Kilili commends Fitial on CIP speed-up; ‘risk remains’

WASHINGTON, D.C.-In a letter to Gov. Benigno R. Fitial this week, CNMI Delegate Gregorio Kilili C. Sablan commended Fitial and his capital improvements project team for the faster spending of grants from the federal government. The current expenditure rate is 36 percent, up from last year’s 32 percent.

But Sablan advised the governor that funds are still at risk of being reprogrammed by the Interior Department. A proposal in the budget submitted to Congress by President Obama on Monday would allow Interior to move CIP funds from the any territory whose expenditure rate is below 50 percent.

This is not the first time the President has asked Congress for authority to take CIP funds from any territory that is slow in spending. The President’s budget made the same proposal last year.

Sablan, however, was able to block the President’s proposal. It was removed from the annual appropriation bill for the Department of the Interior, which provides annual CIP grants to the Northern Marianas, American Samoa, Guam, and the U.S. Virgin Islands.

Sablan argued that there are valid reasons for the delays in spending. CIP projects often cost more than any one-year’s grant, so the CNMI has to “save” grant funds from year to year until there is enough available to start larger projects.

One example is the Puerto Rico dump closure and environmental restoration. Costs have been estimated at $12 million, yet the Commonwealth has only been receiving around $10 million in recent years. And the dump is not the only project competing for those funds. The CIP grant has to be allocated among numerous important projects on three different islands. So it takes time to “save” enough funds for a project on the scale of the Puerto Rico dump closure.

Sablan also convinced appropriators to reject the proposal to reprogram CIP funds from one territory to another because there is already a mechanism to reward areas that get projects moving quickly.

The 2004 Section 702 Funding Agreement between the Interior Department and the CNMI set up competitive standards that determine how much CIP each territory is granted each year. One of those standards is how quickly a territory spends its CIP grants. So slower spenders get smaller grants.

Under the competitive performance standards system the Commonwealth has been getting smaller CIP grants over the years. In fiscal 2005 the CNMI grant was $12.5 million. For 2013 the CIP grant will be just $8.7 million. This amount is not controlled by Congress, but is the result of the competitive system the CNMI agreed to in 2004. (PR)