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Pacific Islands Development Program, East-West Center

With Support From Center for Pacific Islands Studies, University of Hawai‘i

U.S. ‘Sequester’ Poses Significant Problems For CNMI
Federal reductions would cut police, education and health funds

By Haidee V. Eugenio

SAIPAN, CNMI (Saipan Tribune, Feb. 22, 2013) – Millions in federal funds that the Commonwealth of the Northern Mariana Islands depends on for health, education, other programs, and jobs are at risk if "sequestration"-a series of automatic, across-the-board cuts to U.S. government agencies totaling $1.2 trillion over 10 years-takes effect on March 1, posing quite a challenge to the three-day-old Inos administration.

Simply put, budgets of most federal government programs and agencies, some of which provide funding to CNMI programs, will shrink by Friday next week.

For example, the CNMI could lose more than $1.65 million in Title I grant to its education district, and over $256,000 in "Idea Special Education" grants.

A U.S. House Appropriations Committee Democrats report on Feb. 13 also estimates that the CNMI faces a loss of more than $101,000 in early childcare assistance, assuming a 5.3-percent reduction.

Delegate Gregorio Kilili C. Sablan (Ind-MP) said yesterday that the potential impact on the CNMI could involve "a few million dollars"-money that the islands cannot afford to lose at this time.

The U.S. Office of Management and Budget recently calculated that sequestration will require an annual reduction of roughly 5 percent for nondefense programs and roughly 8 percent for defense programs.

But Sablan said given that these cuts must be achieved over only seven months instead of 12, the effective percentage reductions will be approximately 9 percent for nondefense programs and 13 percent for defense programs.

"These large and arbitrary cuts will have severe impacts across the government. We are looking at a 9-percent cut to federal funding for law enforcement, education, health and other programs the Northern Mariana Islands depend on," Sablan told Saipan Tribune.

He added that former Assistant Secretary of Interior Anthony Babauta "successfully shielded huge reduction of funds for the Office of Insular Affairs from the sequester."

Newly installed Gov. Eloy S. Inos, along with Lt. Gov. Jude U. Hofschneider, said yesterday that the administration is preparing for sequestration's impact on the CNMI, which they say could lead to temporary job loss and program funding cuts unless they are able to "cushion the blow" by reprogramming funds and other plans.

But Inos also recognizes that the clock is ticking to come up with an immediate solution because of the March 1 effective date of sequestration unless the U.S. Congress does something to avert it.

Inos, who oversaw finances when he was lieutenant governor under the Fitial administration, said he had tasked the grants management office to do a quick inventory of all the grant funds that the CNMI has, the number of people employed using those funds, and the projects that are at risk.

"If their funding comes to a screeching halt, then we need to have some alternative plans to make sure that at least they carry out for a brief period of time until we find a solution," he told reporters after he and Hofschneider emerged from their first meeting with Cabinet secretaries and agency directors at the Emergency Operations Center on Capital Hill yesterday.

Inos said when they figure out the services that could be compromised, they will be able to determine the amount they need to reprogram, if any.

"We just have to be prepared. We don't want to have a situation where people all of a sudden will be off the payroll because there's no more funding. We need to do proper transition planning and so forth so that it's not going to be a shock to these folks," he added.

The U.S. Congress put off the sequester until March 1 instead of Jan. 1 as part of a last-minute fiscal cliff deal.

More than $500 billion will be cut from the Department of Defense and other national security agencies.

The rest is cut on the domestic side including national parks, federal courts, the FBI, food inspections and housing aid.


According to Department of Defense (DoD) officials, the sequestration would prevent the department from mobilizing forces in a way that ensures continued peace and stability in the Asia-Pacific.

At a Feb. 13 committee hearing by the House Armed Services Committee on the impacts of sequestration on defense spending, Deputy Secretary Ashton Carter said the sequester would also hamper U.S. efforts to provide humanitarian assistance and disaster recovery. He said the Asia-Pacific region has thrived for more than 70 years and is full of many important trading partners.

Gen. James Amos, Commandant of the U.S. Marine Corps, also weighed in, saying the Marines remain committed to going to Guam and reducing its presence in Okinawa. He noted, however, that the impact of sequestration on the Pacific realignments would be significant.

Delegate Madeleine Z. Bordallo (D-GU) said it is incumbent on Congress to act now to find a balanced and comprehensive solution to prevent a full sequester from occurring. "Although it remains unclear what the exact impact would be, sequestration would impact the implementation of the military buildup [in] Guam."

"It is important to note that sequestration would affect all government spending, including domestic discretionary spending, with 60 percent of the cuts absorbed by DoD alone. These deep cuts would interrupt government operations and have adverse implications for federal civilian employees," Bordallo said. "It is clear that sequestration would have lasting effects on the readiness of our Armed Forces."

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