[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
FISCAL YEAR 2021 BUDGET REQUEST FOR DEPARTMENT OF THE INTERIOR'S
OFFICE OF INSULAR AFFAIRS
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OVERSIGHT HEARING
BEFORE THE
COMMITTEE ON NATURAL RESOURCES
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
Tuesday, February 11, 2020
__________
Serial No. 116-30
__________
Printed for the use of the Committee on Natural Resources
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://www.govinfo.gov
or
Committee address: http://naturalresources.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
39-743 PDF WASHINGTON : 2020
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COMMITTEE ON NATURAL RESOURCES
RAUL M. GRIJALVA, AZ, Chair
DEBRA A. HAALAND, NM, Vice Chair
GREGORIO KILILI CAMACHO SABLAN, CNMI, Vice Chair, Insular Affairs
ROB BISHOP, UT, Ranking Republican Member
Grace F. Napolitano, CA Don Young, AK
Jim Costa, CA Louie Gohmert, TX
Gregorio Kilili Camacho Sablan, Doug Lamborn, CO
CNMI Robert J. Wittman, VA
Jared Huffman, CA Tom McClintock, CA
Alan S. Lowenthal, CA Paul A. Gosar, AZ
Ruben Gallego, AZ Paul Cook, CA
TJ Cox, CA Bruce Westerman, AR
Joe Neguse, CO Garret Graves, LA
Mike Levin, CA Jody B. Hice, GA
Debra A. Haaland, NM Aumua Amata Coleman Radewagen, AS
Joe Cunningham, SC Daniel Webster, FL
Nydia M. Velazquez, NY Liz Cheney, WY
Diana DeGette, CO Mike Johnson, LA
Wm. Lacy Clay, MO Jenniffer Gonzalez-Colon, PR
Debbie Dingell, MI John R. Curtis, UT
Anthony G. Brown, MD Kevin Hern, OK
A. Donald McEachin, VA Russ Fulcher, ID
Darren Soto, FL
Ed Case, HI
Steven Horsford, NV
Michael F. Q. San Nicolas, GU
Matt Cartwright, PA
Paul Tonko, NY
Jesus G. ``Chuy'' Garcia, IL
Vacancy
David Watkins, Chief of Staff
Sarah Lim, Chief Counsel
Parish Braden, Republican Staff Director
http://naturalresources.house.gov
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CONTENTS
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Page
Hearing held on Tuesday, February 11, 2020....................... 1
Statement of Members:
Gonzalez-Colon, Hon. Jenniffer, a Resident Commissioner in
Congress from the Territory of Puerto Rico................. 3
Sablan, Hon. Gregorio Kilili Camacho, a Delegate in Congress
from the Territory of the Northern Mariana Islands......... 1
Statement of Witnesses:
Bryan, Jr., Hon. Albert, Governor, U.S. Virgin Islands....... 5
Prepared statement of.................................... 7
Questions submitted for the record....................... 14
Guerrero, Hon. Lou Leon, Governor, Guam...................... 24
Prepared statement of.................................... 27
Questions submitted for the record....................... 29
Palacios, Hon. Arnold I., Lieutenant Governor, Northern
Mariana Islands............................................ 15
Prepared statement of.................................... 16
Questions submitted for the record....................... 19
OVERSIGHT HEARING ON FISCAL YEAR 2021 BUDGET REQUEST FOR DEPARTMENT OF
THE INTERIOR'S OFFICE OF INSULAR AFFAIRS
----------
Tuesday, February 11, 2020
U.S. House of Representatives
Committee on Natural Resources
Office of Insular Affairs
Washington, DC
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The Committee met, pursuant to notice, at 2:09 p.m., in
room 1324, Longworth House Office Building, Hon. Gregorio
Kilili Camacho Sablan [Vice Chair of the Committee for Insular
Affairs] presiding.
Present: Representatives Sablan, Cox, Cunningham, Soto,
Case, San Nicolas; and Gonzalez-Colon.
Also present: Representative Plaskett.
Mr. Sablan. I apologize, I was at a markup that was
supposed to last an hour-and-a-half, and it lasted 4 hours. The
Committee will now come to order.
The Committee is meeting today to hear testimony on the
Policy Priorities of the Trump Administration's Fiscal Year
2021 Budget for the Insular Areas.
Under Committee Rule 4(f), any oral opening statements at
hearings are limited to the Chairman and the Ranking Minority
Member.
Therefore, I ask unanimous consent that all other Members'
opening statements be made part of the hearing record if they
are submitted to the Clerk by 5 p.m. today.
Hearing no objection, so ordered.
I also ask unanimous consent for the gentlelady from the
U.S. Virgin Islands--she will be here--Ms. Plaskett, to sit on
the dais and question the witnesses at today's hearing.
Without objection, so ordered.
I now recognize myself for my opening statement.
STATEMENT OF THE HON. GREGORIO KILILI CAMACHO SABLAN, A
DELEGATE IN CONGRESS FROM THE TERRITORY OF THE NORTHERN MARIANA
ISLANDS
Mr. Sablan. Good afternoon again, everyone, and thank you
very much for joining us this afternoon. Thank you to the
governors, Governor Guerrero, Governor Bryan, and Lieutenant
Governor Palacios, for being here for this oversight hearing on
the President's budget proposal for Fiscal Year 2021.
I know Washington is a long way from home and you will have
to make best use of your limited time here. Obviously, you
think it is important to let Congress know what your financial
needs are for the coming fiscal year because Congress
appropriates the money.
I want you to know that the Office of Insular Affairs was
also invited to be here to explain and defend the President's
budget, and they declined. And given the way they wanted to cut
your funding, I can understand why they may not want to be
here. So, we will proceed without them.
I would like to take a quick look back before we talk about
the future. We made some important decisions for you in Fiscal
Year 2020. When the governors were here a year ago, we were on
the brink of a Medicaid cliff. Your Obamacare money was running
out, and the long-standing goal of state-like was unfulfilled.
That has all changed.
You wanted a Federal local Medicaid match like a state's.
Congress gave you an 83-17 Federal-local match, better than any
state gets. You wanted unlimited Federal money like a state. I
can't say we have unlimited money, but in the case of the
Marianas, for example, Congress provided $60 million. That is
nine times more than current law, exactly what the Governor's
office told us would cover their costs.
What we did not get you is a permanent fix. Congress was
ready to give you 6 years of funding. I understand that the
White House is responsible for cutting that back to 2 years. It
was the last item on the agenda before the President said he
may consider threatening to veto the budget if 6 years of
funding for Medicaid for Puerto Rico and other territories are
in there.
So, now the ball is in your court. Congress wants you to
have more Medicaid money, and we are willing to give you a very
generous FMAP, just what the governors are asking for. But I
have to caution you--if the insular areas do not use this
Medicaid money with a Federal-local match better than any
state, then it will be very difficult for your Representatives
here in Congress to make the case for continuing Medicaid
funding at this level beyond 2 years.
Please, you are getting exactly what you asked for, so use
it or it will be very difficult to keep this level of medical
funding.
I would also like to note that all the insular areas are in
recovery mode. Hurricanes in the Caribbean, typhoons and
cyclones in the Pacific have had a devastating impact on
individuals, families, public infrastructure, and your
economies. Congress has provided, literally, billions of
dollars for the recovery. In last year's Disaster Relief Act,
we set aside $129 million specifically for the Northern
Marianas' Yutu recovery. The Marianas are getting $249 million
in CDBG-DR funds. And all the insular areas have access to
recovery money from the EDA, the Agriculture Department, the
Army Corps of Engineers, and other Federal agencies.
I want to let you know--and I think I can speak for all the
insular Representatives--we are tracking the money Congress
appropriated for you. If you are having any problems getting
that money, if agencies are slow to respond or put up any
roadblocks, let us know, please. We want you back on your feet
as quickly as possible.
During your statements today and during questioning, there
will be ample opportunity to discuss the specifics of the
President's budget.
I will now turn to the distinguished gentlelady from Puerto
Rico, the Ranking Member, for her opening statement.
STATEMENT OF THE HON. JENNIFFER GONZALEZ-COLON, A RESIDENT
COMMISSIONER IN CONGRESS FROM THE TERRITORY OF PUERTO RICO
Miss Gonzalez-Colon. Thank you, Chairman, and I welcome all
the governors here. For me, it is a pleasure to have governors
coming from far, from the Pacific and the Caribbean, to join us
today. And I do know personally how difficult it is, as a
territory, to fight a lot of the issues that have us together.
I want to say welcome to our friend, Madeleine Bordallo, as
well, always a Member and Representative of Guam. And, of
course, our current Congressman from Guam, Mr. San Nicolas, and
Mr. Sablan, and the Lieutenant Governor of the Northern Mariana
Islands, as well as the Governors of the Virgin Islands and
Guam. I am happy to have you here.
Today, we intend to analyze the priorities and other
efforts contained in the President's fiscal budget 2021 request
for insular areas, which used $89 billion for current
appropriations, and $619 million with permanent funding.
These represent a $19 million decrease over the Fiscal Year
2020, but I think it is important to establish that this budget
was just presented yesterday. So, many of us haven't even
finished reading how that will impact the whole Federal access
to many programs. And, of course, every budget that is
presented by the President during the last 4 years never has
been approved after it has come to Congress. So, this is the
reason we want to have your input in many of those areas, so we
can work together.
And in order to have something done, it needs to be in a
bipartisan way. In that sense, the budget was released, and
there is still much to review. I realize it may be somewhat
difficult to comment in detail without having had more time to
analyze this budget. I do, however, welcome the discussion to
hear each island's top priorities. And I think that is one of
the most important things.
As Members of Congress representing the islands, we tried
to get some common agenda in the past, and we have been
effective in doing so.
The Office of Insular Affairs within the Department of the
Interior is responsible for carrying out responsibilities for
all U.S. territories, except Puerto Rico. These are American
Samoa, Guam, the Northern Mariana Islands, and the U.S. Virgin
Islands.
And, in addition to providing assistance to these four
territories, this office is charged with overseeing Federal
assistance under the Compact of Free Association, which the
United States has signed with the three freely associated
states: the Republic of Palau, the States of Micronesia, and
the Republic of the Marshall Islands.
Given the geographical location and size of the four small
U.S. territories and the freely associated states, each one
faces unique challenges. These can be in the form of economic,
health, healthcare quality, infrastructure, and many others. As
we know too well in Puerto Rico, these challenges are only
exacerbated by unequal treatment Americans receive in
territories. Multiple Federal programs such as Medicaid,
Medicare, SSI, among many other programs, treat us differently.
And that is the reason we all, every time we can, work together
to achieve equality in many areas.
My hope is that we can work together to address each
island's priorities in an efficient way that is beneficial to
both the taxpayers' money and the residents that call the U.S.
territories home. With your help, Mr. Chairman, I would like to
continue the Committee review of the Fiscal Year 2021 Office of
Insular Affairs budget request with the Department of the
Interior. Having their participation in this process will be
crucial.
Again, I want to say thank you, and I look forward to
hearing your testimony. I think there are a lot of things that
can be done.
I know one of the issues that is not in the purview of
today's hearing is the cockfighting ban. And we just talked
about that before the hearing. We also face the same situation.
For Puerto Rico, this is an issue of economic development,
because of the jobs that are created, the tax revenues that are
created, as well.
I know that you may not be prepared today to discuss that
issue, but I will be more than happy to receive your comments
in writing regarding those to see how we can push together, not
just a Federal provision of that ban. Some states--in our case,
we just state-legislated to try to mediate these, but I know
that will not be enough.
With that, I yield back.
Mr. Sablan. Thank you very much. Let me introduce the
witnesses. We have the Honorable Albert Bryan, Jr., Governor of
the United States Virgin Islands.
Welcome, Governor.
We have the Honorable Arnold I. Palacios, Lieutenant
Governor for the Commonwealth of the Northern Mariana Islands.
Lieutenant Governor, welcome.
And, of course, the Honorable Lou Leon Guerrero, Governor
of Guam.
Welcome, Governor.
I would also like to acknowledge the presence of a former
colleague, Ms. Bordallo, and also the presence of--if I am not
mistaken, I can see him--he is the former staff director for
Insular Affairs under this Committee, Mr. Babauta, and also the
Honorable Mr. Babauta, former Assistant Secretary of the
Interior.
Welcome.
Under our Committee Rules, oral statements are limited to 5
minutes, but your entire statement will appear in the hearing
record.
The lights in front of you will turn yellow when there is 1
minute left, and then red when time is expired.
After the witnesses have testified, Members will be given
the opportunity to ask questions.
Let me start with Governor Bryan of the United States
Virgin Islands.
You have 5 minutes, sir. Press the button in front of you,
please.
STATEMENT OF THE HON. ALBERT BRYAN, JR., GOVERNOR, U.S. VIRGIN
ISLANDS
Governor Bryan. Thank you. Good afternoon, Chairman, Vice
Chairman Sablan, and Committee members. Thank you for the
opportunity to appear here today to outline the priorities of
the U.S. Virgin Islands, and the important role of the
Department of the Interior's Office of Insular Affairs in
helping us achieve our goals.
