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By Benhur C. Saladores

SAIPAN, Northern Mariana Islands (July 28, 1998 - The Saipan Tribune)--- Commonwealth lawmakers have slammed a recent move in the U.S. Congress to slash $2 million each year from federal grants to the Northern Marianas.

Saying that it undermines the Covenant agreement, leaders of the CNMI Legislature consider the action a "severe blow" to ongoing efforts to revive the ailing local economy through massive infrastructure development.

They are alarmed in particular over its potential impact to several pending infrastructure plans to be financed by funds under the Capital Improvement Projects.

In a letter sent Friday to Rep. Don Young, chair of the U.S. House Resources Committee, Senate President Paul A. Manglona and Speaker Diego T. Benavente opposed an amendment to a law which will effectively reduce federal appropriations for the CNMI from $11 million to $9 million.

"(W)e cannot afford to lose even $2 million - $2 million the United States has already promised us by law - without an adverse impact on our people," they said.

Introduced by Rep. George Miller, the amendment to the fiscal 1999 Interior Appropriations bill was passed last week by the House upon the lawmaker's argument that $88 million in earlier federal funding has yet to be used by the CNMI.

But local leaders maintained only $33 million - not $88 million - remains unmatched to date, representing Covenant grants since 1996. Under the Manglona-Guerra agreement which amends Section 702 of the Covenant, the commonwealth is required to match federal fund dollar-for-dollar.

More than $100 million has also been allotted from 1993-95 for CIP programs such as solid waste, power, water, roads and schools, whose remaining balance of $53 million is expected to be obligated by yearend.

According to the letter, some $630 million in infrastructure projects will have to be implemented over the next few years, and this will need federal assistance.

"The planning effort in this regard by the CNMI depends on the federal government honoring its commitment to funding at the $11 million per year level until the year 2002," it said.

Other steps have also been taken recently by commonwealth officials to meet the matching requirement, including a new law mapping out the framework for bond flotation and debt servicing of all CNMI's financial obligations.

Benavente and Manglona, however, underscored in their appeal the initiative could backfire because of the amendment which they said runs contrary to provision of 702 assuring continued direct financial assistance to the CNMI at the end of the multi-year agreement.

"In planning its CIP expenditures and approaching financial markets, the commonwealth relies on the United States' commitment of $11 million per year," they explained.

"Congressman Miller would destroy this partnership and impede the commonwealth's ability to market bonds," they added. "After all, what does it do to the commonwealth's creditworthiness to make one of its major sources of repayment subject to the whims of any one of the 535 members of the United States Congress?"

The plan to take away the badly needed money, according to the letter, will also aggravate living conditions on the islands which have been experiencing its worst economic slowdown in years.

"Never before have we faced such an immediate downturn in our economy while experiencing greater and greater stress on our aging infrastructure," it said.

CNMI officials have blamed the sluggish economy, which has been spawned by the financial crisis in Asia, its main tourism market, for its inability to allocate local funds for the CIP programs.

For additional reports from The Saipan Tribune, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Saipan Tribune.

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