Governor Torres calls for stronger collaboration with Congressman Sablan during global pandemic

In addition to the numerous requests for federal assistance to stop the spread of COVID-19 in the Marianas, Governor Ralph DLG. Torres has formally sent a letter of recommendations of measures that require congressional action to Congressman Gregorio Kilili Sablan to complement the CNMI’s response to the global pandemic.

In his letter, Governor Torres reaffirmed the need for collaboration to ensure additional federal assistance that require congressional approval.  

“As this government utilizes its limited resources to respond to the global outbreak of the novel coronavirus (COVID-19), it is clear that no other community in the United States is affected by a pandemic of this size and magnitude than the people of the CNMI,” Governor Torres said.

“To respond to both the public health crisis and the unfolding fiscal and economic crisis facing our people, I have unleashed every resource available to the CNMI government to halt the spread of this disease to our people and mitigate the existential threat the loss of financial resources of this size will have on the necessary and essential services of government.”

“The CNMI government and the people we serve need immediate assistance from the federal government. Historically, the CNMI and the territories of the United States have been treated separately than the states of our nation in apportioning the benefits of federal programs. This has impacted the viability of our economies and resulted in a system that has leveled us with dramatically unequal outcomes. This systemic inequality can be remedied if Congress can recognize the exceptionality of our hardships in this crisis and act with an equally unique response.”

Governor Torres then provided an extensive list of recommendations that require necessary action within the US Congress in order to prevent longstanding effects to the Commonwealth.

Settlement Fund

The largest and most concerning obligation of the CNMI is the obligations outlined in the Settlement Agreement with the United States District Court on the CNMI’s pension program. The Settlement Fund that was established as a result of this agreement provides for mandatory minimum payments to the fund to ensure continued benefits for the CNMI government’s retirees. This year, the $44 million obligation is the largest single item of the Commonwealth’s budget.

Efforts have been made to safeguard this payment while allowing flexibility within the CNMI’s finances for this trying period. Through the Constitutionally-authorized Pension Obligation Bond (POB) vehicle, the shifting of this judgment obligation to a long-term debt service obligation would provide greater levels of resiliency to manage cyclical downturns in the economy or unexpected shocks to our community in the form of natural disasters or, as we see now, global pandemics.

The CNMI however, cannot at this time, offer the financial markets the security necessary to obtain affordable financing options. This is due to the structural deficiencies of our economy that are inherent in a location the size and nature of ours, and the persistent risks of external threats such as typhoons, tourism volatility, and negative ramifications of federal government actions and policy.

In meeting these obligations, the Congress can support the alleviation of this large obligation while allowing the CNMI government the opportunity to undertake additional structural reforms. Congressional action should also seek to allow for a federal guarantee to backstop our efforts to obtain financing to support our retirees. A federal guarantee of CNMI pension obligation bonds may give the market greater confidence in lending the necessary resources to the CNMI government so we may prioritize limited funding to supporting other critical public services.

100% Federal Match for Medicaid Funds

Increasing Medicaid funds is a significant lifeline to the majority of our population and enhances the critical access to healthcare services in response to this health crisis. For the CNMI, however, this is both a health crisis and a financial crisis. Increasing the amount available for CNMI Medicaid beneficiaries creates a larger base for which limited local resources are required to match. Even at a reduced local share, increasing the total amount available, while the necessary measure to take, continues to impact the CNMI government’s finances, which should equally be of concern to Congress.

I ask that in addition to increased Medicaid funding to the territories, the territories receive these funds at 0% local match for a duration of time so that the population continues to receive the critical health care services they need while recognizing that the economic collapse we currently experience does not impede that access.

100% Federal Match for FEMA projects

Eliminating the local share for FEMA programs provided in response to Super Typhoon Yutu and Typhoon Mangkhut are necessary to reduce the financial burden on the Commonwealth government, while allowing for economic activity to continue, employment to grow in the related sectors, and for local funds to be appropriated to critical functions of government.

Increase Capital Improvement Program and Technical Assistance Funds to OIA

Allowing for additional funds to be available in the Department of Interior, Office of Insular Affairs budget for the territories under the Technical Assistance Program and to the CNMI under the CIP program, is a necessary request to gain critical access to finances that would enable the CNMI to navigate the evolving circumstances posed by the COVID-19 outbreak. Further, I reiterate my previous request to increase the CIP appropriation to adjust for inflation.

During this time of financial hardship, I request that you push for a similar allowance given to the American Samoan government to use the CIP allotment to cover some operational expenses of the CNMI government. We wish to obtain the freedom to work with OIA in utilizing these funds to offset recurring obligations of the Commonwealth government.