The timing of this hearing is fortuitous. As we recover
from the widespread damage and destruction caused by the two
devastating Category 5 hurricanes that hit in late 2017, we
must focus on fundamental, longer-term issues that need to be
addressed by Congress, including your Committee and OIA.
Further, as recent experiences in Puerto Rico have shown,
the United States must recognize its special responsibilities
for the U.S. territories and the potentially deleterious
effects that Federal policies can have on the territories and
U.S. citizens therein. The United States must face those
responsibilities head on and commit sufficient Federal
resources to fulfill its responsibilities to the territories on
a sustainable basis.
The Virgin Islands believes the time is right for a
comprehensive revision of the territory's economic relationship
with the United States, one that will place the territory on a
path to true and sustainable fiscal health.
As part of its long-standing tax relationship with the
Virgin Islands, Congress has historically provided that all
Federal taxes on all products, including rum, manufactured in
the Virgin Islands be returned, or covered-over, to the local
Treasury. Rum tax revenues covered-over to the Virgin Islands
constitute a major source of funding for the territory, and are
used to finance essential public services, and to securitize
the territory's bonds and facilitate the territory's future
access to the capital markets.
The timing of these temporary extensions often causes
budget planning problems and uncertainties for the Virgin
Islands. The Virgin Islands request that OIA and the Committee
support the Virgin Islands' efforts in Congress to make the
temporary rate permanent, and thereby avoid the need for
periodic, often last-minute, increases.
The cover-over provision that results in the Virgin Islands
receiving the Federal tax revenues on rum products applies
broadly to tax revenues generated by all articles produced in
the Virgin Islands and transported to the United States. From
the mid-1960s through 2012, a major oil refinery operated on
the island of St. Croix and generated substantial Federal
excise taxes, which, on the face of the governing statute,
should have been recovered to the Virgin Islands Treasury in
the same manner as rum excise taxes.
The Virgin Islands request that OIA and the Committee work
with other committees to effect passage of an amendment that
finally seals and returns Section 7652 to its intended function
and requires that fuel excise taxes be included in the cover-
over program.
The Federal Earned Income Tax Credit, or the EITC, and the
Child Tax Credit are intended to encourage and foster work
among low-income individuals. The Federal Government
effectively funds their programs for all states and the
District of Columbia through the IRC. While a worthy goal,
these tax credits have unintended and unfair consequences in
the Virgin Islands, as well as other territories, due to its
status as a mirror tax code system. Unlike in the states and
DC, the cost of the Earned Income Tax Credit is borne solely by
the fiscally stressed Virgin Islands and Guam, a cost which
neither territory can bear. As a matter of fairness, and to
avoid imposing an onerous financial burden on the local
Treasury, Congress should provide for Federal reimbursement.
The Virgin Islands would like to thank this body for all of
the work that it has done to secure Medicaid to thousands of
Virgin Islanders. But that issue still remains unresolved.
We also have many requests into Congress in terms of
providing for visa waivers to make us more sustainable, in
terms of allowing visitors not only for medical needs, but for
tourism. And we are asking for the support in this in the
homeland security.
Our infrastructure has stayed at the same level for Federal
highway funds for over 30 years now and continues to be an
issue for Virgin Islanders.
Last, I would like to say the Insular Areas Act expressed a
policy of Congress that the four small territories should be
provided certain flexibilities under Federal grant programs.
Importantly, the Act, as amended, mandates that the Department
of the Interior shall waive matching requirements for all
insular areas under all of its grant programs and requires all
other departments and agencies to waive any requirement for
local matching.
However, FEMA has not waived the local match for most
categories of public assistance in response to Hurricanes Irma
and Maria, requiring that the Virgin Islands come up with
millions of dollars that are still being supplied by a Federal
mandate under the CDBG-DR.
The GVI proposes that the Act be amended to provide a
statutory presumption in favor of waiving the local share, to
foster economic development and stability, and to update the
relationship of the territories to the Federal Government.
There is no other land state in the Union that has as much
Federal land, percentage-wise, as the Virgin Islands. The
Office of Insular Affairs owns 66 percent of St. John, yet our
payment in lieu of taxes is a mere $30,000, compared to--that
should be closer to $30 million. Just on a glance, the Federal
Government owns more than 14 percent of the land in the Virgin
Islands, and all we get is a 30 percent.
Mr. Chairman, thank you for the opportunity to testify
before this Committee. We have submitted a full written
testimony that expands on the subject matter that I have
briefly discussed. While many of these issues are long-
standing, we look forward to working with this Committee and
the Office of Insular Affairs to bring final resolution to
these matters.
Our goal is not simply to survive, but our goal is to
thrive. Thank you.
[The prepared statement of Governor Bryan follows:]
Prepared Statement of the Honorable Albert Bryan, Jr., Governor, U.S.
Virgin Islands
Good afternoon Chairman Grijalva, Ranking Member Bishop, and
Committee members. Thank you for the opportunity to appear here today
to outline the priorities of the U.S. Virgin Islands and the important
role of the Department of the Interior's Office of Insular Affairs
(``OIA'') in helping us achieve our goals.
The Committee on Natural Resources (the ``Committee'') is primarily
responsible for Federal legislation impacting the U.S. Virgin Islands
and the other U.S. Territories. The Committee also has an important
role in working with other committees to ensure that those committees,
in developing and considering Federal legislation, fully consider the
Territories' unique status and needs and the potential impact of
legislation on the Territories. The Committee also oversees OIA, which
is the Federal agency tasked with assisting the Territories in
promoting sustainable economic growth, fostering development, and
otherwise improving the lives of their citizens, and acting as a
liaison between the Territories and the Federal Government.
The timing of this hearing is fortuitous. As we recover from
widespread damage and destruction caused by the two devastating
Category 5 hurricanes that hit in late 2017, we must focus on
fundamental, longer term issues that need to be addressed by Congress,
including your Committee, and OIA. Further, as recent experiences in
Puerto Rico have shown, the United States must recognize its special
responsibilities for the U.S. Territories and the potentially
deleterious effects that Federal policies can have on the Territories
and the U.S. citizens therein. The United States must face those
responsibilities head-on and commit sufficient Federal resources to
fulfill its responsibilities to the Territories on a sustainable basis.
The Virgin Islands believes the time is right for a comprehensive
revision of the Territory's economic relationship with the United
States--one that will place the Territory on the path to true and
sustainable fiscal health. I will focus today on issues of critical
importance to the economic development and fiscal stability of the
Territory, along with specific recommendations for action by the
Committee and OIA.
taxes
A logical starting point in considering how the Federal Government
can help create the investment climate for sustainable economic growth
is the critical role of Federal tax policy. Federal tax policy has an
outsized impact on the economy of the Virgin Islands--a positive impact
when it is designed and applied properly, and a negative impact when it
is not. As discussed below, Congress and OIA have a critical role to
play in how the Federal tax code impacts our Territory, our economy,
and our quality of life.
rum tax legislation
As part of its long-standing tax relationship with the Virgin
Islands, Congress has historically provided that all Federal taxes on
all products--including rum--manufactured in the Virgin Islands be
returned, or ``covered-over,'' to the local treasury. Rum tax revenues
covered-over to the Virgin Islands constitute a major source of funding
for the Territory, and are used to finance essential public services
and to securitize the Territory's bonds and facilitate the Territory's
future access to the capital markets. Permanent law provides that
$10.50 of the $13.50 per proof gallon tax is covered-over to the Virgin
Islands, and $0.25 per proof gallon is retained by the U.S. Treasury.
Cover-over of the remainder ($2.75 per proof gallon), however, has
required a series of temporary fixes by Congress. Most recently, after
Hurricanes Irma and Maria, Congress extended the temporary rate through
December 31, 2022.
The timing of the temporary extensions often causes budget planning
problems and uncertainties for the Virgin Islands. The Virgin Islands
requests that OIA and the Committee support the Virgin Islands' efforts
in Congress to make the temporary rate permanent and thereby avoid the
need for periodic (often last-minute) increases.
fuel tax legislation
The ``cover-over'' provision that results in the Virgin Islands
receiving the Federal tax revenues on rum products produced in the
Virgin Islands applies broadly to tax revenues generated by all
``articles produced in the Virgin Islands and transported to the United
States.'' 26 U.S.C. Sec. 7562(b). From the mid-1960s through 2012, a
major oil refinery operated on the island of St. Croix and generated
substantial Federal excise taxes, which--on the face of the governing
statute--should have been covered-over into the Virgin Islands treasury
in the same manner as rum excise taxes. In the late 1970s, the
governments of the Virgin Islands and Puerto Rico brought suit against
the United States seeking to compel the ``cover-over'' of gasoline
excise taxes into their respective treasuries. The Virgin Islands
initially prevailed in the U.S. District Court and was awarded hundreds
of millions of dollars in gasoline excise tax revenues.
On appeal, however, the Court of Appeals for the District of
Columbia Circuit reversed, thus extinguishing the Virgin Islands' legal
claim as well as any basis for settlement. The D.C. Circuit based its
decision to reject the Virgin Islands' claim on a judicially created
distinction that--despite the statute's unambiguous application to
``all taxes imposed by'' the United States ``on articles produced in
the Virgin Islands and transported to the United States''--limited the
types of Federal taxes that were subject to cover-over. The GVI sought
Supreme Court review of the decision but was denied. Under the
principles of res judicata, the D.C. Circuit's decision is final and
cannot be re-litigated.
Congress, however, has the power to legislatively overturn the
judiciary's decision, which essentially re-wrote the cover-over statute
to limit its application in ways that cannot be justified under the
statute's plain language. An amendment to Section 7652(b) clarifying
the scope of the cover-over program would be sufficient to right this
historical wrong and return the cover-over provision to its original
purpose and effect.
Restoring the cover-over provision to its original breadth would
provide the Virgin Islands with a critical source of revenue that would
play a key role in returning the Territory to long-term fiscal health.
The St. Croix refinery, idled in 2012, is set to re-open in 2020 and
resume refining operations on a smaller, environmentally friendlier
scale. Because the refinery has not been operating, the excise tax
revenue it generates will be new revenue, such that covering those
revenues into the GVI treasury will not deprive the Federal Treasury of
any existing revenue streams.
The Virgin Islands requests that OIA and the Committee work with
other committees to effect passage of an amendment that returns Section
7652(b) to its intended function and requires that fuel excise taxes be
included in the cover-over program.
economic growth incentives
Federal tax policy can play a critical role in creating the
investment climate to help the Territory generate sustainable economic
growth, create jobs, and improve its long-term fiscal health. In
furtherance of these goals, the Virgin Islands requests that the
Committee and OIA support fair and balanced tax rules for the
Territories, including the possessions tax rules enacted as part of the
American Jobs Creation Act of 2004 (``Jobs Act'') and the ``GILTI''
rules enacted as part of the 2017 Tax Act.
Legislation to Modify the Qualified Income Rules and Provide Parity
Among Territories in Treatment of Capital Gains
The Virgin Islands and other Territories face unique economic
challenges as a result of their geographic distance, lack of natural
resources, and general small island limitations on scale. In the case
of the Virgin Islands, these challenges have been exacerbated by harsh
income sourcing rules implementing the possessions provisions of the
Jobs Act. As a result, the once-promising Virgin Islands economic
development programs dramatically slowed, and the Territorial
government has been left with few tools to address its stagnant private
sector economy and resulting fiscal problems.
The sourcing rules, particularly whether income may be deemed
``effectively connected'' with a V.I. trade or business (``V.I. ECI''),
should be based on established tax precedents--specifically, the
principles embodied in Treasury's model income tax treaty. At the very
least, even under Treasury's narrower definition of V.I. ECI, Treasury
should not discriminate against U.S. source income (in favor of foreign
source income) in the determination of V.I. ECI. Accordingly, Congress
should modify the U.S. income limitation in Internal Revenue Code
(``IRC'') Section 937 to exclude only U.S. source income generated by
activities in the United States (attributable to a U.S. office or fixed
place of business).
In addition, an anomaly in the Code allows Puerto Rico to provide
more favorable treatment of capital gains from the sale of personal
property held by a Puerto Rico taxpayer than is available to similarly
situated taxpayers in the mirror-code Territories. There is no sound
policy reason for treating mirror code possessions differently from
non-mirror code possessions.
Congress should modify the ``effectively connected'' income rules
for possessions in Section 937(b)(2)--enacted as part of the Jobs Act--
by modifying the U.S. income limitation to exclude only U.S. source (or
effectively connected) income attributable to a U.S. office or place of
business. Congress should also ensure parity of capital gains tax
treatment with Puerto Rico and other U.S. possessions by clarifying in
Section 865(j)(3) that capital gains income earned by V.I. taxpayers
should be deemed to constitute V.I. source income under the general
sourcing rules without regard to the tax rate imposed by the V.I.
government. This modification is reflected in H.R. 411 and H.R. 412,
both as introduced by Congresswoman Stacey Plaskett on January 9, 2019,
and referred to the Committee on Ways and Means. The Virgin Islands
therefore requests that OIA and the Committee work with Treasury and
other committees to effect passage of these bills.
