STATEMENT OF LT. GOVERNOR PEDRO A. TENORIO COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS BEFORE THE SUBCOMMITTEE ON INTERIOR AND RELATED AGENCIES HOUSE APPROPRIATIONS COMMITTEE UNITED STATES CONGRESS APRIL 26, 1988 MR. CHAIRMAN AND HONORABLE MEMBERS OF THIS COMMITTEE. FROM THE NORTHERN MARIANAS, WE BRING YOU GREETINGS AND A WARM "HAFA ADAI". AS ALWAYS, WE APPRECIATE THE INTEREST THAT THE CONGRESS DEMONSTRATES IN THE WELFARE OF OUR COMMONWEALTH. IT IS THROUGH THIS INTEREST AND ASSISTANCE YOU HAVE GIVEN US THAT WE HAVE BEEN ABLE TO DEVELOP OUR ISLANDS CLOSER TO ACHIEVING SELF-SUFFICIENCY. WITH ME TODAY IS OUR FINANCE DIRECTOR, MR. ELOY INOS, AND OUR SPECIAL ASSISTANT FOR PLANNING AND BUDGET AFFAIRS, MR. JAMES RIPPLE. THEY ARE JOINED BY THEIR ASSISTANTS MESSERS PEDRO P. REYES AND JOAQUIN TEREGEYO. ALSO WITH US TODAY ARE MR. ERIC SMITH, OUR ASSISTANT ATTORNEY GENERAL, AND MR. PEDRO SASAMOTO, THE EXECUTIVE DIRECTOR OF OUR COMMONWEALTH UTILITIES CORPORATION. FROM OUR LEGISLATURE AND REPRESENTING THE SENATE IS THE HONORABLE PRESIDENT BENJAMIN T. MANGLONA AND THE HONORABLE PEDRO R. GUERRERO, SPEAKER OF THE HOUSE OF REPRESENTATIVES. TWO YEARS AGO, THE CONGRESS ENACTED AND THE PRESIDENT SIGNED FEDERAL FINANCIAL ASSISTANCE TO THE COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS IN POLITICAL UNION WITH THE UNITED STATES". SECTION 10 OF PUBLIC LAW 99-396 PLEDGED $228 MILLION OF DIRECT GRANT ASSISTANCE TO THE COMMONWEALTH AT GUARANTEED ANNUAL AMOUNTS FOR THE SEVEN FISCAL YEARS BEGINNING IN FY 1986. PUBLIC LAW 99-396 MAKES REFERENCE TO CERTAIN PERFORMANCE STANDARDS TO ACHIEVE EFFICIENCY IN THE DELIVERY OF GENERAL GOVERNMENT OPERATIONS. WE ARE PLEASED TO INFORM THE COMMITTEE THAT WE HAVE MET THESE STANDARDS AND WE PLAN TO CONTINUE THE LAW REQUIRES THE COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS TO 23 PERCENT FOR FISCAL YEAR 1988, WHICH WILL BE FURTHER INVESTMENTS COUPLED WITH LAW AND ORDER THAT ASSURES SAFETY TO PERSONS AND PROPERTY. THE CNMI HAS ESTABLISHED A POLICY TO MAINTAIN A LEVEL OF GOVERNMENT CONSISTENT WITH THE NEED FOR SERVICES DEMANDED BY THE GENERAL PUBLIC AND TO MEET ITS CONSTITUTIONAL OBLIGATIONS. THE EXPENDITURES FOR GOVERNMENT OPERATIONS HAVE INCREASED ONLY SLIGHTLY SINCE THE FIRST FISCAL YEAR OF COMMONWEALTH STATUS IN 1978. BUT THIS INCREASE HAS BEEN FAR LESS THAN THE ACTUAL AND ANTICIPATED RATE OF ECONOMIC AND POPULATION GROWTH. MEASURING THE SIZE OF GOVERNMENT BY COMPARING THE COST OF GOVERNMENT TO THE GROSS ISLAND PRODUCT (GIP) DURING FISCAL YEAR 1979, THE FIRST FULL YEAR OF COMMONWEALTH STATUS, THE COST OF GOVERNMENT WAS 16.4 PERCENT OF GIP. THE SIZE OF THE CNMI GOVERNMENT INCREASED TO 23.4 PERCENT OF GIP IN 1985. THIS CAN BE CONTRIBUTED TO INCREASED OUTLAYS FOR HEALTH CARE, WHEN WE WERE STRIVING FOR CERTIFICATION FOR MEDICAID AND MEDICARE, EXPANDED FUNDING FOR EDUCATION, AND THE IMPLEMENTATION OF A RETIREMENT PLAN THAT WILL PROVIDE ADEQUATE INCOME FOR GOVERNMENT EMPLOYEES DURING THEIR RETIREMENT YEARS. THIS TREND REVERSED IN 1986 AND 1987 WITH THE COST OF GOVERNMENT DECREASING TO 19.2 PERCENT OF GIP. THIS REDUCTION HAS BEEN ACCOMPLISHED THROUGH GRADUAL PRIVATIZATION OF SOME OF OUR UTILITIES, BETTER TRAINING OF GOVERNMENT EMPLOYEES, AND OTHER IMPROVEMENTS IN THE DELIVERY OF PUBLIC SERVICES. ALL UTILITY FUNCTIONS PREVIOUSLY RUN BY OUR EXECUTIVE BRANCH DEPARTMENT HAVE BEEN TRANSFERRED TO THE STATUTORILY CREATED COMMONWEALTH UTILITIES CORPORATION (CUC) EFFECTIVE OCTOBER 1, 1987. AS REQUIRED BY THE GRANT PLEDGE AGREEMENT BETWEEN THE FULL METERING IS ACCOMPLISHED AND SERVICES IMPROVED. WITH THE IMPLEMENTATION OF THE NEW FULL COST RECOVERY RATES AS MANDATED BY THE GRANT PLEDGE AGREEMENT, IT IS ESTIMATED THAT THE ANNUAL ENERGY ASSISTANCE FUNDING FOR ELIGIBLE AND NEEDY FAMILIES. THE SEVEN-YEAR CAPITAL DEVELOPMENT PLAN IS PROGRESSING. WITH |