Forgive Federal Student Loans for Taxpayers in the CNMI

What is at the heart of our financial difficulties is a significantly diminished consumer demand due to the collapse of our tourism industry. To increase overall demand, removing the encumbrances on our population’s disposable income is of absolute necessity. Congress should provide an avenue for complete student loan forgiveness for all residents of the CNMI and U.S. Territories who have obtained federal financing for education under 20 U.S.C. 1087(a) et seq.

Provide 100% Federal Cover-Over for the Earned Income Tax Credit

The CNMI needs more external resources to reach the hands of our population in order to mitigate the effects of lost income and wages from the collapse of our tourism industry. Congress should quickly allow for a 100% federal cover-over of Earned Income Tax Credit payments made in the upcoming tax filings so that residents can offset the damage caused to individual finances during this crisis. Anything less than 100% would represent a severe burden to an already over-burdened fiscal scenario and threatens the viability of our government’s financial stability and should be avoided.

Ensure refundable and nonrefundable credits created in response provide a cover-over of funds to the CNMI Treasury

As the CNMI’s representative to Congress, I am asking for your diligence in ensuring that any credit (refundable or nonrefundable) created in response to the COVID-19 outbreak do not negatively impact the CNMI’s finances. As you are aware, as a mirror-code jurisdiction, the CNMI adopts the provisions created within the Internal Revenue Code. If a credit is created to mitigate the economic impacts of this crisis, that credit must contain provisions to provide for a federal cover-over of funds from the U.S. Treasury to the CNMI Treasury. A lack of vigilance in this matter could greatly worsen the CNMI’s financial position and impact our ability to provide critical services to our people.                           

Amend U.S. Public Law 115-218

We must be cognizant of the extent to which this crisis has crippled the CNMI economy. Action should be taken in this opportunity to recognize the economic impact the CW-1 program has on our future economic growth opportunities and amend provisions of the Northern Mariana Islands U.S. Workforce Act that will further impede our economic recovery.

I ask that you include a complete elimination of the requirement for CW-1 employees to return to their country of origin for a 30-day period prior to submitting a renewal petition for the third renewal period. This loss of a quarter of our workforce during this period will result in a tremendous reduction in productivity and revenue for employers and will most certainly lead to even greater business closures in the months ahead.

Further, we must recognize the need to eliminate the prohibition on construction workers under the CW-1 program in its entirety as we will require access to construction trades to undertake development and redevelopment projects to rebuild sectors of our economy that were not impacted by Super Typhoon Yutu, but have been impacted by this outbreak.

Additionally, we must recognize the significance of this downturn in the business cycle and allow for the prevailing wage determination to be eliminated for this fiscal year so that businesses can make the necessary personnel adjustments within the private sector to keep the current level of employment steady. Already, due to the effects of this outbreak, unemployment has surged as businesses are forced to close their doors in an effort to halt the spread of this disease. Increasing the cost of labor at this timeframe will destroy opportunities for employees throughout our labor force and result in further delays in our recovery.

Increase Federal Funding Opportunities for the Public School System

The CNMI government’s revenues do not provide the adequate levels of funding to support our Public School System (PSS). Even after providing 25% of their Constitutionally-mandated share of general revenues, the current economic conditions are not producing sufficient financial resources to ensure adequate funding for our students. There is no way around this fact.

I ask that we do all we can to increase the amount of funding available to our PSS and provide for greater flexibility in the use of these funds so that our school administrators have the resources to provide the best for our students during these difficult times.

Provide Expediency to the Community Development Block Grants for Disaster Recovery (CDBG-DR)

The CNMI must make every effort to push forward with available federal resources to increase economic activity and stimulate employment within our islands. The CDBG-DR program provides these resources, however, states across the nation have recognized the obstacles created by federal law that slow the release of these funds. To provide expediency for the release of this program’s benefits, I request that Congress do the following:

  • Remove the restriction on the use of these funds for purposes tied directly to covered disasters so these resources can be mobilized in support of recovery from this most recent disaster
  • Waive NEPA compliance requirements for activities funded by this program
  • Reduce the standard requirements for Citizen Participation related to the Action Plan

Governor Torres closed his letter with a renewed call for teamwork and collaboration for the greater good of the CNMI during this public health and global economic crisis

“This is a disaster of unprecedented proportions for the CNMI. As such, the needs of the community are constantly evolving. Above all, I ask for your cooperation in continuing productive dialogue as it relates to the needs of our people and this government. This administration is doing its utmost to avert a greater disaster if we do not adequately respond to the multitude of issues presenting themselves today.”

“There’s too much at stake for our people and our islands. However, I am confident that if I can get your support to push these necessary measures in Congress, we will be better positioned to help every individual and family in the Marianas get through these tough and unprecedented times.”

Office of CNMI Governor and Lt. Governor
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