NMI now more dependent on federal dollars than local funds

  Federal spending and grants pumped into the CNMI now exceed the local government’s gross revenue, and Delegate Gregorio Kilili Sablan (Ind-MP) said this means the CNMI is now “more dependent on federal dollars.”

Both federal and local money are used for a host of programs and services related to health, education, public safety, employment, environmental protection, disability assistance, water, power and wastewater, youth activities and promoting entrepreneurship.

The federal government’s direct expenditures or obligations in the CNMI totaled over $258 million in 2010, while federal grants alone reached almost $190 million in 2010, exceeding CNMI revenue of over $130 million.

“It is clear that federal money is crucial to the Commonwealth and that we have to be adept at finding, applying for, and managing these grants. That’s why your congressional office is currently hosting a comprehensive grants workshop,” Sablan said.

The trend started in 2009 when federal grants totaled over $147 million, more than the CNMI government’s gross revenue of over $137 million. Some lawmakers said American Recovery and Reinvestment Act funding is one main reason for the increased federal money pumped into the CNMI since 2009, and ARRA is now winding down.

From 2001 to 2008, CNMI revenues exceeded federal grants, based on numbers from the Consolidated Federal Funds Report and completed annual CNMI single audits.

In 2001, CNMI gross revenue was over $213 million, and federal grants were only over $62 million.

This meant federal grants were only as much as 29 percent of local revenues. But as years went by, the percentage gap between federal grants and local revenues edged closer until crossing paths in 2009, with federal grants exceeding local revenues.

In 2002, CNMI revenue totaled $195 million, and federal funds were only $66 million.

A year later, local revenue went up a bit to $200 million and federal grants were at $89 million.

In 2004, local revenue was $210 million and federal grants, $156 million.

CNMI revenue reached $214 million in 2004 and federal grants were at $119 million.

Local revenue went down to $192 million in 2006, when federal grants went up to $126 million.

In 2007, CNMI revenue was only at $159 million and federal grants also went down to almost $81 million.

Local revenue went up a bit to $195 million in 2008. Federal grants also went up to $111 million.

By 2009, CNMI revenue was only $137 million, while federal grants went up to $147 million.

The CNMI has yet to have a completed single audit for 2010, but that year, federal grants to the CNMI were at a historic high of over $189 million.

Rep. Ray Yumul (R-Saipan), a former House Ways and Means Committee chair, said the decrease in CNMI revenue was mostly a result of external factors such as the Asian economic crisis, the terror attacks in 2001 and the lifting of world trade quotas that led to the demise of the garment industry, slowdown in tourism, and the pullout of Japan Airlines.

But Yumul said one other way to look at the issue is the more aggressive federal grant applications by CNMI government agencies and private entities, resulting in an increasing amount of federal grants coming CNMI’s way.

He cited as an example an $8 million telecommunication grant awarded to IT&E.

Yumul also said the federal government is also dealing with shrinking resources that need to be spread across its states and territories yet the CNMI managed to get increasing amounts.

“We also have to give credit to our grant writers, managers, and others for making sure we get more federal grants, whether it be formula or competitive grants,” he told Saipan Tribune.

Yumul was among those who attended the first series of comprehensive grants workshop that the CNMI delegate is hosting. The grants workshop, funded by the U.S. Department of the Interior’s Office of Insular Affairs, continues this week.

Senate President Paul Manglona (Ind-Rota) separately said that given that the CNMI is now getting more federal grants than it could generate in revenue locally, the CNMI should continue to work on its single industry-tourism-and develop others such as agriculture.

Grants workshop

The grants workshop is being conducted by Charles Hester, a certified public accountant who has extensive federal experience with grants and audits. He has been conducting the workshop under the auspices of Graduate School USA, one of the federal government’s continuing education providers of choice.

On Friday, he awarded certificates of completion from Graduate School USA to participants who completed Part I of the comprehensive grants workshop held in Room D1 of the Northern Marianas College in As Terlaje.

Hester is conducting Part II of the workshop this week. The workshop is provided free of charge to participants.

Rota and Tinian residents were also able to join through videoconferencing connections.

Sablan, in welcoming individuals from government and private entities on Tuesday last week, lauded them for their willingness to take advantage of an opportunity to improve their grants skills.

“They are learning about planning, obtaining, and successfully completing grants and contracts; administrative requirements and cost principles for grants and other agreements; and effective fiscal management of grants,” he said.

Sablan said they put an initial cap of 75 for the grants workshop but they had to increase it to 120 to accommodate more people.