The CNMI is going to get a total of $507 million under the American Rescue Plan Act of 2021. With that much money flowing to the CNMI, “we can’t just do whatever we want,” said Finance Secretary David DLG Atalig. There are many rules and regulations that have to be followed and complied with in spending that funding.
For one, the state cannot use this money for any pension obligation or pension funding. Two, “we cannot use this money to subsidize a reduction in tax or lower taxes and use the monies to absorb and offset that.”
Without going into great detail, Atalig laid out during the Saipan Chamber of Commerce general membership meeting at the Hyatt Regency Ballroom yesterday the government’s plans on how to spend its share of the ARPA money. “There are four major areas that we can spend this money on— Section 602 allocates $483 million for state fiscal recovery (basically for the municipalities of Rota, Tinian, Saipan. and the Northern Islands), Section 603 b2 earmarks $5 million for local fiscal recovery (non-entitlement units of local government), Section 603 b3 states $10 million for local fiscal recovery (counties), and Section 604 states $9 million for capital projects fund,” he said.
To ease the process for the CNMI to spend the money, the government has changed some rules in its procurement process to do away with some potential chokepoints. “We have been working on improving our procurement process so that we can spend quicker,” said Atalig. “In fact, last Friday we published our new procurement rights and if you do business with the government, I’d recommend to go in there and take a look at…the whole procurement process that has been updated. It took over a year and a half to do this as part of improving processes so that we can continue to do good business with the private sector in a reasonable time.”
Atalig said the administration of President Joe Biden has its eye on better infrastructure, which is why there’s an infrastructure bill in motion that he’s trying to get passed in the U.S. Congress by the end of the month. “That’s almost a complete package of over $3 trillion again.
Under Section 604 of ARPA where $9 million is allocated for infrastructure, it will be specifically used in three areas—water, sewer, and broadband. “…There are other areas in our book that talks about funding for infrastructure. …We hope to get a sizable amount and definitely exciting for the business community and for projects in the city.”
Atalig said that Section 602 that allocates $483 million have four areas where it would be spent by percentage—21% to respond to the public health emergency with respect to the COVID-19 or its negative economic impacts, including assistance to households, small businesses and non-profits or aid to impacted industries such as tourism, travel and hospitality; 6% to respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers of the state, territory, or tribal government that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work; 52% for the provision of government services to the extent of the reduction of revenue; and 21% to make necessary investments in water, sewer, or broadband infrastructure.
“The last part that talks about 21% infrastructure is separate from Section 604 but we’re allocating monies for water, sewer, broadband infrastructure. …The governor has prioritized infrastructure to two major homestead projects so that we can get some of our people homestead properties for that and hopefully stir up economic development because they’ll start building. …I have a detailed plan and I’m just preparing for the U.S. Treasury’s guidance on how to report our spending plan to get the funding which the U.S. Treasury is scheduled to give by Monday,” Atalig said.
“Section 603 is the amount of monies that will be going to the municipalities…and we’re going to use the same formula that was given to us by U.S. Congress and split it once we get the exact amount. …Our calculation is about $13.1 million and we’ll split this up equally among the four mayors, the rest of it by population. …The next section is the allocation for [Section] 604 which is for just capital improvements and projects, and this is about $14 million coming to the CNMI, and all the three areas we can use this on, again, is water, sewer and broadband and that is the make-up of the ARPA funds,” he added.
According to Atalig, 50% of funds will be released soon and 50% by Feb. 10, 2022. “So we have until December 2024 to spend these funds. …We don’t know if there is going to be any extension but we are planning to spend before December 2024. …As for transparency…we started a financial system that is going to be ‘live’ and my hope is before January of next year. We implemented a new chart of account for allocated funds so when the list comes out we will have a portal that can be viewed by the public or have it posted on our website.
“We have hired several people just to manage specifically these funds. …These funds are going to every department and agency…for a lot of different projects and so we are going to track these,” he added.
This slew of money is from the $4.5 billion allocated to the five territories that includes American Samoa, Guam, the CNMI, Puerto Rico, and the U.S. Virgin Islands. Half of that amount or $2.25 billion was equally divided among the five territories for 2021. That amount to about $450 million for each one. However, other funding added to the amount going to each territory eventually boosted the total amount to $507 million, as in the case of the CNMI. The other half of the $4.5 billion will be divided equally and given to the five territories in 2022.