COMPACT-IMPACT COSTS U.S. owes CNMI over $100 million

The United States owes the CNMI government over $100 million in total funds for the reimbursement of the Compacts of Free Association’s fiscal impacts to the local coffers from 1986 to 1999, official records obtained from Capitol Hill disclosed.

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 U.S.

Between 1986 and 1998 alone, 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.

The figure does not include the financial stress caused by the migration agreement between the U.S. and the FAS to the CNMI coffers in the Fiscal Year 1999, which government officials estimate to have reached $15 million.

CNMI records disclosed citizens of the Federated States of Micronesia, Marshall Islands and Palau represented about four percent of the total Northern Marianas population in 1998.

Government estimates indicated there were at least 3,118 Federated States of Micronesia, Marshalls and Palau citizens residing in the Northern Marianas in 1997.

Costs associated with providing public services to the citizens of the Freely Associated States represented about 15 percent of the total Commonwealth’s budget in 1998.
Major services impacted by the migration of FAS citizens on the islands include the public health, education, public safety, the public defender and youth services.

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 FAS citizens.

In 1986, a Hay Group study said migration of FAS citizens to the Northern Marianas caused at least $7.5 million to the local coffers. The CNMI Department of Commerce placed the estimate in 1997 and 1998 at $13.7 million and $15.1 million respectively.

Reimbursement

Of the estimated $80 million-$108 million Compact Impact between 1986 and 1998, the federal government has reimbursed the CNMI government with measly $2.792 million in the form of grants released in 1992, 1993, 1994 and 1995.

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.

The U.S. government has been consistently allocating funds for the reimbursement to Guam of the impacts of the Compact of Free Association and nothing for the CNMI since 1996.

Gov. Pedro P. Tenorio disclosed the CNMI had been billing the United States government for the Compact-Impact reimbursements since the 1980’s but nothing has been finalized so far, and that the figure has already grown bigger.

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 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.

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.

The money that will be slashed off CNMI’s CIP was reprogrammed to Guam which would receive more than 50 percent increase in grants to mitigate the impact of Micronesian migration in the island.

Guam Senator Carlotta 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.