S. government, and no grants have actually been cancelled, so far.
Report by Mark Rabago
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