Compact Impact aggravates CNMI’s deficit problem

Failure by the U.S. government to reimburse the expenses incurred by the CNMI in hosting citizens of the Freely Associated States under the Compact of Free Association is putting more pressure on the Commonwealth’s budget deficit problems.

In a letter to the U.S. General Accounting Office, Gov. Pedro P. Tenorio said people from the Compact countries — Federated States of Micronesia, Republic of Palau and Marshall Islands — further dent the government’s dwindling resources.

Mr. Tenorio explained that the Commonwealth currently pays for the education and health service costs of citizens from the three Micronesian states who come to Saipan to live and work, unlike nonresident workers whose health insurance is paid for by their employers.

“[This is] a heavy burden to the CNMI government which must pay their health service costs and education costs and other types of services,” the local chief executive pointed out.

Mr. Tenorio explained that failure by the federal government to reimburse the CNMI in the form of Compact Impact funding exacerbates the Commonwealth’s deficit problem, which had ballooned to over $80 million in FY 1998.

“Guam receives Compact Impact aid even though the CNMI is included in the legislation under which Guam receives the aid,” he lamented.

The Compact of Free Association between the US and the Freely Associated States has caused the CNMI government nearly $24 million in subsidies extended to citizens of the three Micronesian countries who have migrated to the Northern Marianas.

This was contained in the preliminary estimate released by the Office of the Governor on the Compact’s impact to the CNMI government for periods covering fiscal year 1997 and 1998.

Extension of health and other social services to citizens of the Marshall Islands, Federated States of Micronesia, and Palau cost the CNMI $12.8 million in 1997 and $11.9 million in 1998.

Estimated compact impact, according to the last report made by the Commonwealth government in 1997, was $7.5 million. No impact assessment was made in 1998.

The CNMI had been reimbursed by the federal government only once since the Compact of Free Association was sealed in mid-1980s. In 1992, CNMI received $395,000 in technical assistance grant.

Mr. Tenorio said the commonwealth is taking aggressive steps to finally get reimbursement from the U.S. government on the expenses incurred from hosting FAS citizens in the CNMI, claiming that the Commonwealth had been billing the United States government for the Compact-Impact reimbursements since the 1980’s but nothing has been finalized so far.

This, even as the US Congress openly recognized that the federal government should reimburse the money spent by the CNMI in accommodating migrants from the Federated States of Micronesia, Marshall Islands and the Republic of Palau.

Under the Compact of the Free Association, residents from Pohnpei, Yap, Chuuk, Palau and Marshall Islands can migrate to US island-territories like Guam and the CNMI, as well as to the State of Hawaii without restriction.

The agreement guarantees the provision of education, medical and other state benefits to the migrating Micronesians which will be shouldered by the local governments and will, in turn, reimbursed by the United States through Congressional appropriations.

Instead of appropriating money to reimburse the Commonwealth’s expenses in hosting FAS citizens, President Clinton has proposed a $5 million cut on CNMI’s capital infrastructure project budget for fiscal year 2000.

Guam Senator Carlota Leon Guerrero had spearheaded a lawsuit, against President Clinton over the compact impact reimbursement issue. CNMI and Hawaii are also respondents to the lawsuit.

The lawsuit was initially decided in favor of Guam, Hawaii and the CNMI at the district court in Guam which has been appealed.

The Hay Group, in 1997, reported that the government spent $21 million in 1996 to accommodate FAS citizens in the islands. This figure is translated to at least $4,000 per Micronesian immigrant.

The Hay Group report disclosed that CNMI was a home to at least 5,308 FAS citizens in 1995. The group represents 8.6 percent of the Commonwealth’s total population registered at 61,607.