CIP Funds Cut •CIP funds the only alternative to revenue from garment sector, says governor

Gov. Pedro P. Tenorio has protested to Washington a plan that would decrease the FY 2000 infrastructure grants that CNMI will receive under a seven-year financial assistance agreement with the US in fear that such move may push the islands into economic instability.

The 51 percent cutback in funding for Capital Improvement Projects was contained in the next fiscal year’s spending package President Clinton has submitted to Congress.

Under the proposed budget, $5.4 million of the $11 million intended for the Northern Marianas will be diverted to Guam to cover the cost of hosting Micronesians by the neighboring island.

The amount more than doubled the current level of capital improvement grants Washington extends to Guam from $4.6 million to $10 million to ease the financial impact spawned by the immigration of citizens from the Freely Associated States.

A previous study by the Hay group estimates that the impact of accommodating Micronesians by the Northern Marianas could run to at least $7.5 million in FY 1996 alone.

“We are deeply concerned and dismayed by this information,” the governor wrote to Edward Cohen, Clinton’s special representative to the 902 talks.

According to Tenorio, the proposal will derail efforts of the commonwealth to implement a massive construction plan, a route the local government is eyeing to boost the slumping economy.

He said, “The diversion, added to our current bleak economic situation, creates an economic instability that hinders our ability to plan for our future. In short, the Commonwealth cannot afford the diversion of these funds.”

The Northern Marianas is supposed to receive annually $11 million in construction grants from the federal government under the Third Special Representatives Agreement ratified by Congress in 1996.

Washington says it is slashing the CIP monies because of the inability of the commonwealth to expend federal grants in the past.

But Tenorio said it was a “mis-characterization” since a number of projects from the previous grants are either under construction or in the design phase and CNMI cannot draw the grants until completion of the project. “Therefore, it appears on the books that this money has not been used when, in fact, it has been committed.”

In December a local task force, with the help of representatives from the Office of Insular Affairs and the US Army Corps of Engineer, put together a list of infrastructure projects that will be carried out over the next seven years amounting to $154 million.

CNMI has so far identified $57 million in local matching requirement, and is eyeing outside financing to raise the dollar-for-dollar match for the balance. Officials say they are anticipating the multiplier economic impact of the CIP funds on the island economy to reach $300 million.

“During the recent informal Covenant Section 902 meeting, you strongly encourage the CNMI to relieve its dependence on the garment industry revenues by planning ahead for alternative revenue generating sources,” Tenorio told Cohen, “Of our alternative revenue generation efforts, this is the only measure that has certainty to it.”