Legislature questions loss of power over 702 funds

The Office of Insular Affairs has promised to work with the CNMI Legislature to find out why the legislative branch was stripped of powers to appropriate CIP funds under the fiscal year 2005 agreement.

House Speaker Benigno R. Fitial raised yesterday why the CNMI Legislature was not involved in the negotiation for the Section 702 agreement that was recently signed between the U.S. government and the Commonwealth. He also wants to know if such an arrangement was stipulated in the agreement.

Deputy Assistant Secretary of the Interior David B. Cohen and Lt. Gov. Diego T. Benavente officially signed the CIP Funding Agreement during a brief ceremony at the Governor’s Office Monday.

Cohen said he is pleased with the outcome of the agreement, which was initialed in Feb. 2004. Cohen also acknowledged CNMI Resident Representative Pete A. Tenorio, who was instrumental in securing the $12.4 million CIP Funds for fiscal year 2005.

“On U.S. perspective, the CIP fund does not only benefit the CNMI but also other territories like American Samoa, Guam, U.S. Virgin Islands, and Puerto Rico. It is an incentive for good project planning,” said the deputy assistant secretary.

For his part, the resident representative stressed that Rota and Tinian would equally get its 1/8th share of the $12.4 million, which would be used for infrastructure projects on the two islands.

“The CNMI has to perform and, depending on its performance, it would get more; if not, it would get less. It gives the CNMI the opportunity to show the federal government that all funds are expended properly and all accounted for,” said Tenorio.

But the House speaker was quick to point out that, although it was a good gesture, the initial funding under Section 702 used to be $27 million. This means that the amount has decreased in recent years.

Fitial also asked why the Legislature was left out during the negotiation, adding that both chambers wish to participate in future dealings.

But Cohen stressed that the U.S. Congress has taken steps to disburse the funding assistance effectively. He said the remainder of the original CIP funds that the U.S. government believes the CNMI no longer need were given to needy territories.

Also, he said that the CNMI baseline funding level is $11 million but it was able to negotiate for $12.4 million for FY2005.

Cohen urged the Legislature and the CNMI Executive Branch to work together in discussing how the funds are to be expended. “We expect the Executive Branch to go on with the process and the Legislature is an important part of this leadership. We hope that they would work together.”

According to Cohen, he would sit down with the administration and members of the Legislature to discuss this process.

“I would be meeting with the Speaker this week…to clarify some points on this negotiation. We want the Legislature to be involved and hopefully, the Legislature would be informed on actions that the Executive Branch would be taking,” said the deputy assistant secretary.

The Lt. Governor echoed Cohen’s statement, adding that the CIP money would be expended based on the restrictions and limitations set under the agreement.

Benavente is optimistic that the executive and the legislative branches would be able to work together on the CIP funding issue.

“We would be meeting with the Legislature to discuss this and we hope that our priorities are the same,” said Benavente, who headed the Section 702 negotiation last year.

Section 702 of the Covenant provides for an initial seven-year period of financial assistance to the CNMI government. After the expiration of that initial period, the U.S. government has continued to provide assistance to the CNMI through a series of long-term funding agreements. The most recent long-term funding agreement was executed in 1992. That agreement, which, after being extended by the U.S. Congress, expired Sept. 30, 2003, generally provided the CNMI with $11 million per year for capital improvement projects. That funding is being continued by Office of Insular Affairs for the current fiscal year.

The 1992 agreement required the CNMI to match dollar-for-dollar all capital improvement funds provided by the federal government. Largely through the efforts of Tenorio, that matching requirement is made optional by the current agreement.

The CNMI’s capital improvement funding comes out of a mandatory annual appropriation of $27.72 million that the OIA receives to fund infrastructure projects in Guam, the Virgin Islands, American Samoa, the CNMI, and certain other jurisdictions.