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THE ASSISTANCE PROVIDED BY OTIA, WE HAVE ENTERED INTO A CONTRACT WITH ARTHUR D. LITTLE OF BOSTON, MASSACHUSETTS, A CONSULTING

FIRM, TO ASSIST US TO FINALIZE THE SEVEN YEAR PLAN IN ACCORDANCE
WITH PUBLIC LAW 99-396. THE FINAL PLAN WILL BE SUBMITTED TO
OTIA FOR REVIEW IN JULY OF THIS YEAR. PENDING COMPLETION OF THE

PLAN, IN THE INTERIM, OTIA HAS AGREED TO PROVIDE FUNDING OF CIP
PROJECTS TOTALLING $44,000,000, THE NET AMOUNT AVAILABLE FROM
THE SERIES "1" BOND PROCEEDS OF OCTOBER 1, 1987. OF THIS NET
AMOUNT, $19,500,000 HAS BEEN AUTHORIZED FOR IMMEDIATE
DRAWDOWN. THE INDIVIDUAL PROJECTS ARE IDENTIFIED IN OUR

DETAILED BUDGET SUBMISSION.

THE FISCAL YEAR 1989 OPERATIONS AND CAPITAL IMPROVEMENT BUDGET SUBMISSION FOR THE CNMI IS IN FULL COMPLIANCE WITH THE BALANCED BUDGET PROVISION REQUIRED BY THE CNMI CONSTITUTION, THE APPROPRIATE U.S. LAWS, AND GRANT FUNDS MANAGEMENT RULES AND REGULATIONS. WE HAVE IDENTIFIED THE CAPITAL IMPROVEMENT PROJECTS (CIP) THAT WILL BE FUNDED DURING FISCAL YEAR 1989 FOLLOWING PRUDENT AND TIMELY IMPLEMENTATION SCHEDULES FOR ONGOING PROJECTS, AND ADHERING TO THE CNMI SENATORIAL DISTRICT

CERTIFICATION OF APPROVED PROJECTS.

FISCAL YEAR 1989

THE FEDERAL FINANCIAL ASSISTANCE FOR THE CNMI FOR FISCAL YEAR

1989 IS $40,150,000. THIS BUDGET HAS BEEN SUBMITTED TO THE

COMMITTEE IN COMPLIANCE WITH THE SPECIAL REPRESENTATIVES
AGREEMENT SIGNED ON JULY 10, 1985, AND INCORPORATED BY REFERENCE
UNDER PUBLIC LAW 99-396. THIS AGREEMENT PROVIDED FOR THE U.S.
FINANCIAL ASSISTANCE FOR A PERIOD OF SEVEN YEARS COMMENCING IN
FISCAL YEAR 1986. INCLUDED IN ITS PROVISIONS THE SUMS OF
$15,000,000 AND $25,150,000 FOR OPERATIONS AND CIP RESPECTIVELY
WERE TO BE ALLOCATED IN FISCAL YEAR 1989.

IN ADDITION TO THE PRESIDENT'S BUDGET RECOMMENDATIONS FOR FISCAL YEAR 1989 WHICH WE SUPPORT, OUR UNIQUE CIRCUMSTANCES WARRANT A SPECIAL REQUEST FOR CAPITAL DEVELOPMENT FUNDS ABOVE THE LEVEL RECOMMENDED. PUBLIC LAW 99-396 PLACES EMPHASIS ON CAPITAL DEVELOPMENT FUNDING. THE PLANNED OUTLAYS FOR FISCAL YEAR 1989,

COMBINED WITH THE AUTHORIZED FUNDING THROUGH FISCAL YEAR 1992, WILL NOT MEET THE IMMEDIATE NEEDS IN THE AREAS OF WATER AND

HARBOR .ND WILL ONLY KEEP THE OTHER INFRASTRUCTURE DEVELOPMENTS

AHEAD OF THE ADDED DEMAND RESULTING FROM AN EXPANDING AND

GROWING PRIVATE SECTOR ECONOMY.

U.S. PUBLIC LAW 98-254 AUTHORIZED $15 MILLION FOR WATER SYSTEMS IMPROVEMENTS IN SAIPAN. THIS WAS REAUTHORIZED UNDER PUBLIC LAW 99-662 FOR WATER SYSTEMS IMPROVEMENTS IN THE NORTHERN MARIANA ISLANDS. OF THIS AUTHORIZATION, $4.671 MILLION WAS APPROPRIATED

AND EXPENDED IN CRITICAL WATER SYSTEM IMPROVEMENT NEEDS. THE

BALANCE OF $10.329 MILLION IS NEEDED FOR DESIGN, ENGINEERING AND CONSTRUCTION OF THE CRITICAL WATER SOURCE DEVELOPMENT,

TRANSMISSION AND DISTRIBUTION SYSTEM THROUGHOUT THE CNMI. WE

REQUEST THAT THIS COMMITTEE CONSIDER, AND SUPPORT OUR REQUEST
FOR THE APPROPRIATIONS OF $10.329 MILLION AS AUTHORIZED BY U.S.
PUBLIC LAW 98-254 AND FURTHER REAUTHORIZED UNDER U.S. PUBLIC LAW
99-662. ALTHOUGH WE CONTINUE TO DEVELOP ADDITIONAL GROUNDWATER
SOURCES, WATER CONSUMPTION HAS INCREASED AT A GREATER RATE THAN
ANTICIPATED DUE TO THE RAPID CONSTRUCTION OF ADDITIONAL
RESIDENTIAL, HOTELS AND OTHER COMMERCIAL ESTABLISHMENTS. OUR