Legislation to Modify Rigid Residency Requirements
In addition, the Jobs Act created onerous residency requirements
for the Virgin Islands that inhibit the Territory's ability to attract
investment. In the Jobs Act, Congress provided Treasury authority to
modify the rules for determining bona fide possessions residency. The
Virgin Islands has urged Treasury to exercise its authority to consider
amendments to the rules, where appropriate, that would give greater
deference to Congress' goals of encouraging economic and private sector
development in the Virgin Islands and the other U.S. possessions.
Under IRC Section 932, a ``bona fide'' resident of the Virgin
Islands (i.e., a tax resident) may satisfy his or her U.S. income tax
obligation by filing in, and paying the applicable tax to, the Virgin
Islands. Under Section 934, the Virgin Islands is authorized to reduce
tax on V.I. source income and V.I. ECI. Prior to the Jobs Act, the
determination of ``bona fide'' V.I. tax residency was based on the
totality of an individual's facts and circumstances (the ``facts and
circumstances'' test). However, Section 937, added by the Jobs Act,
provides that a ``bona fide'' resident of the Virgin Islands is a
person who meets all elements of a three-part test (physical presence,
tax home, and closer connection tests). Treasury has provided only very
limited flexibility from the physical presence test by allowing V.I.
residents to treat up to 30 days of off-island travel outside of the
United States as ``constructive presence.''
The proper test for bona fide V.I. residency should be the test the
IRS applies under IRC Section 7701(b) to determine whether a foreign
individual residing in the United States has sufficient presence in the
United States to justify subjecting that individual to U.S. taxing
jurisdiction in the same manner as U.S. citizens. Under that test, such
foreign individual must be physically present at least 183 days in any
one tax year, or an average of 122 days a year over any 3-year moving
period. Despite Treasury's ample discretionary authority to adopt the
122-day test, Treasury has taken the position that the Jobs Act
prevents it from doing so. The Virgin Islands therefore requests that
the Committee affirm to Treasury that it has authority to address the
inequities in the Jobs Act residency requirements. This proposal is
contained in H.R. 412.
Legislation to Address Inequities in the CFC Tax Regime
The U.S. tax system includes certain anti-deferral rules under
which a ``U.S. shareholder'' that owns stock in a ``controlled foreign
corporation'' (a ``CFC'') is required to include in gross income its
pro rata share of, among other items, (i) the CFC's Subpart F income,
and (ii) the CFC's ``global intangible low-taxed income'' (``GILTI'').
A CFC's Subpart F income includes a range of items, including items of
passive income such as dividends, interest, rents, royalties and
annuities. Very generally, the amount of a CFC's GILTI is the CFC's
income above a 10 percent annual return on the tax basis of its
tangible assets. These rules result in unfavorable treatment of Virgin
Islands corporations and their shareholders in at least two ways.
First, these rules inexplicably fail to provide Virgin Islands
corporations with the benefit of an exclusion that benefits similarly
situated corporations in other possessions. Under current U.S. tax law,
certain Virgin Islands corporations can be subject to classification as
CFCs, causing negative U.S. tax consequences to their U.S. investors,
while similarly situated Puerto Rico corporations (and other
possessions corporations) are excluded from CFC classification. This is
simply not fair, nor is it supportable from a tax policy perspective.
There is no rationale for this unfavorable treatment of Virgin
Islands corporations and their shareholders, which diverts needed
capital investments away from the Virgin Islands to other U.S.
possessions. To rectify this unfavorable treatment and bring tax parity
to investments in the possessions, we propose that Section 957(c) be
amended to expand the exclusion from the definition of United States
person to include bona fide residents of the Virgin Islands.
Second, the application of GILTI to corporations in the Virgin
Islands limits the effectiveness of the Virgin Islands economic
development programs and is inconsistent with the long-standing tax
relationship between Congress and the Virgin Islands. The Tax Cuts and
Jobs Act of 2017 introduced a new tax on a U.S. shareholder's GILTI
earned by a CFC. The GILTI tax, by increasing the tax on U.S.
investment in Virgin Islands businesses, is particularly harmful to
Virgin Islands corporations given that, as described above, they do not
benefit from the Section 957(c) exclusion that benefits similarly
situated corporations in other possessions.
Under the GILTI rules, a corporate U.S. shareholder in a Virgin
Islands corporation that is a CFC generally would be subject to tax at
a rate of 10.5 percent (increasing to a rate of 13.125 percent
beginning in 2026) on a broad class of the Virgin Islands corporation's
income, even if that Virgin Islands corporation is conducting an active
business and otherwise meets the applicable criteria to qualify for a
lower rate of tax with respect to such income under a Virgin Islands
economic development program and Section 934(b)(1) of the IRC.
To protect the viability of the Virgin Islands' Economic
Development Commission (EDC) and other economic development programs
and to encourage investment in economic development in the Territories,
the GILTI inclusion received from CFCs formed in the Territories should
be exempt from tax. This critical change could be accomplished by
excluding corporations formed in the Virgin Islands and other
Territories from the definition of ``controlled foreign corporation''
for purposes of Code Section 951A. Without this change, almost all
potential investors in the Territories, other than investments from
residents of the Territories, will be subject to the GILTI inclusion,
including hotels, manufacturing operations, and high-tech businesses.
Absent a full exemption, the effective rate of tax on GILTI inclusions
from possessions corporation should be reduced. This could be
accomplished for corporate U.S. shareholders by increasing the amount
of the deduction for GILTI inclusions that are attributable to
possessions corporations. The Virgin Islands therefore requests that
OIA and the Committee work with Treasury and other committees to amend
the GILTI provisions that would exempt, or reduce the rate of tax
applicable to, GILTI inclusions attributable to possessions
corporations.
Legislation to Reimburse the Virgin Islands and Other Mirror Code
Territories for the Cost of the EITC and CTC
The Federal Earned Income Tax Credit (``EITC'') and Child Tax
Credit (``CTC'') are intended to encourage and foster work among low-
income individuals. The Federal Government effectively funds these
programs for all States and the District of Columbia through the IRC.
While a worthy goal, these tax credits have unintended and unfair
consequences in the Virgin Islands due to its status as a mirror tax
code jurisdiction. Unlike in States and DC, the cost of the EITC is
borne solely by the fiscally stressed Virgin Islands, a cost which the
Territory cannot bear.
The EITC costs the GVI approximately from $18,045,792.29 in 2015 to
$8,318,616.08 in 2018, given a reduction in population. As a matter of
fairness, and to avoid imposing an onerous financial burden on the
local treasury, Congress should provide for Federal reimbursement for
the cost of the EITC incurred by mirror code jurisdictions (i.e. the
Virgin Islands and Guam). There is ample precedent for such
reimbursement. See, e.g., American Recovery and Reinvestment Act of
2009 (ARRA), Div. B, Sections 1001(b) (reimbursement to mirror code
possessions for cost of Making Work Pay Credit) and 1004(c)
(reimbursement for cost of American Opportunity Tax Credit). Other
examples of such reimbursement date back to the 1970s.
The CTC is another Federal tax credit that imposes costs (in the
form of lost local revenue) on the mirror code jurisdictions. Congress
has provided to the mirror code jurisdictions Federal reimbursement for
the cost of the CTC for families with more than two children. The GVI
was reimbursed $3,547,924.93 in 2018. However, there is no Federal
reimbursement for the cost of the CTC for families with one or two
children. The CTC for such families has reduced the revenues of the GVI
by $8,318,616.08 in 2018, down from $18,045,792.29 in 2015. As a matter
of fairness, and to avoid imposing an onerous financial burden on the
local treasury, Congress should provide for Federal reimbursement for
the cost of the CTC for families with any number of children incurred
by the mirror code jurisdictions. There is ample precedent for
reimbursement, as noted above. Indeed, in its final Report, the
Congressional Task Force on Puerto Rico recommends that Congress
provide Federal reimbursement for the costs borne by the mirror code
jurisdictions for the CTC. See Task Force Final Report, p. 31, fn. 38.
These provisions are critical for not only providing needed fiscal
relief for the Virgin Islands but also for maintaining and growing a
workforce needed to grow and sustain the Virgin Islands' economy. The
Virgin Islands therefore requests that OIA and the Committee work with
Treasury and other committees to provide for reimbursement to mirror
code jurisdictions of the costs of both the EITC and the CTC.
healthcare and social welfare
Notwithstanding the additional Federal resources that the
Affordable Care Act and disaster funding provided, the task of
implementing healthcare reform in the Virgin Islands has proven to be
challenging, particularly in light of the disparate treatment of the
Territories. Significant progress has been made in addressing--in the
short term--the Medicaid funding issues in the Territory, but a
permanent solution is still needed. Further, under Medicare, the Virgin
Islands-owned hospitals are under-reimbursed for the costs of providing
care to the many Medicare-eligible U.S. citizens in the Territory.
These challenges can be significantly ameliorated by permanent changes
to Medicaid provisions in the Social Security Act and changes to the
reimbursement methodology for the hospitals under Medicare.
Medicaid
The Virgin Islands appreciates the disaster-related Medicaid
relief, particularly the additional funding and temporary waiver of the
local match in the aftermath of Hurricanes Irma and Maria, and for the
recently enacted relief in the final FY 2020 appropriations package,
specifically a state-like FMAP and a deferral of the ``fiscal cliff''
for 2 years. This interim relief avoided the loss of healthcare
coverage for thousands of U.S. citizens in the Virgin Islands and a
possible collapse of our healthcare system. A permanent solution that
provides for state-like treatment for the Virgin Islands and other
Territories is needed in order to avoid the same dire consequences
recently averted upon enactment of the final FY 2020 appropriations
package. The Virgin Islands requests the support of OIA and the
Committee for legislation that permanently guarantees state-like
treatment for the Territories.
Medicare Reimbursement for Hospitals
The two hospitals in the Virgin Islands are reimbursed for Medicare
expenditures based on an outdated methodology established under the Tax
Equity and Fiscal Responsibility Act of 1982 (``TEFRA''), resulting in
under-reimbursement in the millions of dollars for each hospital each
year. In 2011, the hospitals each submitted to the Centers for Medicare
and Medicaid Services (``CMS'') a request for assignment of a new base
year. Those requests are still pending.
More recently, Hurricanes Irma and Maria destroyed both hospitals
to such an extent that they need to be replaced. The Virgin Islands
understands that CMS, as a result, will provide the hospitals with new
base years, at least going forward. The Virgin Islands requests the
support of OIA and the Committee for new base years for both hospitals.
Extension of SSI to the Virgin Islands and Other Territories
Supplemental Security Income (``SSI'') is a Federal need-based cash
assistance program intended to equalize eligibility standards and
benefit amounts for similarly situated aged, blind, and disabled
people. The program was created to replace existing, disparate programs
with one that provides an income source for the aged, blind, and
disabled whose income and resources are below a certain level, and
incentives and opportunities for those able to work or be
rehabilitated.
SSI is a Federal entitlement program, paid out of the general
revenue of the United States. However, residents of the Virgin Islands,
Guam, and American Samoa are not under the SSI program, despite having
needs similar to low-income aged, blind, and disabled persons in other
Territories and the States. Instead of SSI, the former Federal-state
programs of Old-Age Assistance, Aid to the Blind, and Aid to the
Permanently and Totally Disabled (AABD) continue to operate in the
Virgin Islands. Benefits are capped, which means that the grant in no
way considers actual need. There also is a 25 percent local match, and
the responsibility to administer these programs falls on the Territory.
As a result, benefits are far less than those under SSI and far less
predictable (benefits can vary significantly from year to year and even
within a year).
Including the Virgin Islands, Guam, and American Samoa in the SSI
program would increase benefits for the elderly, blind, and disabled to
a level on par with their counterparts on the mainland and CNMI. The
Virgin Islands therefore requests that OIA and the Committee work with
other committees to effect these necessary changes.
homeland security
Proposed Virgin Islands Special Visa Waiver Program
Tourism is the lifeblood of the Virgin Islands economy. The Virgin
Islands is a highly desirable tourist and sporting event destination,
and the Territory's ability to attract is limited by the lack of a visa
waiver program similar to those in the Pacific Territories. The Virgin
Islands seeks authority from Congress or administrative authorization
from the Department of Homeland Security to establish a special visa
waiver program for the Virgin Islands that mirrors programs currently
authorized for, and utilized successfully by, Guam and the Commonwealth
of the Northern Marianas (``CNMI'').
Executive Order 13597, entitled ``Establishing Visa and Foreign
Visitor Processing Goals and the Task Force on Travel and
Competitiveness'' (Jan. 19, 2012), directed the Secretaries of Commerce
and Interior to co-lead an inter-agency task force to, among other
things, develop recommendations for a ``National Travel & Tourism
Strategy'' and increase efforts to expand the national Visa Waiver
Program (``VWP''). Pursuant to authority of the Immigration and
Nationality Act (``Act''), 8 U.S.C. Sec. 1184(a)(1), the Attorney
General and Secretary have promulgated regulations establishing a
national Visa Waiver Program (``VWP'') which allows nationals of
certain countries to travel to the United States (and U.S. Territories)
for stays of up to 90 days without obtaining a visa. VWP-eligible
countries include most European countries, plus Japan, Singapore,
Brunei, and South Korea. Not all travelers from VWP countries, however,
are eligible to use the program. VWP travelers are required to apply
for authorization through the Electronic System for Travel
Authorization (``ESTA''), must be screened at their port of entry into
the United States, and must be enrolled in the US-VISIT program
administered by DHS.
