CNMI’s CIP funds used as Compact-Impact payment

There is apparently nothing to be happy about the half-a-million-dollar federal appropriations received by the Commonwealth as partial payment to the fiscal impacts of the Compacts of Free Association.

It turned out that the $500,000 Compact-Impact allocation from the Fiscal year 2002 budget submitted by President George W. Bush to the US Congress already belonged to the CNMI under the Section 702 funding.

As if diversion of the money from Capital Improvement Projects coffers to Compact-Impact payment was not enough, the Commonwealth’s $500,000 is way smaller than Guam’s allocation of $4.5 million.

Two visiting staff members of the US House Resources and Appropriations Committee said Guam’s $4.5 million appropriation was realized through the extensive lobbying work of the island-territory’s US Congress Delegate Robert Underwood.

This was disclosed by Tony Babauta of the House committee on resources and Kimo Kaloi, a member of US Congressman James Hansen’s staff. The two made the disclosure during a panel discussion at the CNMI House of Representatives yesterday.

“It is the direct result of the Mr. Underwood’s’ capacity to represent Guam,” said Mr. Babauta.

However, Commonwealth leaders are upbeat that inclusion of the CNMI in the White House’s proposed financial year budget may already be a good sign. This is the first year the US Administration included the Commonwealth in its annual budget package, said Mr. Kaloi.

“This is not a fresh money. It will be coming from the CIP and not a direct appropriations for CNMI unlike other territories such as Hawaii and Guam. This is trickery,” said Rep. Oscar M. Babauta.

Also, the $500,000 allocation is too little an installment payment to the US government’s $120 million outstanding financial obligation to the Commonwealth, which has been seeking reimbursement of the Compacts’ fiscal impacts to local coffers from 1986 to 1999.

The CNMI commerce department, which was tasked to look into the financial impact of hosting residents of the Freely Associated States in the Northern Marianas, revealed the Compacts cost the CNMI government $12 million in Fiscal Year 1999 alone.

A summary of the Compacts’ estimated financial impacts indicated that the Commonwealth government coughs up an average of $15 million every year to subsidize various social services delivered to citizens of the three countries signatory to the agreement with the US.

Between 1986 and 1998, the CNMI Department of Commerce placed the estimated financial impact of the agreement between the U.S. and the Freely Associated States to be between $80 million and $108 million.

A fiscal impact study conducted by the Department of Commerce disclosed migration of residents of Palau, Marshall Islands and the Federated States of Micronesia to the CNMI restrained Commonwealth coffers by another $12 million in FY1999.

Government estimates indicated there are more than 3,000 FSM, Marshalls and Palau citizens residing in the Northern Marianas, who represent about four percent of the CNMI’s overall population count of 69,000 in 1999.

The agreement with the Federates States of Micronesia and the Republic of Marshall Islands started in 1986, while that with the Republic of Palau was implemented in 1994.

In the period covering 1986 to 1995, the commerce department said the CNMI government has incurred between $43.7 million and $71.7 million in total expenses for services provided to FAS citizens.

Of the estimated $80 million-$108 million Compact Impact between 1986 and 1998, the federal government has reimbursed the CNMI government with measly $3.8 million in the form of grants released in 1992, 1993, 1994, 1995 and 2000.

In 1992, the CNMI government received $394,960 in total grants from the Department of the Interior; another $396,600 in 1993; $400,000 in 1994 and $1.6 million in 1995.

Former Insular Affairs Director Danny Aranza, during a meeting with CNMI government officials and business leaders last year, turned over $1 million in Compact-Impact reimbursement to the Commonwealth.

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 restrictions.

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.