WATER PRODUCTION HAS INCREASED BUT IS INSUFFICIENT TO MEET THE
DEMAND DUE NOT ONLY TO ACCELERATED ECONOMIC GROWTH, BUT ALSO DUE
TO EXCESSIVE LEAKAGE AND DEFICIENCIES OF THE WATER TRANSMISSION

AND DISTRIBUTION SYSTEMS. DETAILED PLANS FOR NEW WATER SOURCE

DEVELOPMENT AND PLANS TO REPLACE MAIN TRANSMISSION AND

DISTRIBUTION LINES HAVE BEEN DEVELOPED AND ARE NOW AWAITING

FUNDING FOR CONSTRUCTION. WE REQUEST THAT THIS COMMITTEE

CONSIDER, AND SUPPORT, OUR REQUEST FOR THE APPROPRIATION OF $10.329 MILLION AS AUTHORIZED BY U.S. PUBLIC LAW 98-254 FURTHER

REAUTHORIZED UNDER U.S. PUBLIC LAW 99-662.

THE PROPOSED PROJECTS TO BE FUNDED ARE DETAILED IN ATTACHMENT I OF OUR BUDGET SUBMISSION. AS IN THE PAST, IT IS RECOMMENDED

THAT THESE FUNDS, WHEN APPROPRIATED, BE ADMINISTERED BY THE

DEPARTMENT OF THE INTERIOR. APPROVAL OF THIS REQUEST AND THE APPROPRIATION OF THE FUNDS WILL MOVE US CLOSER TO MEETING THE U.S. PUBLIC HEALTH DRINKING WATER STANDARDS.

THE SAIPAN SEAPORT CONTINUES TO BE A MAJOR THREAT TO CONTINUED ECONOMIC GROWTH. THE PRESENT DOCK WAS CONSTRUCTED BY THE JAPANESE DURING THE LATE 1930'S. IT IS UNSAFE, SMALL, AND

INCAPABLE OF ACCOMMODATING ADDITIONAL SEAPORT TRAFFIC. IF

FURTHER DAMAGED BY STORM OR HEAVY USE, IT COULD FORCE THE CNMI TO AIRLIFT OR LIGHTER SEVERAL HUNDRED THOUSAND TONS OF

MATERIALS, GOODS, SUPPLIES INCLUDING FOOD, WHICH WOULD BE AN IMPOSSIBLE TASK. THE SAIPAN COMPREHENSIVE PORT DEVELOPMENT PLAN

PREPARED BY THE U.S. ARMY CORPS OF ENGINEERS ESTIMATES A COST OF $28,000,000 FOR ONSHORE AND $14,000,000 FOR OFFSHORE

IMPROVEMENTS AND REPAIRS FOR A TOTAL PROJECT DEVELOPMENT COST OF

$42,000,000. IT IS ESTIMATED THAT IF THE OFFSHORE AND ONSHORE PROJECTS ARE CONSTRUCTED ON OR ABOUT THE SAME TIME CONSIDERABLE SAVINGS OF APPROXIMATELY $5 MILLION WOULD BE REALIZED. THIS WILL BE ACHIEVED BY UTILIZING THE OFFSHORE DREDGING SPOILS FOR THE ONSHORE LANDFILL. IN THIS CONNECTION, THE CNMI HAS EARMARKED $12.5 MILLION OF ITS COVENANT CIP FUNDS FOR THE PROJECTS. WE RESPECTFULLY REQUEST THE COMMITTEE TO INCLUDE IN THE FISCAL YEAR 1989 APPROPRIATION, THE $14 MILLION AUTHORIZED UNDER U.S PUBLIC

LAW 99-662, AND AN ADDITIONAL $15.5 MILLION TO FULLY FUND THE PROJECTS. THE CNMI HAS EARMARKED $12,500,000 OF COVENANT CIP

FUNDS FOR PHASE-ONE ONSHORE IMPROVEMENTS COMMENCING EARLY IN

FISCAL YEAR 1989. IN THE EVENT THE PROJECTS ARE NOT UNDERTAKEN

IN A COORDINATED AND TIMELY CONSTRUCTION SCHEDULE, THE COST WILL BE INCREASED BY THE REQUIREMENT OF OBTAINING LANDFILL MATERIALS FROM ONSHORE QUARRIES. THE DETAILS OF THE SAIPAN PORT IMPROVEMENT PROJECTS ARE ENCLOSED AS ATTACHMENT II OF THE BUDGET SUBMISSION. THIS INFORMATION IS FURTHER SUPPORTED WITH THE NECESSARY FEASIBILITY STUDIES AND ENGINEERING DRAWINGS. COMMONWEALTH PORTS AUTHORITY IS READY TO PREPARE BIDDING

THE

DOCUMENTS AND ADVERTISE FOR CONSTRUCTION BIDS, WHEN ADEQUATE

FUNDING IS AVAILABLE.

WE WISH TO THANK THIS COMMITTEE FOR ITS SUPPORT AND INCLUSION OF

THE $12,100,000 OF FUNDS FOR WAR CLAIMS PAYMENT IN PUBLIC LAW

100-202. WE PRAY THAT THE COMMITTEE WILL SUPPORT AN

APPROPRIATION OF THE BALANCE IN THE FISCAL YEAR 1929 BUDGET. WE APPRECIATE THE $8,000,000 APPROPRIATION AS A PARTIAL FUNDING FOR PRIOR YEAR SERVICE BENEFITS. WE REQUEST THE COMMITTEE'S

CONTINUED SUPPORT FOR THE APPROPRIATION OF THE BALANCE AFTER THE

NEW ACTUARIAL STUDY HAS BEEN COMPLETED. IT IS OUR POSITION THAT

WITH THAT APPROPRIATION THE FEDERAL GOVERNMENT WILL HAVE MET ITS

LEGAL OBLIGATION TO FUND THE BENEFITS UNDER THE PROVISIONS OF

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