The proposed special visa waiver program would permit the
Department of Homeland Security to consider approving visa-less entry
into the Virgin Islands for the same category of users specified in the
Executive Order, PLUS residents of non-VWP countries, including
residents of the Caribbean Community (``CARICOM'') as determined by a
tourism and economic need survey similar to that used in Guam and CNMI.
Such a visa waiver program is not without precedent. A separate and
special visa waiver program for Guam (``GVWP'') and the Commonwealth of
the Northern Marianas (``NMVWP'') was established pursuant to these
same provisions. These special visa waiver programs are specifically
authorized by statute. In particular, Section 214(a)(1) of the Act
provides that ``[n]o alien admitted to Guam or [the CNMI] without a
visa . . . may be authorized to enter or stay in the United States
other than in Guam or [the CNMI] or to remain in Guam or [the CNMI] for
a period exceeding 45 days from the date of admission to Guam or [the
CNMI].'' Pursuant to this authority, GVWP-eligible countries include
certain Pacific Island nations, Australia, New Zealand, and Taiwan.
As the Virgin Islands is outside of the U.S. Customs Zone, such
waiver would pose no threat to the United States and its other
Territories because movement beyond the Virgin Islands would require
any such visa-less guests to subject themselves to U.S. immigration and
customs inspection and control. Visitors arriving by sea or air would
be notified that they cannot move beyond the boundaries of the Virgin
Islands.
The economic impact for the Virgin Islands, however, would be
significant as the Virgin Islands could then receive visitors in the
following categories:
Seasonal yachting and sporting events;
Shopping visits from other Eastern Caribbean countries;
Medical visits to the Territory's medical facilities and
medical professionals;
Arriving air passengers to the Territory's airports for
transfer to any of the northeastern Caribbean islands; and
Cruise line passengers on ships that customarily only
service Eastern Caribbean islands because of their European
Union no-passport or visa requirements.
Requests for such access has been increasing by residents of the
Eastern Caribbean and by the Florida and Caribbean Cruise Association
(``FCCA'').
The Virgin Islands seeks authority from Congress to establish a
special visa waiver program for the Virgin Islands that mirrors
programs currently authorized for, and utilized successfully by, Guam
and CNMI. We urge OIA and the Committee to work with Homeland Security
and other committees to authorize such a program in any immigration
reform legislation that might be considered by Congress.
infrastructure
Long-term under-investment by the Federal Government has resulted
in a substantial portion of our infrastructure being dilapidated and
inadequate. Further, the poor condition of our infrastructure has made
it more susceptible to damage or destruction when natural disasters
strike. Long-term improvement in the funding allocations for the
Territories is needed to bring their infrastructure into the condition
necessary to support a modern economy.
The disparities in funding are striking in surface transportation.
In the final years of the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users and extensions thereof,
Congress allocated $62 million annually to the four Territories under
the Territorial Highway Program (including a $50 million allotment and
$12 million in lieu of High Priority Project funding). In 2012, the
Moving Ahead for Progress in the 21st Century Act (``MAP-21'')
maintained highway funding levels for all states, DC, and Puerto Rico,
but inexplicably cut the Territories' funding by a third (to $40
million a year).
The subsequent bill (``FAST Act'') did not restore the funding cut
in MAP-21; it provided only a small (5 percent) increase over the
reduced MAP-21 allocation for the small Territories, (to $42 million a
year). In contrast, the FAST Act increased funding to the states and DC
ranging up to 14.8 percent over the life of the FAST Act (through FY
2020). Further exacerbating these funding shortfalls is the exclusion
of the Territories from other surface transportation programs, which
provide substantial funding to the States and DC.
Congress will have an opportunity to correct these inequities in
the upcoming surface transportation reauthorization and any other
infrastructure funding bills. For example, on January 29, 2020, House
Democrats put forth a framework to invest $760 billion over 5 years in
the Nation's infrastructure. Earlier, the Trump Administration had
proposed investing $2 trillion on infrastructure.
The small Territories need substantial investment in their aging
and deficient infrastructure. Further, because of the increasing risk
of damage from natural disasters, the Territories' infrastructure must
be built to be more resilient and sustainable than most other areas of
the United States. In order to provide the Territory a fair and
equitable share of infrastructure funding, the Virgin Islands requests
that in the upcoming surface transportation reauthorization bill
funding for highways in the Virgin Islands be increased to not less
than $35 million annually, and, further, that funding in any other
infrastructure package provide a set-aside of not less than 1.5 percent
for the four Territories. We urge OIA and the Committee to work with
the Department of Transportation and other committees and Federal
agencies to achieve these necessary provisions.
update to insular areas act
Enacted in 1977, the Insular Areas Act, 48 U.S.C. Sec. 1469a,
expressed the policy of Congress that the four small Territories (the
Insular Areas) should be provided certain flexibilities under Federal
grant programs. Importantly, the Act, as amended, mandates that the
Department of the Interior shall waive matching requirements for all
Insular Areas under all of its grant programs, and requires all other
departments and agencies to waive any requirement for local matching
funds under $200,000 otherwise required by law. Further, pursuant to
the Act, all Federal agencies have the discretion to waive the entire
local match for the Insular Areas (the four small Territories) for
Federal funding programs. The Act also allows Federal grants to
Territories to be consolidated to minimize administrative burdens.
There is ample precedent for Federal agencies to exercise their
discretion under the Act to waive the local match. Indeed, the local
match has been waived under the Insular Areas Act in a number of
contexts in the past, particularly after catastrophic events. For
example, in recognition of the severity of Hurricanes Irma and Maria,
FEMA invoked the Insular Areas Act authority to waive the 25 percent
non-Federal matching requirement for the Hazard Mitigation Grant
Program in the Virgin Islands. However, FEMA has not waived the local
match for most categories (Categories C-G) of public assistance in
response to Hurricanes Irma and Maria, requiring the Virgin Islands to
come up with potentially hundreds of millions of dollars in local match
under those programs, amounts that could and should be better spent on
disaster recovery and economic development. In other instances, Federal
agencies have not used their discretion to waive the local share in
other grant programs, despite the difficulty that the Virgin Islands
and the other Insular Areas have in providing a local match.
Opportunities abound as well. As the world becomes increasingly
interconnected, the opportunity for economic growth and expansion in
our territories has never been greater. Innovation, investment,
entrepreneurialism: they are the building blocks that made America into
one of the most dominant economies on Earth. We now have the
opportunity to transform our natural blessings in the territories into
unprecedented prosperity for our people, in partnership with our fellow
U.S. citizens and our Federal Government.
Our goal is not just to survive. Our goal is to thrive.
The GVI proposes that the Act be amended to provide a statutory
presumption in favor of waiving the local share; to foster economic
development and stability; and to update the relationship of the
Territories to the Federal Government as partners in the global
influence and economic dynamics of the United States of America.
______
Questions Submitted for the Record to Governor Albert Bryan Jr. of the
U.S. Virgin Islands
Governor Bryan did not submit responses to the Committee by the
appropriate deadline for inclusion in the printed record.
Questions Submitted by Rep. Neguse
Question 1. Governor Bryan, is the Virgin Islands still dealing
with an outbreak of the Stoney Coral Tissue Loss Disease?
Question 2. Governor, you know better than us that healthy coral
reefs protect your islands from coastal erosion and storm damage among
other beneficial effects. But these precious resources have been
experiencing a variety of threats including poor water quality, over-
harvesting, coastal development, disease and bleaching. The Office of
Insular Affairs (``OIA'') has supported coral reef initiatives on your
islands in the past under recommendations from the Coral Reef Task
Force. However, for FY2021, OIA is proposing cuts to their Coral Reef
Initiative by more than 65 percent.
Question 3. How will such a drastic cut affect your natural
resources managers' ability to control and eradicate invasive species
and protect your fragile environments?
Question 4. Are there particular environment or wildlife challenges
that Congress can be helpful to you in addressing?
Question 5. Is the Department of the Interior being responsive to
your needs? What is the most pressing of those that is not currently
funded at necessary levels?
Questions Submitted by Rep. Sablan
Question 1. The Interagency Group on Insular Areas was created to
``solicit information and advice from the elected leaders of the U.S.
Insular Areas'' and make recommendations to the President to address
appropriate issues regarding Federal programs. Do you believe the
executive branch is doing enough to address your concerns?
Question 2. Are there any specific issues you think Congress needs
to address?
Question 3. Congress passed the FY 2020 appropriation with $6.25
million for the formulation and implementation of energy action plans
to reduce the cost of electricity, stop the loss to island economies
from purchase of imported fuels, and increase the efficiencies of your
distribution systems. This a long over-due down payment on P.L. 113-
235. The House has shown we are willing to invest much more. Our FY
2020 bill had $12 million, but the final bill cut that in half. We need
to hear from you. Are you interested in more help to cut the cost of
electricity for your constituents and modernize your electrical
systems?
Question 4. How is Interior and the Office of Insular Affairs
helping your administration combat and prepare for the effects of
climate change?
Question 5. On February 7, 2020, the House passed legislation that
would provide funding for the Earned Income Tax Credit in Guam, the
U.S. Virgin Islands, American Samoa, and the Northern Marianas. The
White House says the President will veto the bill. President Obama came
out in favor of EITC for the insular areas at the end of his second
term. Where do you stand on this issue? Should Congress provide Federal
funding to pay our low-income working families?
Question 6. Congress helped you avoid the Medicaid cliff with
passage of Public Law 116-94. The law also reduced your local share of
Medicaid from 45 percent to 17 percent--better than the matching amount
for any state. Can you tell us how you are using all this new money to
improve delivery of health care to your constituents?
Question 7. Congress provided $20.8 million for technical
assistance to the insular areas last year. The administration keeps
trying to cut technical assistance. The President's FY 2021 budget
proposes $14.67 million. OIA hands out that technical assistance money
in response to requests from governors and others. Congress gives OIA
free rein to decide. Would you would prefer more control of that money?
For instance, would you like some of that technical assistance slush
fund put it into specific programs?
______
Mr. Sablan. Thank you very much, Governor.
I now recognize the Honorable Arnold I. Palacios,
Lieutenant Governor for the Commonwealth of the Northern
Mariana Islands.
Governor, you have 5 minutes.
STATEMENT OF THE HONORABLE ARNOLD I. PALACIOS, LIEUTENANT
GOVERNOR, NORTHERN MARIANA ISLANDS
Lieutenant Governor Palacios. Thank you, Chairman Sablan,
Ranking Member, and other members of your Committee. Thank you
for allowing me to testify this afternoon. I am here on behalf
of Governor Torres, who sends his regrets for not being here to
speak with you once again.
This past year has presented challenges that have truly
showcased how vulnerable our community is to threats beyond our
control. Having successfully exited the austerity measures we
imposed on our employees in the government after Super Typhoon
Yutu, Governor Torres is in the CNMI today working to contain
the economic collapse following the outbreak of the novel
coronavirus, which has significantly impacted our tourism
arrival to the islands, essentially crippling the economy's
sole industry.
As a result of this outbreak, CNMI expects to lose 150,000
tourist arrivals, primarily from China, and 30 percent of our
expected total annual arrivals for this fiscal year.
This year has proven that our economic development
trajectory has led us to a position that is the definition of
fragility. In a moment, without a single instance of an
outbreak in the CNMI, we lost the second-largest tourism market
due to a force that we cannot even see.
As you know, Section 701 of our government states that the
United States will assist us in our efforts to achieve a
progressively higher standard of living for our people as part
of this American family, and develop the economic resources
needed to meet the responsibilities of local self-government.
President Trump's budget submission for Fiscal Year 2020
reaffirms this commitment, and it is now more urgent than ever
to revisit what being a member of the American economic
community means.
We wish to thank the Department of the Interior and OIA for
their commitment to seeing tangible results in our CIP program
and other funding support. The Congress and the Administration
must continue to recognize that a modern, functional
infrastructure is an absolute prerequisite to economic
development in all insular areas. CIP programs assist us in
this effort.
However, the program has been $27.7 million since the
inception of the CNMI in 1978, and continues at this level,
when it was modified to include Guam, American Samoa, and the
U.S. Virgin Islands. We would like to see Congress increase the
level of funding for the CIP programs in our insular areas. The
CNMI once again urges the review, therefore, of the CIP grant
programs to allow an increase in the budgeted amount that
adjusts for inflationary costs and current infrastructure needs
of the U.S. territories.
Mr. Chairman, I wish to thank all the members of this
Committee for your continued support through the many
challenges we have faced in our current immigration transition.
Governor Torres and I continue to say that we have every
interest in creating more jobs and opportunities for U.S.
workers in the Commonwealth. But improvements can be made from
our experience thus far.
