The administration of Gov. David M. Apatang has lowered its fiscal year 2026 revenue forecast by 10%, or about $13.08 million, citing the lingering economic impacts of Super Typhoon Sinlaku and ongoing tourism challenges, a move that will trigger budget cuts across much of the executive branch for the remainder of the fiscal year.
Apatang informed House Speaker Edmund S. Villagomez and Senate President Karl R. King-Nabors in a June 17 letter that the revised forecast follows a series of revenue shortfalls and a sharp decline in collections after the April typhoon. The reduced revenue estimate lowers the government's expenditure ceiling from $134.5 million to $121.4 million through the end of FY 2026.
According to the governor, the Department of Finance's April revenue collection report showed a 32% shortfall, or nearly $3.93 million. Combined with earlier deficits, the government has recorded a cumulative revenue shortfall of about 5%, or $4.65 million, so far this fiscal year.
In a June 11 memorandum to the governor, Finance Secretary Tracy B. Norita said the revenue estimate had exceeded the legal threshold requiring a formal revision.
"The FY 2026 revenue estimate is beyond the 3% threshold with reasonable certainty due to the economic impacts of Super Typhoon Sinlaku, combined with continued tourism challenges affecting tourist arrivals."
Norita said Finance worked with the U.S. Department of the Interior's Office of Insular Affairs and used April and May collection data to revise projections for the remaining months of the fiscal year.
"The Department of Finance utilized the most recent collection data for April and May and applied a gradual percentage reduction to June through September, resulting in a total annual budgetary adjustment of approximately $13.081 million or 10%."
The revised forecast reflects several factors affecting the local economy, including the indefinite suspension of T'Way Air flights, Philippine Airlines' suspension of service through October, slow business recovery after the storm, and ongoing utility restoration efforts. Finance also considered the anticipated economic effects of the Federal Emergency Management Agency and Small Business Administration assistance programs.
To align spending with projected revenues, the administration applied a proportional reduction factor of 0.14816619 to executive branch departments, agencies and municipalities covered by the budget act. Constitutional salaries and funding for the Public School System were excluded from the reduction.
One immediate consequence will be a reduction in employee work schedules. Apatang said employee work hours will decrease from 70 hours to 64 hours per pay period.
The governor also directed the Civil Service Commission and Office of Personnel Management to lead a Furlough Taskforce to develop a framework for possible furloughs as the government adjusts to reduced revenues.
Norita acknowledged the seriousness of the situation but said the Department of Finance would continue working with government leaders to manage the fiscal challenges.
"The Department of Finance stands ready to work with you, the Office of Management & Budget and all stakeholders as we navigate this fiscal and budgetary crisis."
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