Northern Mariana Islands
Economy In A Tailspin
CNMI Asks For Federal Aid
| The Commonwealth of the Northern Mariana Islands' government coffer is
nearly empty due to a serious slump in the economy. This has forced budget
cuts in all three branches of the government at a level unseen since the
inception of the Commonwealth in 1978. In fact, these unprecedented budget
cuts forced the government to request an immediate economic bailout of $140
million from the U.S. Congress which include funding for government operations
for the first time in more than 20 years. As we went to press, the CNMI
government is still wrestling with the proposed eight-hour reduction of
work hours pay per period or whether to reduce everyone's salary by 10 percent
across the board. The alternative is reduction-in-force in the more than
5,000 government employees.
When Governor Benigno R. Fitial took office Jan. 9th, he cut the budget by $15 million two weeks later, from $213 million submitted by the previous administration to $198.5 million. The 15th Commonwealth Legislature, sensing that the Commonwealth is in dire financial straits, passed legislation giving Fitial 100 percent reprogramming authority which has a sunset clause that will end once a new budget is enacted. - ADVERTISEMENT - Fitial on Mar. 16 submitted a $127.5 million financial package to CNMI Washington Representative Pete A. Tenorio. Tenorio then added more than $12 million and is requesting a total of $140 million from the U.S. Congress. The extra $12 million is to cover capital improvement projects (CIP) that were deferred from funding in previous years such as the Kagman watershed construction projects and water conservation service. But that's not all that Tenorio is seeking. "I added $60 million (more) as a special request to the Senate Sub-Committee on Water and Energy Development to provide for one time CIP to install three several separate reverse osmosis water purification plants to be strategically located in three separate areas of Saipan," Tenorio told Pacific Magazine. "These facilities will treat our brackish water into potable and drinkable water that we can get out of our household faucets." The CNMI government ceased asking the U.S. Congress for government operations funding in the mid 1980s when Gov. Pedro P. Tenorio was in office, and current Washington Representative Pedro A. Tenorio was his lieutenant governor. Funding for CIP, however, continued under Section 702 of the Covenant which allows the Northern Marianas to work out a seven-year financial package with the U.S. Government. Gov. Fitial said this economic financial bailout is a one-time request only, which will be included under fiscal year 2007 budget. "We don't plan to go in every year and ask for the same amount," Fitial said. Tenorio did not rule out entirely the possibility of requesting funding annually, indicating that this all depends on how fast the CNMI's economy can recover. Fitial says he will also push for a bill that has been in the U.S. Congress for two years to amend what is known as "headnote 3(a)" that allows garments manufactured in the CNMI to enter the U.S. duty-free as long as there is a 50 percent product added on in the CNMI. Now the CNMI is asking for a 70-30 ratio, so that less work is done in the CNMI to make locally produced garments competitive with Asian garment products. The Governor said the U.S. Congress is put on notice that if the 70-30 issue does not pass, it would adversely affect the local garment industry, and drastically reduce the overall CNMI government revenues. "In the event that the garment industry disappears," Fitial said, "we would be coming to the U.S. Congress annually for financial assistance." $60 million is allocated for the Commonwealth Utilities Corporation (CUC) for purchase of fuel, equipment, repairs for generators and parts; Department of Corrections for seed money to operate a 300-room jail facility that has already been completed but not yet opened due to lack of funds, and the Public School System for construction of classrooms, repairs and maintenance among others. The CNMI asked for $67.5 million for capital improvements including Tinian and Rota harbors reconstruction and reconfiguration; Department of Public Health for repairs, maintenance and staffing of the dialysis center; Department of Public Works for closure of the Puerto Rico dump and landfill construction for Tinian and Rota, and Commonwealth Ports Authority for purchase of airport navigational system. Washington Rep. Tenorio submitted nine separate requests to five different committees in the U.S. House of Representatives. In a Mar. 17 press release from his office, Tenorio said he is working closely with Gov. Fitial and members of his cabinet on the CNMI's financial package request. "Normally," he stated, "only members of (U.S.) Congress are allowed to submit appropriations requests to the subcommittees. But I felt that under the circumstances with our economy in such bad shape, that I had to do this." Tenorio said he doesn't expect to get everything they have requested. "We will be lucky if we get some assistance," he added. "Congress is trying to reduce federal spending and is proposing cutbacks in many federal programs. But I am going to try and get every penny I can."
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