I wish to offer the following recommendations for your
consideration: (1) allow the CNMI Government to participate in
the labor certification process in a similar manner as is
allowed for our sisters and brothers in Guam; (2) fully lift
the exclusion of construction workers from the CW-1 program. A
full relief of this restriction will help support the
development of our new homes damaged by our typhoons, and to
further develop the economy toward increased jobs and
opportunities for U.S. workers; and (3 we ask that you
eliminate the touch-back provision to prevent a quarter of the
labor force departing the CNMI for an indeterminate number of
months at the start of Fiscal Year 2021.
Mr. Chairman, we need your assistance. The American
economic community's promise to our forefathers is not defined
by the rigor of our regulations. It is defined by the promise
of our ideals. I believe this to be true, and I look forward to
continuing to work alongside you as we inch closer to that
dream of real membership in this great community.
Before closing, Congressman, I wish to also extend our
appreciation for your work, and those of the other
Congressional Members from the insular areas on the new
Medicaid allocation. This was one of the most welcome news in
our healthcare system. Thank you. [Speaking foreign language.]
[The prepared statement of Lieutenant Governor Palacios
follows:]
Prepared Statement of the Honorable Arnold I. Palacios, Lieutenant
Governor, Commonwealth of the Northern Mariana Islands
Good afternoon, Chairman Grijalva, Ranking Member Bishop,
Congressman Sablan and members of the Committee. Thank you for allowing
me this opportunity to testify at this hearing on the Fiscal Year 2021
budget request for the Department of the Interior's Office of Insular
Affairs (OIA).
Additionally, I appreciate that this hearing will afford us the
opportunity to discuss the many urgent and troubling economic issues
facing the CNMI today and ways Congress can support our resiliency
toward external economic shocks.
I am here on behalf of Governor Ralph Torres who sends his deepest
regrets for not being able to speak with you all once again. This past
year has presented challenges that have truly showcased how vulnerable
our community is to threats beyond our control. Having successfully
planned an exit to the painful austerity measures placed in the
aftermath of Super Typhoon Yutu, Governor Torres is in the CNMI today
doing all he can to contain the economic collapse resulting from the
outbreak and spread of the novel coronavirus which has significantly
impacted the influx of tourists to our islands, essentially crippling
the economy's sole industry.
As a result of this outbreak, the CNMI expects to lose more than
150,000 tourist arrivals from China against earlier forecasts for this
fiscal year. This estimated loss represents more than 30 percent of our
expected total annual arrivals for this fiscal year. This loss of
income for our economy is and will be painful, but is not solely
contained to the China market. Concern has spread throughout the
tourism industry. Much like SARS before it, the coronavirus' effects on
the CNMI tourism market will be felt long after the outbreak has
subsided.
This year has proven that our economic development trajectory,
inclusive of the effects of Federal laws, has led us to a position that
is the definition of fragile. In a moment, without a single instance of
the outbreak in the CNMI, we lost the second largest tourism market due
to a force we cannot even see. In this state, we must return to the
hopes created during our origins as a Commonwealth.
Section 701 of the Covenant to Establish a Commonwealth of the
Northern Mariana Islands in Political Union with the United States of
America states that the U.S. Government 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.''
President Donald J. Trump's budget submission for Fiscal Year 2020
reaffirms this commitment and it is now more urgent than ever to
revisit what being a member of the American economic community means.
The recent history of the CNMI's collaboration with the OIA has
produced tangible and lasting results that have aided in the
development of our infrastructure and provided additional resources for
our community and our economy. The redevelopment of the former Puerto
Rico dump to a beautiful tourist attraction and the ongoing sewer line
development efforts are prime examples of the possibilities that can be
obtained through collaboration. Additionally, OIA has been instrumental
in the funding of a range of programs to advance the service of
government through the technical assistance program. For the hard work
in understanding the needs and complexities present in the CNMI, we
wish to thank the Department of the Interior, and OIA.
The existence of the OIA is indicative of something that must be
repeated--the Territories, like the CNMI, have such unique challenges
and face such tremendous obstacles toward sustaining viable economies
that a separate approach is necessary.
The Congress and the Administration must continue to recognize, as
they have done since the origins of the Commonwealth government, that a
modern, functional infrastructure is an absolute prerequisite to
economic development. However, time continues forward and as with all
things, these resources will one day no longer be of use. We do not
have the resources available to undertake the redevelopment of the
monumental infrastructure initiatives of the U.N. Trust Territory era,
but we must. We soon must rehabilitate our airport, our seaports, our
sewage treatment facilities, our water wells, our sewer and water
lines, but we simply cannot do these necessary things while
partitioning up a single pot of resources that have not changed since
the inception of the Commonwealth government.
As the CNMI has asked before, Congress and the Administration must
recognize that the Capital Improvement Project (CIP) Grants provided
under the CNMI's Covenant agreement with the United States must adapt
to the circumstances of today.
The CNMI once again urges the review of the CIP Grants Program to
allow for an increase in the budgeted amount that adjusts for
inflationary costs and current infrastructure needs of the U.S.
territories.
The CIP Grants Program has been one of the most successful Federal
programs for the CNMI, Guam, American Samoa, and the U.S. Virgin
Islands for infrastructure projects, and has had a significant impact
on the advancement of quality of life and economic development in the
islands.
Given that the program has been $27.72 million since its inception
for the CNMI in 1978 under Section 701 of U.S. Public Law 92-241, and
continued at this level when it was modified to include Guam, American
Samoa, and the U.S. Virgin Islands under U.S. Public Law 104-134 until
today, a review of the CIP Grants Program is timely given the priority
of infrastructure for the smaller U.S. Territories and the severe
economic conditions that have presented themselves in recent years.
The discussion of the budget for this critical department is
important for the CNMI. However, the needs of our people span across
the Federal Government.
I wish to thank all the members in this Committee for your
continued support through the many challenges we have faced with our
current immigration transition period. Because of your support and
assistance, the CNMI economy averted total collapse after the passage
of the Northern Mariana Islands U.S. Workforce Act (U.S. Public Law
115-218) and the allowance for the CNMI economy to continue to grow
beyond the expiration of the transition period in 2019. We have made
tremendous progress in committing ourselves to building a strong and
vibrant economy based on the strengths of U.S. workers, but this
ongoing transition period should be one of fluidity and willingness to
be flexible toward accomplishing the intents of the law.
In this first year of implementation of U.S. Public Law 115-218,
the CNMI has been diligent in our pursuit of full compliance with the
new requirements of the law. In light of this experience, I must raise
concern about the unintended consequences that must be averted at the
risk of damaging our struggling economy further and imperiling the many
U.S. jobs we have created thus far.
As Governor Torres and I continue to say, we have every interest in
creating more jobs and opportunities for U.S. workers seeking to build
their lives in the CNMI. However, the counterintuitive nature of the
CNMI economy has showcased that the best way to create opportunities
for U.S. workers is to continue to build the economy alongside our
foreign workers. Labor is a critical factor necessary for production,
and the reality is, at this point in time, we simply do not have enough
to sustain a viable economy.
In an effort to continue the pursuit of greater levels of U.S.
workers in our economy, I wish to offer the following recommendations
for your consideration:
1. Allow the CNMI Government to participate in the labor
certification process in a similar manner as is allowed for
in Guam. The U.S. Department of Labor does not produce
labor force data for the CNMI, the Bureau of Labor
Statistics does not conduct labor market surveys in the
CNMI, and the CNMI is not included in USDOL's Occupational
Employment Statistics (OES) program. This is understandable
as USDOL had limited historic involvement in the CNMI labor
market. To remedy this deficiency and to ensure labor
market decisions are being made with the most relevant and
locally contextualized information, providing the same
authority as Guam to certify wage and labor needs prior to
submission of a CW-1 petition would be logical and
efficient.
2. Fully lift the exclusion of construction workers (Standard
Occupational Classification Code 47-0000) from the CW-1
program and further recognize the limited number of U.S.
construction workers and the inapplicability of alternative
visa classification on the labor force needs of the CNMI
community. A full relief on this restriction will help
support the development of new homes to combat the housing
shortage caused by the destruction of Super Typhoon Yutu
and to further develop the economy toward increased jobs
and opportunities for U.S. workers.
3. Eliminate the touch-back provision to prevent a quarter of the
labor force departing the CNMI for an indeterminate number
of months at the start of Fiscal Year 2021. At this time of
severe financial difficulties, a dramatic reduction in the
size of the labor force will compound our mounting
challenges into a potential collapse of our economy.
Removing the requirement for foreign workers to return to
their country of origin following the second renewal period
does not create a pathway to citizenship. The periodic loss
of a large segment of the workforce will create unnecessary
complications within the economy and hurt U.S. job seekers
entering into the labor force.
Congress must understand the vulnerability that persists in a small
island economy like the CNMI. Limited resources, high transportation
and trading costs, diseconomies of scale all play a significant role in
leading the CNMI to the position it is in today. We struggle against
global forces, unprecedented natural disasters, and a litany of
impediments keeping us from making good on the promise enshrined in our
founding document--``A progressively higher standard of living for its
people as a part of the American economic community.''
I am seeking your help in finding solutions and before you, there
are many. To break the barriers keeping us from viability is our access
to tourists who would pay to enjoy our beaches and breathe in our clean
air, the cost of transportation of goods and people that locks our
residents in and a world of potential visitors out. We need your
assistance to ensure that poor health does not guarantee financial
struggles. We can do so much if we work toward a shared understanding
of who we are.
The American Economic Community promised to our forefathers is not
defined by the rigor of our regulations. It is defined by the promise
of our ideals.
We are here asking for your assistance to be proactive in the
support of these ideals. Moreover, to work with us in addressing the
unique and dire needs of the thousands of Americans living on our
shores. I also ask that you understand our attempts to fight for every
opportunity we must thrive within this community. We need increased
access to financial resources to scale that development ladder, but we
also need your trust that we can succeed together.
I believe this to be true and I look forward to continuing to work
alongside you as we inch closer to that dream of real membership in
this great community.
______
Questions Submitted for the Record to Lieutenant Governor Arnold I.
Palacios of the Commonwealth of the Northern Mariana Islands
Questions Submitted by Rep. Neguse
Question 1. Governor, you know better than us that healthy coral
reefs protect your islands from coastal erosion and storm damage among
other beneficial effects. But these precious resources have been
experiencing a variety of threats including poor water quality, over-
harvesting, coastal development, disease and bleaching. The Office of
Insular Affairs (``OIA'') has supported coral reef initiatives on your
islands in the past under recommendations from the Coral Reef Task
Force. However, for FY 2021, OIA is proposing cuts to their Coral Reef
Initiative by more than 65 percent.
1a. How will such a drastic cut affect your natural resources
managers' ability to control and eradicate invasive species and protect
your fragile environments?
Answer. The CNMI immensely values its coral reefs and continues to
implement management efforts that support its sustained use and
conservation as it is a significant part of the Commonwealth's culture.
Unfortunately, these critical habitats face multiple threats that
continue to place severe stress upon one of the CNMI's most valued
resources. These threats grow exponentially as the CNMI sees its
population increase, its tourism market thrive, and coastal development
climb.
To address such threats such as coral bleaching and diseases,
invasive species, and physical damage, the CNMI's natural resource
managers rely on its partnership with the Department of the Interior's
Office of Insular Affairs to carry out various management actions and
plans specifically crafted to address the declining health of the
CNMI's coral reefs. Previous grants awarded to the CNMI through OIA's
Coral Reef Initiative (now the Coral Reef and Natural Resource
Initiative) have gone toward projects such as developing Conservation
Action Plans and Watershed Management Plans for the CNMI priority
watersheds, behavior change campaigns to raise awareness and promote
sustainability and green lifestyles, building local capacity in coral
reef management, and coral reef restoration work.
As the United States Coral Reef Task Force's co-chair, the
Department of the Interior has been an invaluable partner to the CNMI,
assisting the jurisdiction to address these various threats to our most
precious resource. Currently, DOI is providing funding to the CNMI to
implement restoration activities as a more proactive approach toward
coral reef management. The successful establishment of a state-managed
in-water coral nursery will allow the CNMI to eventually outplant coral
fragments that are proven to be more resilient to climate change and
restore degraded or damaged reefs around the islands.
1b. Are there particular environment or wildlife challenges that
Congress can be helpful to you in addressing? Is the Department of the
Interior being responsive to your needs? What is the most pressing of
those that is not currently funded at necessary levels?
Answer. OIA had previously supported the Micronesia Challenge--a
shared commitment between the Federated States of Micronesia, the
Republic of the Marshall Islands, the Republic of Palau, Guam, and the
CNMI to effectively conserve at least 30 percent of near-shore
resources and 20 percent of terrestrial resources across Micronesia by
2020. In 2019, the Chief Executives of the Micronesian jurisdictions
renewed their commitment to the Micronesia Challenge by extending and
expanding their goal of conservation to be met by 2030. Continued
funding support for this initiative will be helpful toward achieving
this collective effort.
Questions Submitted by Rep. Sablan
Question 1. The Interagency Group on Insular Areas was created to
``solicit information and advice from the elected leaders of the U.S.
Insular Areas'' and make recommendations to the President to address
appropriate issues regarding Federal programs. Do you believe the
executive branch is doing enough to address your concerns?
Answer. The annual IGIA Senior Plenary Meeting serves an integral
forum for insular area leaders to bring awareness to the critical
issues faced by the territories. These annual meetings provide a great
opportunity to directly engage with Federal departments and agencies on
the needs and concerns of Federal programs in the insular areas.
