CNMI spared from CIP cut • But US Senate Appropriations Committee defers allocation of $5.52 million to FY 2003

The U.S. Senate Appropriations Committee has deferred a proposed 51 percent cut on the annual construction grants provided by the federal government to the Northern Marianas, junking Clinton Administration’s plan to funnel the money next year for Guam’s Compact Impact costs.

Committee members, however, agreed to reduce the amount from $11 million to $5.58 million for FY 2000 on the condition that the remaining $5.52 million will be given to the Commonwealth in FY 2003, when the seven-year assistance program stipulated in the Covenant expires.

In effect, the island gets to keep the original total amount of $77 million in federal grants under the capital improvement projects from 1996 to 2002, according to Juan N. Babauta, CNMI representative to Washington.

But the $5.52 million originally given to Guam to defray the costs of hosting Freely Associated States citizens will now be channeled next year to the U.S. Virgin Islands for its infrastructure needs on a one-time basis deal.

The Senate move came on the heels of a general sentiment in the committee that taking away these funds from the CNMI appears to be “punitive” and contradicts the existing agreements which provide impact assistance to Guam.

It also followed lobbying by island leaders against the proposal to slash the assistance to $5.6 million for the next three years under a mark-up version of President Clinton’s spending plan for FY 2000, citing ongoing efforts to come up with local funds for the matching obligations.

In a letter to Gov. Pedro P. Tenorio over the weekend, Babauta said the Washington office has also undertaken steps to convince the House Appropriations Committee not to approve the proposed cut.

The budget proposal, which was submitted by the Department of the Interior’s Office of Insular Affairs early this year to Congress, is expected to be tackled by the House in the next few weeks.

Both chambers will have to produce bills allocating these funds, but they must first settle their differences in a joint conference to come up with identical appropriation measures.

“We are hopeful that our issues will be resolved prior to the conference,” Babauta told the governor.

Recommendation by a Subcommittee: The full Senate Appropriations Committee approved last Tuesday the recommendation to defer the cut by the Subcommittee on Interior which it had been deliberating for months.

“Although the Committee decided that funding could be deferred for two years because the CNMI still had some funding backlog, it left no doubt that it supported the total funding amount,” Babauta said, adding the full Senate has scheduled to take up these measures “shortly.”

The representative earlier had appealed to Subcommittee chair Sen. Slade Gorton against the funding reduction, informing him of the availability of local resources to meet these grants on a dollar-for-dollar basis as required under the Guerra-Manglona Agreement.

So far, the island government has set aside about $103.2 million worth of CIP funds, including the sale of bonds by the Public School System and the recently-signed law allocating $24.2 million to various infrastructure projects such as the new prison on Saipan.

“This has not been easy for us to do, but as we are demonstrating by our actions, we are committed to seeing this policy of increasing self-reliance through to its completion in FY 2002,” Babauta wrote to Gorton.

The Commonwealth has been behind since 1995 in its spending of the yearly construction grants, unable to source matching funds, and the proposed cut had stemmed largely from the significant backlog in previous year grants.

CNMI officials have opposed the move, saying it would further push the island into economic instability when its failure to make use of the multi-year grants has been due to the worsening financial crisis besetting the government.