COMPACT-IMPACT COSTS: U.S. OWES CNMI OVER $100 MILLION

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By Aldwin R. Fajardo

SAIPAN, Northern Mariana Islands (June 12, 2000 – Saipan Tribune)---The United States owes the CNMI government over $100 million for reimbursement of the Compacts of Free Association’s fiscal impacts on local coffers between 1986 to 1999, according to records from Capitol Hill.

A summary of the Compacts' estimated financial impacts indicated that the Commonwealth government contributes an average of $15 million a year to subsidize various social services delivered to citizens of the three countries signatory to the agreements with the U.S. – the Federated States of Micronesia, the Marshall Islands and Palau.

Between 1986 and 1998, the CNMI Department of Commerce estimated that the financial impact of the agreements between the U.S. and the Freely Associated States was between $80 million and $108 million.

CNMI records disclosed that citizens of the Federated States of Micronesia, the Marshall Islands and Palau represented about 4 percent of the total Northern Marianas population in 1998.

Government estimates indicated there were at least 3,118 citizens of the Federated States of Micronesia, Marshalls and Palau 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 to the islands include health, education, safety, and youth services.

The Compact agreement with the Federates States of Micronesia and the Republic of Marshall Islands started in 1986. The agreement with the Republic of Palau was implemented in 1994.

The Commerce Department said the CNMI government has incurred between $43.7 million and $71.7 million in services provided FAS citizens between 1986 and 1995.

In 1986, a Hay Group study said the migration of FAS citizens to the Northern Marianas cost at least $7.5 million to 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 to $108 million Compact-Impact costs between 1986 and 1998, the federal government has reimbursed the CNMI government only $2.792 million, in grants. Those grants were released in 1992, 1993, 1994 and 1995.

In 1992, the CNMI government received $394,960 in 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 reimbursement funds to Guam, but nothing for the CNMI since 1996.

Gov. Pedro P. Tenorio disclosed that the CNMI has been billing the United States government for Compact-Impact reimbursements since the 1980's, but nothing has been finalized so far. He said that the figure has already increased.

The U.S. Congress openly recognized that the federal government should reimburse the money spent by the CNMI in accommodating migrants from the Federated States of Micronesia, the Marshall Islands and the Republic of Palau.

Under the Compacts of the Free Association, residents of Pohnpei, Yap, Chuuk, Palau and the Marshall Islands can migrate to U.S. island-territories such as Guam and the CNMI, as well as to the state of Hawai‘i and the U.S. mainland, virtually without restriction.

The agreement guarantees the provision of education, medical and other state benefits to the migrating Micronesians, which are to be shouldered by the local governments and will, in turn, be reimbursed by the United States.

Instead of appropriating money to reimburse the Commonwealth's expenses in hosting FAS citizens, President Clinton has proposed a $5 million cut in 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 a more than 50 percent increase in grants to mitigate the impact of Micronesian migration on the island.

Guam Senator Carlotta Leon Guerrero had spearheaded a lawsuit against President Clinton over the Compact-Impact reimbursement issue. CNMI and Hawai‘i are also respondents to the lawsuit.

The lawsuit was initially decided in favor of Guam, Hawai‘i and the CNMI at the district court in Guam, which has been appealed.

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

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