Question 2. Are there any specific issues you think Congress needs
to address?
Answer. Paramount among our many pressing issues is the state of
the economy in the aftermath of Super Typhoon Yutu in 2018 and the
outbreak of the novel coronavirus which has severely impacted vital
tourism arrivals. Throughout the many actions in the past several
years, Congress has shown a willingness to understand the unique
circumstances the CNMI faces in establishing and maintaining a viable
and functioning economy. If Congress were to look at the totality of
our circumstances with objectivity of the present facts, it would be
apparent that much needs to be done to mitigate the ever-present and
high probability of economic collapse that we contend with on a near
constant basis. We cannot maintain a long-term growth trajectory while
remaining at the edge of a cliff. Small changes around the world can
result in catastrophic repercussions to our economy. Congress should
recognize that we are not similar to the states in this regard, and to
see stability in this region, greater emphasis on developing a more
diversified and sustainable economy is an absolute requirement.
As the CNMI government has stated before, the CW-1 program is
crucial toward obtaining the necessary labor to grow our economy. That
is still true today, and the opportunity to obtain that growth is
affected by several provisions contained in the Northern Mariana
Islands U.S. Workforce Act. These concerns I have outlined in my
submitted testimony.
Further, however, the CNMI needs additional Federal Government
support in ensuring long-term competitiveness of our industries against
regional and international destinations. Greater emphasis should be
added toward crafting national legislation that drives U.S. investment
to the U.S. territories, as we continue to struggle to compete against
even the most disadvantaged U.S. mainland community due to our unique
and crippling limitations. The Congress can assist the CNMI in meeting
its U.S. workforce targets by allotting additional Federal resources to
the CNMI labor force. Currently the majority of the funds dedicated to
supporting the transition program, originate from employers within the
CNMI through the additional fees required under the CW-1 petition
process. If Congress wishes to see greater levels of success in this
effort, more resources are needed.
If we were to look at the major economic issues facing the U.S.
territories in the last decades of our histories, it is difficult to
locate action by Congress that has showcased a proactive interest in
supporting economic development among our communities. We do not wish
to remain a problem to be solved by the Federal Government, but
Congress must realize that there needs to be a new approach to
territorial issues that is driven by a goal of viable, resilient and
functioning economies within its U.S. territories.
Question 3. Congress passed the FY 2020 appropriation with $6.25
million for the formulation and implementation of energy action plans
to reduce the cost of electricity, stop the loss to island economies
from purchase of imported fuels, and increase the efficiencies of your
distribution systems. This a long over-due down payment on P.L. 113-
235. The House has shown we are willing to invest much more. Our FY
2020 bill had $12 million for all of you, but the final bill cut that
in half. We need to hear from you. Are you interested in more help to
cut the cost of electricity for your constituents and modernize your
electrical systems?
Answer. The CNMI appreciates all assistance provided toward the
reduction of our dependence on imported fossil fuels. We are
approaching a period of great opportunity in the coming years, as we
target this funding source, along with additional resources provided
through the Federal Government's response to Super Typhoon Yutu, to
harden our power system and implement efficiencies that will support
more affordable and consistent utilities services to our people.
We are certainly in support of any additional assistance Congress
can provide and the need for such assistance is apparent. But it is
also important to recognize that direct appropriations are a part of
the equation. Congress can assist the CNMI in accessing greater
resources within the financial markets to support financing for large-
scale and necessary infrastructure spending. Increasing the total
amount of CIP provided to the CNMI to an inflation adjusted level and
ensuring consistent apportionments would open a range of financing
opportunities presently unavailable due to our present financial
condition. I additionally ask for consideration of territory-specific
legislation from Congress that would greater incentivize U.S.
investment into the territories as a means to find the necessary
capital to modernize our electric grid and our general infrastructure.
Question 4. How is Interior and the Office of Insular Affairs
helping your administration combat and prepare for the effects of
climate change?
Answer. The Office of Insular Affairs has been a consistent ally in
our efforts to confront and respond to increasing weather events. The
effects of natural disasters are profound and the impacts are spread
throughout the Nation. The response of the entire Federal Government to
Super Typhoon Yutu has been of tremendous support to the CNMI and OIA
has been a critical partner in this effort alongside the range of
Federal agencies that include FEMA, EDA and HUD to name a few.
Question 5. On February 7, 2020, the House passed legislation that
would provide funding for the Earned Income Tax Credit in Guam, the
U.S. Virgin Islands, American Samoa, and the Northern Marianas. That is
worth $11 million per year for the Marianas. But the White House says
the President will veto the bill. President Obama came out in favor of
EITC for the insular areas at the end of his second term. Where do you
stand on this issue? Should we provide Federal funding to pay our low-
income working families?
Answer. I support the extension of Federal funding to cover the
provision of the Earned Income Tax Credit to CNMI taxpayers. This
administration maintains the year's long policy of the CNMI in
requesting the Federal Government to recognize the disparity
territorial treasuries face in the application of the EITC and the
effects this program has on local budget resources. In 2016, Governor
Torres requested the Federal Government's support under President
Barack Obama to extend resources to implement the EITC in the CNMI and
that request is present within the 902 report submitted to Congress.
Further, Governor Torres supported legislation presented to Congress on
the extension of the EITC to CNMI taxpayers. This is a critical program
that would support families, and workforce development if Federal
funding was assured to ensure it is provision.
Question 6. Congress helped you avoid the Medicaid cliff with
passage of Public Law 116-94 on December 20, 2019. The Marianas is
getting $60 million this year and $60 million next year--nine times
more than we would otherwise have received and more than we have ever
received before. Public Law 116-94 also reduced our local share of
Medicaid from 45 percent to 17 percent--better than the matching amount
for any state. Can you tell us how you are using all this new money to
improve delivery of health care to our constituents?
Answer. The Medicaid Program received a total of $36 million in
disaster relief funding at 100 percent Federal share. The disaster
relief funds enabled the CNMI Medicaid program to make full payments to
the Commonwealth Healthcare Corporation (CHCC) and other private
providers in the CNMI.
Furthermore, since the CNMI Medicaid program had depleted its funds
by September 30, 2019, the additional funds enabled the CNMI to satisfy
pending payments to private providers, including off-island inpatient
care, specialized consultation, laboratory, radiology, prescription
drug payments, and others.
Question 7. Congress provided $20.8 million for technical
assistance to the insular areas last year. The Administration keeps
trying to cut technical assistance. The President's FY 2021 budget
proposes $14.67 million. OIA hands out that technical assistance money
in response to requests from governors and others. Congress gives OIA
free rein to decide. Would you would prefer more control of that money?
For instance, would you like some of that technical assistance slush
fund put it into specific programs?
Answer. In our collaborative relationship with OIA, we find we have
open communication as to the direction of technical assistance funding
to CNMI priorities. The current operation of this program provides
necessary support to the CNMI with the primary limitation being the
limited total amount of funding available. I would respectfully request
the consideration of Congress to continue supporting this worthwhile
program and find avenues to increase the total amount appropriated to
support this necessary funding source for the territories.
Question 8. The Pacific governors know that the Federal Government
made an error in how it counts the number of FAS immigrants in Hawaii.
Because of their error, OIA has proposed cutting what American Samoa,
Guam, and the Northern Marianas get in Compact Impact funding to make
up for what Hawaii did not get in past years. Hawaii needs that money,
but I do not think that the other insular areas should have to pay for
the Census Bureau's and OIA's mistake. Do you think we should reduce
the administrative budget of OIA to make up for their mistake, rather
than making you pay? Does your administration provide reports on the
costs of hosting Compact migrants?
Answer. Resources and attention should rather be directed to the
issue of whether the authorized level of mandatory assistance is
insufficient to meet the costs of services provided by each affected
jurisdiction. I support the call of the other territory leaders in
urging Congress to work with the affected jurisdictions to resolve this
issue prior to the disbursement of future Compact Impact funds.
And while I disagree that the territories should be made to pay for
the mistake of the Federal Government, I also believe it is unfair to
penalize OIA, when the mistake did not originate from them.
Question 9. A key feature of the U.S. Workforce Act (P.L. 115-218)
is the annual spending plan the Governor puts together for the training
fees that employers of CW workers must pay. The money is supposed to
train local workers to replace foreign workers. Is the Governor's plan
working as projected? How many local workers are being adding to the
workforce?
Answer. The first annual plan for the expenditure of CW training
fees is currently progressing toward full implementation. We are
thankful for the cooperation the CNMI has received with the U.S.
Department of Labor in creating the plan and look forward to utilizing
the available funds to ensure more U.S. workers in our labor force. It
is critical to note that the demand for workers is contingent upon the
state of our economy. The CNMI economy is currently experiencing
difficulties related to the effects of Super Typhoon Yutu, the outbreak
of the coronavirus and the newly implemented requirements of the U.S.
Workforce Act. It continues to be the position of the CNMI government
that a good and growing economy creates opportunities for U.S. workers
in our community.
Question 10. Another key feature of the U.S. Workforce Act is that
OIA must report to Congress on what that agency is doing to help
economic development in the Marianas. Do you agree with their first
report? Are you satisfied with what OIA is doing to identify economic
development opportunities for the Northern Marianas? Can you give us an
example of how OIA is helping you?
Answer. Economic development in the CNMI is difficult, as the
strict limitations we face on land and resources are only compounded by
limited access to labor and capital resources. The report of the
Department of the Interior showcases a brief but accurate narrative of
the financial difficulties experienced in the CNMI and the
Administration has been diligent partners in recognizing the needs of
our economy. The report details the numerous grant programs and
consultative support funded by the Department and the accounting of
these programs is an accurate description of the help being provided to
the CNMI.
Question 11. EPA was recently in the Marianas to plan for using the
$56 million for solid waste. Can you tell me what the plan is? Will
Rota and Tinian finally get modern, environmentally appropriate solid
waste systems?
Answer. The CNMI Government, through the Bureau of Environmental
and Coastal Quality (BECQ), Office of Planning and Development (OPD),
Capital Improvement Projects (CIP), and Department of Public Works
(DPW), are in ongoing discussions with EPA to formulate the Draft
Strategy Summary and Initial Plan for CNMI Recovery and Solid Waste
Management.
At this time, ongoing discussions are centered on the following
proposals:
1. $1.1M--Update of CNMI Integrated Solid Waste Management Plan
2. $2.6M--Increase solid waste staffing capacity within the CNMI
3. $1M--Design and implement composting pilot project on Tinian
4. $51M--CNMI solid waste infrastructure
i. Close Marpi Cell 1; open Cell 2; construct Cell 3
ii. Construct Tinian landfill
iii. Construct Rota landfill
Question 12. How is the additional Nutritional Assistance Program
funding being used? Do you have enough money to keep benefits at the
same level as Guam?
Answer. The disaster funding of $25.2 million was allocated as
follows: 8.68 percent ($2,186,727) for Administrative costs and 91.32
percent ($23,013,273) for Program Benefits costs.
A total of $7,904,171 had been spent as of February 24, 2020.
Any costs incurred above the $25.2M will be charged against the FY
2020 NAP Block Grant. Utilizing both funding sources, the CNMI will
have enough funding to keep benefits at the same level as Guam for FY
2020. However, NAP is currently evaluating the income standards and
benefit levels for FY 2021 with $12.148M plus anticipated carryover
funds of $2,032,783 from the FY 2020 block grant and $3,124,593 from
the ENAP funds, roughly $17,305,376 in total. With the anticipated
funding availability for FY 2021, it appears that funding would be
insufficient to maintain the Guam level in FY 2021.
Question 13. What are you doing with the water and sewer money?
Answer. These funds will support 14 well sites and for wastewater
treatment plant rehabilitation for both Sadog Tasi and Agingan. The
intent is to return them to their original design specification and
operating condition so that CUC can get an additional 25 to 40 years of
life out of those two critical facilities.
CUC will also be completing its water hardening efforts with
installation of back-up power supplies and building structures to house
these units for up to 70 percent of the water supply system.
Question 14. How is the $2 million for financial management being
used?
Answer. The Office of Grants Management will expand on its duties
and responsibilities, specifically related to disaster recovery that is
primarily focused on financial management, reporting, and compliance
pertaining to all disaster-related funding. The Commonwealth Office of
Recovery & Resiliency (CORR) is being established alongside a team of
technical experts (contracted consultants) and will be working with the
various CNMI Government Departments, Offices, and instrumentalities in
order to maximize efficiency and productivity of recovery efforts.
The primary goals of CORR will include coordinating the
implementation of disaster recovery programs; monitoring expenditure of
all Federal disaster assistance programs; and tracking progress on all
Federal recovery program awards.
The grant will be utilized to fund activities of the CORR to help
improve financial management coordination across each agency and
organization receiving disaster recovery funds related to Typhoon Yutu.
In turn, improvement of the financial management processes will help
ensure:
Compliance with Federal grant regulations for financial
and performance management;
Increased financial management accountability and
transparency through reporting; and
Improvements to the CNMI Government's overall
administration of Federal grant programs.
