Compact impact costs clarified

This is in reference to your editorial on November 15 regarding the estimated compensation owed by the federal government for the fiscal impact and related costs involved resulting from the out-migration of citizens of the Freely Associated States of Micronesia (FAS) to the CNMI.

Your editorial stated that the total Compact impact costs was $28 million. Please permit me to clarify for the record that the $28 million covers only 1997 and 1998. This includes costs relating to public health, education, public safety, and youth services. We estimate that the cumulative reimbursement due to the CNMI for all the years since the Compacts of Free Association were implemented in 1986 for the Federated States of Micronesia and the Republic of the Marshall Islands, and in 1994 for the Republic of Palau, is considerably higher. In fact, our cumulative estimates reflect Compact impact costs exceeding $80 million.

There is a long history of requests to the U.S. Congress by the CNMI for the legally mandated Compact impact assistance dating back to 1990 when $3 million was requested. In 1992, $10.2 million was also requested, however, Congress provided a first-time payment of $394,960. In 1993, the CNMI requested and received a $396,600 technical assistance grant for Compact mitigation with an additional grant for $39,050 to conduct a census of FAS citizens in the CNMI. In 1994, the CNMI received another $400,000 grant and Congress earmarked $1.6 million in Covenant Section 702 infrastructure funds for Compact impact mitigation. No further assistance has been received since 1994. The Hay Group Report estimated a net impact of $7.5 million for 1996.

In addition, one should note that the dollar-for-dollar impact of these costs is far more severe in the CNMI than in Guam or Hawaii. Guam’s annual budget is two and a half times larger than ours and consequently these costs have a far greater impact on our limited financial resources, particularly in health and education.

We sympathize fully with the Compact impact in Guam and Hawaii and we should all work together with Congress to resolve this outstanding issue since we are all similarly impacted.

The Governor and the Legislature have raised the Compact impact issue with the Office of Insular Affairs on numerous occasions. The issue was also raised in the recent hearings before the U.S. Senate and House of Representatives in Washington, D. C. Thank you for your own efforts to help raise public awareness by bringing the issue to the attention of your readers.

Michael S. Sablan

Special Advisor for Finance and Budget