The proposals call for the reestablishment of original 702 allocation levels; funding of a training program to aid in the transition of commonwealth employees to the private sector; and reprogramming of Covenant 702 Funds to address long and short-term financial issues.
Fitial’s first proposal calls for an amendment to an existing federal statute (U.S.P.L. 94-241 amended by U.S.P.L. 104-134), to allow for reinstatement of the commonwealth’s entitlement of the indefinite permanent appropriation for capital improvement funding amounting to $27,720,000 annually.
The governor noted that a critical element of the Covenant was for the U.S. to provide financial assistance to the CNMI for the establishment of critical infrastructure needed for the health and safety of the people. According to the Covenant, “The Government of the United States will assist the Government of the Northern Mariana Islands in its efforts to achieve a progressively higher standard of living for its people as part of the American economic community and to develop the economic resources needed to meet the financial responsibilities of local self-government.”
Section 701 of the Covenant recognized that the costs associated with the development of roads; schools; health facilities; and utilities comparable to those available to citizens of the United States residing on the mainland was beyond the limited financial capacity of the commonwealth.
“Undoubtedly, our struggling economy and the current average household incomes are just a couple of the factors why we cannot wholly absorb the costs of infrastructure development,” said Fitial. “Because the NMI consists of a chain of 14 islands, we have three independent infrastructure systems of schools, utilities, airports, seaports, and health centers for the islands of Saipan, Tinian and Rota.”
Due to the reductions in Section 702 funding that have occurred over the last 17 years, the commonwealth has been deprived of $297 million in funding which could have been used to meet infrastructure needs. In order to adequately achieve infrastructure development, Fitial seeks the restoration of Section 702 funding levels to reflect the intent of the Covenant and at the original level of $27.2 million.
The governor also proposes the establishment of a training program to aid in efforts to transition public employees to the private sector. One of the critical steps in restoring the fiscal balance of the local government will be the reduction in the number of public employees. While Fitial agrees that the depressed level of economic activity will make it difficult for the private sector to absorb these workers, he believes that establishing new training programs at Northern Marianas College to provide new skills to the affected employees will enhance their opportunities for reemployment.
“The commonwealth will seek congressional assistance for the funding and structuring of these training programs. These funds will be used to establish programs at NMC; the waiver of all associated fees and tuition for displaced workers; and job placement services. Although, this transition will present a very difficult time for the affected employees and their families, it can also be seen as an opportunity to provide improved skills specifically structured to future employment to a large sector of our islands,” Fitial said.
The last on the governor’s list of proposals aims for the temporary use of Covenant 702 capital improvement project funds to reduce outstanding long-term debt and address the immediate financial needs of the commonwealth.
Due to the complexity of the commonwealth CIP’s and federal regulations, implementation requires three steps: environmental review, design, and construction.
Thus, complete project implementation often takes three years. In spite of the complexities of these programs, there has been significant progress in the implementation of Section 702 CIP’s.
“I am pleased to report that in the past 14 months, 44 projects have been brought under contract for implementation and we project an expenditure level of $11,235,541 for 2011, representing 112 percent expenditure of the annual allocation. For 2012, as we move into the construction phase of these projects I anticipate an expenditure level of $19,226,202 which represents an expenditure rate of 202 percent of the annual allocation. The current CIP program has established the most aggressive 702 CIP implementation program in the history of the commonwealth,” said Fitial.
Still, he notes that during the three-year implementation period of projects, a large portion of dedicated funds sit dormant until the most costly element — construction or procurement, occurs in the final year.
In view of this, the Fitial administration proposes that such Section 702 funds be used to reduce long-term debt and pay for critical commonwealth services such as the health, law enforcement and compliance with U.S. Environmental Protection Agency requirements associated with Commonwealth Utilities Corp. operations.
“This proposal has also been considered by the Commonwealth Legislature and they have adopted a resolution in support of it. Together with the local leadership and that of our delegate in Washington, I am confident we can accomplish our goals to improve the quality of life for our people,” stated Fitial.
Aside from submitting his proposal to Sablan, Fitial had also communicated these issues with Assistant Interior Secretary for Insular Affairs Tony Babauta and Nik Pula, director of the Office of Insular Affairs.
Fitial also met with Speaker John Boehner, R-Ohio, before the close of the National Governors Association Winter Meeting.
The governor said Boehner’s office has vowed to provide support to the commonwealth and the other territories.