The grant will also be utilized to fund capacity building for
financial and performance management across the recipient agencies of
Federal disaster funds (grantees) and others performing disaster
recovery work through the following activities:
Hands-on training;
Workshops;
Strengthening of internal controls (policies and
procedures) including capacity building (hands-on
workshops)
Tracking tools such as electronic database, logs and
spreadsheets; and
Upgrading/purchasing of equipment and software, as
applicable.
Furthermore, the grant will be utilized to create and maintain
critical reports on disaster funding for all interested parties. These
reports shall be made available on a website and shall identify:
Summary total of Federal awards per grantor agency;
Detailed expenditures for awarded projects updated on a
monthly basis; and
Elements of the Federal program and projects and the CNMI
Government administering and user agency.
Overall, the effect of the above CORR activities will be improved
coordination and oversight for financial and program management at the
grantee user agency level that may be adopted for all grant programs as
applicable.
The CNMI Government is receiving multiple Federal disaster grant
funds to assist in the response, restoration and mitigation efforts
across the territory as a result of Super Typhoon Yutu.
This request through the OIA's Technical Assistance grant will
provide technical assistance with funding key fiscal management,
accountability, and transparency activities related to disaster
recovery brought upon by the major disaster declaration of Super
Typhoon Yutu.
Question 15. Are you having any problems accessing these funds that
I put into the Disaster Recovery Act for the Marianas?
Answer. No.
Question 16. What are your thoughts on the Prior Service Trust
Fund? Should OIA continue to bankroll the fund? Should OIA keep using
Technical Assistance Program grant funds?
Answer. I support the United States' continued commitment to the
hundreds of beneficiaries who previously served in the U.S.-
administered Trust Territory of the Pacific Islands (TTPI), as these
benefits represent a responsibility assumed by the Federal Government
following the dissolution of the TTPI in 1986.
Question 17. Recently imposed austerity measures include 32-hour
work weeks for government employees because of the significant downturn
in economic revenue. How will this impact employees who are paid with
Federal program funds? How will cutting their hours help with the
financial challenges?
Answer. Tourism is the lifeblood of this economy. It funds
necessary public services and provides jobs for our residents. When
events such as Super Typhoon Yutu and the outbreak of the coronavirus
impact this flow of resources into our economy, the entire community is
affected. Both public and private sector organizations are reeling from
this onslaught of economic disruptions, and nearly all employers are
making the difficult but unavoidable decisions to reduce work hours. It
is critical to note that federally funded employees work alongside
locally funded employees, in the same office spaces and using the same
pool of physical resources. It is not a prudent use of limited Federal
Government resources to continue to open offices at a total capacity in
which the programs funded cannot find productive use for the time being
spent. As I have mentioned, the CNMI economy is in a difficult
position. The steps we are forced to take have tremendous impacts to
the nature of our community, but are required to ensure the
continuation of government services, the proper use of Federal
resources, and the mitigation of financial crisis of substantially
deeper proportions. The thoughts and assistance of Congress in
supporting a more resilient and diversified economy in the CNMI is
necessary, and should include all issues of congressional jurisdiction,
such as, limiting restrictions on labor and construction resources,
providing greater incentives for U.S. companies to invest in the CNMI,
and increasing Federal resources in targeted areas to support economic
stability, ameliorate structural inefficiencies present in small island
economies and proactively supporting economic growth in lieu of tighter
restrictions on economic activity.
______
Mr. Sablan. [Speaking foreign language.] I would now like
to welcome the Governor of Guam, the Honorable Lou Leon
Guerrero.
Governor, you have 5 minutes, please.
STATEMENT OF THE HON. LOU LEON GUERRERO, GOVERNOR, GUAM
Governor Guerrero. Thank you, Congressman.
[Speaking foreign language] for the opportunity to appear
before this Committee today to make comments on the proposed
Fiscal Year 2021 budget request for the Department of the
Interior. My testimony on OIA's budget will be brief.
Throughout OIA's existence, the U.S. territories have
largely benefited from the flexibility of Federal grants that
respond to the diverse needs of our islands. These grants vary.
OIA's role in providing this assistance continues to be an
important part of Guam's strategic growth, but we are
appreciative of more than OIA's funding. We also value its
partnership and advocacy within the Federal bureaucracy.
Having served my first year as Governor of Guam, I have
been witness to this value firsthand. As this Committee
contemplates OIA's Fiscal Year 2021 requests, I am in favor of
increasing the budget that provides for territorial assistance
in the areas of technical assistance, maintenance assistance,
and energizing insular communities. The purposes of these
areas, along with the flexibility maintained by OIA to
prioritize these grants, respond to both basic and growing
needs of U.S. island communities.
U.S. territories, however, need changes in policy that this
Committee has supported in the first session of the 116th
Congress. Specifically, I would like to acknowledge Chairman
Grijalva, Ranking Member Bishop, and Delegate Kilili Sablan for
convening a hearing that identified the Medicaid cliff caused
by expiring provisions of the Affordable Care Act for the
territories. Through their leadership, the work of this
Committee, and the Congress as a whole, millions of Americans
living in the territories maintained their access to health
care without unfair matching rates or onerous caps.
As a result of this Committee's interest and advocacy, the
Congress passed legislation that raised the caps for all U.S.
territories and changed our matching formula from 43 percent to
17 percent for the next 2 years. We are, of course, grateful
for this new formula, and that Guam's cap was raised from $18
million to $127 million per year. And, Congressman, be assured
we will spend all that money.
However, we should be treated no differently than if one
resided in a state. I am hopeful that when Congress revisits
this issue, that state-like treatment for Medicaid can be fully
extended to U.S. territories.
Similarly, U.S. territories whose tax code mirrors the U.S.
tax code find themselves treated differently with the Earned
Income Tax Credit, which is a program that benefits working
people with low to moderate income. I am in favor of programs
such as this. However, its application in Guam and other
territories is a burden on our local coffers. The EITC benefit
is directly paid out by the U.S. Treasury, and is estimated to
be a $56 billion program.
However, such benefit is not one assumed directly by the
Federal Government. Rather, the benefit is paid directly out
from our local coffers. For Guam, the estimated annual cost is
$60 million, a benefit that is otherwise paid by the Federal
Government in every state of the Union, and at a figure which,
if left in Guam's budget, would allow us to nearly retire our
deficit, make investments into education and public safety, or
replace our only public hospital.
I applaud House Ways and Means Chairman Richard Neal for
authoring H.R. 3300, the Economic Mobility Act of 2019, and for
its inclusion in the recent supplemental bill passed by the
House last week. The language will direct the U.S. Treasury to
reimburse Guam for 75 percent of its EITC costs. Mr. San
Nicolas is the sponsor of this bill, and though I believe that
Guam and our sister territories should be treated equally with
the states by reimbursing us 100 percent of our costs, H.R.
3300 is a step toward fairness.
As I give this testimony, I cannot help but think how many
governors of Guam have covered the same ground. For years,
territorial governors sitting in hearings like this have
highlighted the costs associated with the Compacts of Free
Association. While these bilateral documents help to offset
China's growing influence in the Western Pacific, and preserve
our national security interests, Guam and other affected
jurisdictions are left to fund the consequences of unmitigated
migration.
While Guam's Compact-related expenditures far outweighs the
Federal offset, equal to only 10 percent of our total island
costs, the methodology used to calculate these costs is often
the subject of skepticism and inquiry. The economic benefit
analysis will accompany shortly our Federal report.
As the upcoming negotiations to extend financial terms of
the current Compact nears, I implore this Committee to
encourage the Administration to consider including as agenda
items: (1) a screening program by the Department of Homeland
Security to ensure that migration to U.S. jurisdictions
complies with the Compact; (2) I would like them to reimburse
Guam 100 percent of our total costs; and (3) I would also like
the Committee to consider providing greater support to FAS
countries in developing their economies and opportunities for
their people.
As the Committee is aware, as a strategic location for the
country's projection of forces in the Indo-Pacific region, Guam
is host to a multi-billion-dollar military infrastructure. We
soon will have a home inaugurated as Camp Blaz, and we will be
endeavoring about $8 billion in cost, an expense shared by both
Japan and the United States.
In the past, Congress has created a Guam-only visa waiver
program, and has also removed Guam from the national cap on H-2
labor. Given these precedents, I am advocating that Congress
pass legislation to create a Guam-only H-2 labor program. I am
hopeful that you would consider my proposal, as I advocate for
it this year.
Finally, I want to thank this Committee for its expeditious
action on H.R. 1365, and we are equally grateful to the Office
of Insular Affairs' role, and to that of the Assistant
Secretary Doug Domenech for the interagency effort to work
bipartisanly with my administration that has allowed Guam to
make awards to those remaining survivors. The ability to do
this, while still supporting the passage of H.R. 1365 and
maintaining our local action, does not abdicate or negate the
need for action by Congress.
We are appreciative of the Committee's long-standing
involvement dating back to our first Delegate, Antonio Won Pat,
and with every Delegate who has championed the issue of parity
in Guam: Mr. Blaz, Mr. Underwood, Ms. Bordallo, and your
current colleague, Mr. San Nicolas.
We are hopeful that the U.S. Senate will pass H.R. 1365.
Thank you again for the opportunity to appear before this
Committee, and I apologize for going over by 3 minutes, 44
seconds, but we have all traveled very far. Thank you for your
patience in listening to our testimony.
[The prepared statement of Governor Guerrero follows:]
Prepared Statement of the Honorable Lourdes A. Leon Guerrero, Governor
of Guam
Hafa Adai and Si Yu'os Ma'ase for the opportunity to appear before
this Committee today to make comments on the proposed FY 2021 budget
request for the Department of the Interior's Office of Insular Affairs.
By extension, I will also share with the Committee my perspective on
Federal policy which weakens Guam's economic growth.
My testimony on OIA's budget will be brief. Throughout OIA's
existence, the U.S. territories of Guam, American Samoa, the U.S.
Virgin Islands, and the Commonwealth of the Northern Mariana Islands
have largely benefited from the flexibility of Federal grants that
respond to the diverse needs of our islands. These grants vary. They
can provide technical assistance to improve our human capacity making
our local governments more efficient and effective, they can help our
governments meet a shortage of public school busses or emergency
vehicles, or they can be the building blocks of our plans to address
school maintenance, adopt greener energy solutions, or develop our
workforce.
OIA's role in providing this assistance continues to be an
important part of Guam's strategic growth. But, we are appreciative of
more than OIA's funding, we also value its partnership and advocacy
within the Federal bureaucracy.
Having served my first year as Governor of Guam, I have been
witness to this value firsthand. I am grateful to OIA's career staff
and its leadership for the strong professional relationship we have
forged since I took office.
As this Committee contemplates OIA's FY 2021 request, I am in favor
of increasing OIA's budget that provides for territorial assistance in
areas of Technical Assistance, Maintenance Assistance, and Energizing
Insular Communities. The purposes of these areas, along with the
flexibility maintained by OIA to prioritize these grants, respond to
both basic and growing needs of U.S. island communities.
U.S. territories however need changes in policy that this Committee
has supported in the first session of the 116th Congress. Specifically,
I would like to acknowledge Chairman Grijalva, Ranking Member Bishop,
and Delegate Kilili Sablan for convening a hearing that identified the
Medicaid cliff caused by expiring provisions of the Affordable Care Act
for the territories. Through their leadership, the work of this
Committee, and the Congress as a whole, millions of Americans living in
the territories maintained their access to health care without unfair
matching rates or onerous caps.
As a result of this Committee's interest and advocacy, the Congress
passed legislation that raised the caps for all U.S. territories and
changed our matching formula from 43 percent to 17 percent for the next
2 years. We are of course grateful for this new formula and that Guam's
cap was raised from $18 million to $127 million per/year. However,
Americans living in territories should be treated no differently than
if one resided in a state. I am hopeful that when the Congress revisits
this issue, that state-like treatment for Medicaid can be fully
extended to U.S. territories.
Similarly, U.S. territories whose tax code mirrors the U.S. tax
code find themselves treated differently with the Earned Income Tax
Credit, which is a program that benefits working people with low to
moderate income. I am in favor of programs such as this, however, its
application in Guam and other U.S. territories is a burden on our local
coffers. The EITC benefit is directly paid out by the U.S. Treasury and
is estimated to be a $56 billion program.
However, in Guam and the U.S. Virgin Islands, where our tax code
mirrors the U.S. tax code, such benefit is not one assumed directly by
the Federal Government. Rather, the benefit is paid directly from local
government coffers. For Guam, the estimated annual cost is $60 million.
A benefit that is otherwise paid by the Federal Government in every
State of the Union and at a figure which, if left in Guam's budget
would allow us to nearly retire our deficit, make investments into
education and public safety or replace our only public hospital which
was built in 1964.
I applaud House Ways and Means Chairman Richard Neal for authoring
H.R. 3300, the Economic Mobility Act of 2019 and for its inclusion in
the recent supplemental bill passed by the House last week. The
language will direct the U.S. Treasury to reimburse Guam for 75 percent
of its EITC costs. Mr. San Nicolas is a co-sponsor of the bill and
though I believe that Guam and our sister territories should be treated
equally with the states by reimbursing us 100 percent of our costs,
H.R. 3300 is a step toward fairness.
As you may know, the Administration has issued a ``Statement of
Administration Position'' on the supplemental measure which indicates
that the President will veto it if passed by the Senate. The SAP does
not mention any specific opposition to offsetting Guam's costs, so I am
hopeful that the House can move the bill as a stand-alone or find
another legislative vehicle that the Senate can eventually pass.
As I give this testimony, I cannot help but think how many
governors of Guam have covered the same ground. For years, territorial
governors, sitting in hearings like this, have highlighted the costs
associated with the Compacts of Free Association. While these bilateral
documents help to offset China's growing influence in the Western
Pacific, and preserve our national security interests, Guam and other
affected jurisdictions are left to fund the consequences of unmitigated
migration. We have documented our costs at $150 million per/year.
While Guam's Compact related expenditures far outweighs the Federal
offset, equal to only 10 percent of our total costs island, the
methodology used to calculate these costs is often the subject of
skepticism and inquiry. To that end, Guam has been working with GAO to
meet previously identified gaps in reporting and design a methodology
that works. That method, and the Economic Benefit Analysis that
accompanies it will be finalized shortly. The net impact of this effort
is a cost that is accurate and fundable.
With the upcoming negotiations to extend financial terms of the
current Compact nears, I implore this Committee to encourage the
Administration to consider including as agenda items: (1) an executable
screening program by the Department of Homeland Security to ensure that
migration to U.S. jurisdictions complies with the Compact; (2)
reimbursing Guam 100 percent of our total costs or, at minimum, define
``offset'' to be 75 percent of our total expenditures hosting FAS
citizens; and (3) providing greater support to FAS countries in
developing their economies and opportunities for their people.
As this Committee is aware, as a strategic location for the
country's projection of forces in the Indo-Pacific region, Guam is host
to a multi-billion dollar military infrastructure. In a short time,
Guam will also be the newest home to the newest Marine Corps Base
constructed in more than 50 years, which will take on the name of
Guam's former Delegate and first son of Guam to attain the rank of
General in the U.S. Marine Corps, the late Ben Blaz.
The yet to be inaugurated Camp Blaz, has been an endeavor that will
ultimately cost $8 billion--an expense shared by both Japan and the
United States.
A decision by the Homeland Security Department in 2014 rolled back
Guam's use of H-2 laborers, however the labor demands needed to build
Camp Blaz continued to be available to the military. Because foreign
labor was preserved for primarily military construction and severely
limited for civilian projects, the cost of construction in Guam has
risen, housing is becoming unaffordable, our hotel industry cannot
provide enough rooms to meet growing tourism, and in the midst of an $8
billion investment in Guam which naturally attracts private interests--
investors are deterred from investing in our island because of the
uncertainty of securing labor for any projects outside of military
interests.
In the past, the Congress has created a Guam-only visa waiver
program and has also removed Guam from the national cap on H-2 labor.
Given these precedents, I will be advocating that the Congress pass
legislation to create a Guam-only H-2 labor program. Such a program
will be exclusive to Guam and coincide with military buildup with a
sunsetting provision.
Peace is good for everyone. And the national interest is best
served when the military and civilians are good neighbors--especially
in small communities. It is also important to point out that lacking an
overall policy to economically develop our U.S. territories, it would
behoove us all to not take advantage of interests who want to develop
Guam while the Federal Government is making an $8 billion investment
into the island.
I am hopeful that this Committee can support such a proposal as I
advocate for it this year.
Finally, I want to thank this Committee for its expeditious action
on H.R. 1365; and we are equally grateful to the Office of Insular
Affairs' role and to that of Assistant Secretary Doug Domenech, for the
interagency effort to work bipartisanly with my administration that has
allowed Guam to make awards to those remaining survivors of Guam's
wartime occupation in the absence of the Treasury not being able to do
so at this time.
The ability to do this, while still supporting the passage of H.R.
1365 and maintaining that our local action does not abdicate or negate
the need for action by the Congress, has been important to allow Guam's
remaining survivors parity, justice, and healing during this 75th year
marking the island's liberation from Japanese occupation.
We are appreciative of the Committee's long-standing involvement,
dating back to our first Delegate, Antonio Won Pat and with every
Delegate who has championed the issue of parity to Guam; Mr. Blaz, Mr.
Underwood, Ms. Bordallo, and your current colleague, Mr. San Nicolas.
We are hopeful that the U.S. Senate will pass H.R. 1365 soon. As
the number of living World War II survivors shrinks each day, I think
it is right that they know you stood with them.
Thank you again for the opportunity to appear before this Committee
and I look forward to answering any questions you may have.
______
Questions Submitted for the Record to Governor Lou Leon Guerrero of
Guam
Questions Submitted by Rep. Neguse
Question 1. Governor, you know better than us that healthy coral
reefs protect your islands from coastal erosion and storm damage among
other beneficial effects. But these precious resources have been
experiencing a variety of threats including poor water quality, over-
harvesting, coastal development, disease and bleaching. The Office of
Insular Affairs (``OIA'') has supported coral reef initiatives on your
islands in the past under recommendations from the Coral Reef Task
Force. However, for FY 2021, OIA is proposing cuts to their Coral Reef
Initiative by more than 65 percent.
1a. How will such a drastic cut affect your natural resources
managers' ability to control and eradicate invasive species and protect
your fragile environments?
1b. Are there particular environment or wildlife challenges that
Congress can be helpful to you in addressing?
1c. Is the Department of the Interior being responsive to your
needs? What is the most pressing of those that is not currently funded
at necessary levels?
Answer. (A) Funding under the Coral Reef Initiative is a major
pillar of Guam's coral reef protection, resiliency, and restoration
efforts. This drastic a reduction coral reef funding would severely
impact efforts to cope with major losses to Guam's coral reefs as a
consequence of the impact of invasive species and coral bleaching
events caused by climate change including the loss of \1/3\ of all
shallow corals around the island.
(B) Given the enormity of the challenge for habitat ecosystem
management to address the consequences of invasive species and climate
change, increased technical and funding support from the Federal
Government is sorely needed.
(C) The support provided by the Department of the Interior to
address these issues is greatly appreciated. Additional funding support
though is needed to advance local efforts with respect to soil and
coastal erosion, coral reef restoration, as well as the increasing
adverse impact of invasive species.
Questions Submitted by Rep. Sablan
Question 1. The Interagency Group on Insular Areas was created to
``solicit information and advice from the elected leaders of the U.S.
Insular Areas'' and make recommendations to the President to address
appropriate issues regarding Federal programs. Do you believe the
executive branch is doing enough to address your concerns?
Answer. The relationship between the executive branch and Guam has
been good during my first year in office. We have no expectations that
all concerns we have raised will see immediate resolution. However, we
find that there is a level of engagement that we believe is sincere in
nature.
Question 2. Are there any specific issues you think Congress needs
to address?
Answer. We are thankful to Congress' action that has changed the
cap and matching requirement for Guam under the Medicaid program. Guam
would like Congress to: (a) pass legislation that reimburses mirror-
code jurisdictions that are required to provide the Earned Income Tax
Credit, Guam's estimated annual costs is estimated at $60 million; (b)
provide a solution for Guam to regain access to foreign labor; and (c)
address Guam's annual public expenditure of $150 million attributed to
effects of the free migration provisions of the Compacts of Free
Association with the Republic of the Marshall Islands, the Federated
States of Micronesia, and the Republic of Palau.
Question 3. Congress passed the FY 2020 appropriation with $6.25
million for the formulation and implementation of energy action plans
to reduce the cost of electricity, stop the loss to island economies
from purchase of imported fuels, and increase the efficiencies of your
distribution systems. This a long over-due down payment on P.L. 113-
235. The House has shown we are willing to invest much more. Our FY
2020 bill had $12 million, but the final bill cut that in half. We need
to hear from you. Are you interested in more help to cut the cost of
electricity for your constituents and modernize your electrical
systems?
Answer. Yes, we need more assistance to reduce Guam's reliance on
fossil fuels and to increase our utilization of alternative forms of
energy both at the residential and commercial levels.
Question 4. How is Interior and the Office of Insular Affairs
helping your administration combat and prepare for the effects of
climate change?
Answer. In 2016, DOI provided a $50,000 Technical Assistance
Program grant to address Guam's climate change concerns with respect to
Guam. This has been utilized for several projects including:
vulnerability analysis of built environments at coastal bays, multi-
section resiliency workshops, a pilot climate GIS Project, all planners
Climate Training Workshops, and the update of Guam's Storm Water
Management Plan for climate change impacts.
Question 5. On February 7, 2020, the House passed legislation that
would provide funding for the Earned Income Tax Credit in Guam, the
U.S. Virgin Islands, American Samoa, and the Northern Marianas. The
White House says the President will veto the bill. President Obama came
out in favor of EITC for the insular areas at the end of his second
term. Where do you stand on this issue? Should Congress provide Federal
funding to pay our low-income working families?
Answer. Guam is in favor of the passage of Federal legislation that
would require mirror-code jurisdictions to be reimbursed by the Federal
Government for carrying out implementing the Earned Income Tax Credit.
Question 6. Congress helped you avoid the Medicaid cliff with
passage of Public Law 116-94. The law also reduced your local share of
Medicaid from 45 percent to 17 percent--better than the matching amount
for any state. Can you tell us how you are using all this new money to
improve delivery of health care to your constituents?
Answer. The new funding is being used to Increase the Guam Medicaid
Poverty level to reduce the uninsured population on Guam and reduce the
only Government Hospital's outstanding receivables, thereby improving
its service delivery. Additionally, we will amend the Medicaid State
Plan to cover all medically necessary cardiac related devices, such as
watchman device, implantable cardioverter-defibrillator, other FDA
approved cardiac implants, and also to cover prosthetic device (Knee
and hip replacement). We are also exploring the possibility of
increasing the provider fee schedule to increase provider
participation.
Question 7. Congress provided $20.8 million for technical
assistance to the insular areas last year. The Administration keeps
trying to cut technical assistance. The President's FY 2021 budget
proposes $14.67 million. OIA hands out that technical assistance money
in response to requests from governors and others. Congress gives OIA
free rein to decide. Would you would prefer more control of that money?
For instance, would you like some of that technical assistance slush
fund put it into specific programs?
Answer. I am in favor of increasing OIA's budget that provides
territorial assistance in the areas of Technical Assistance,
Maintenance Assistance, and Energizing Insular Communities. We
recommend a change to the current process of allocating technical
assistance funding whereby a set amount is allocated to each insular
area versus OIA prioritization or a ``first come, first served basis''
would give our governments more access and control over these limited
financial resources. It should be noted that, based on information in
DOI OIA's FY2020 and FY2021 Budget Justification documents, technical
assistance funding is typically via direct grants to insular areas or
through ``TAP Crosscutting'' programs which benefits multiple insular
areas (e.g., Close Up and Junior Statement Foundations, the Graduate
School USA programs, etc.). However, in FY2018 and FY2019, it appears
that approximately $2M and $3M in technical assistance funding
respectively was redirected to specific insular areas for disaster
relief efforts. Perhaps OIA lobbying for more funding support for the
insular areas from the Federal Emergency Management Agency and other
Federal agencies, would safeguard already-limited technical assistance
funding for our insular governments.
Question 8. The Pacific governors know that the Federal Government
made an error in how it counts the number of FAS immigrants in Hawaii.
Because of their error, OIA has proposed cutting what American Samoa,
Guam, and the Northern Marianas get in Compact Impact funding to make
up for what Hawaii did not get in past years. Hawaii needs that money,
but I do not think that the other insular areas should have to pay for
the Census and OIA's mistake. Do you think we should reduce the
administrative budget of OIA to make up for their mistake, rather than
making you pay?
Answer. As I mentioned in my December 2019 memorandum to Assistant
Secretary for Insular and International Affairs, Douglas Domenech, our
island should not be penalized $12M for technical error that was not of
our doing. This need to maintain Guam's Compact Impact Assistance
allocation through FY2023 is especially important considering our long-
standing position that our government is already grossly under-
compensated in the areas of health, safety and education as a result of
the Compact of Free Association between the United States and the FSM
and RMI. With that said, I'll defer to the Committee on Natural
Resources on identifying a viable source of funding to provide to the
state of Hawaii.
______
Mr. Sablan. You are more than welcome. It is our privilege
that all three of you are actually here this afternoon.
First, I would like to seek unanimous consent that the
Delegate from the U.S. Virgin Islands, Ms. Plaskett, be allowed
to sit on the dais and ask questions.
Without objection, so ordered.
It is now time for Members to ask questions. Members will
each have 5 minutes to ask their questions and get the
response.
I will and I would think that others may be submitting
questions for the record. The Committee will forward those
questions to you, the witnesses, and look forward to getting
responses in a 10-day period. Thank you.
I yield myself 5 minutes for questions.
Again, welcome, Governors. And I understand that economic
development was a theme of IGIA, this year's theme. But
clearly, all the insular areas are struggling. I am happy that
issues identified by territorial governors last year were
reported as addressed--the Medicaid cliff and FMAP, natural
disaster recovery, foreign worker visas, Federal tax policy,
Guam World War II Recognition Act.
A couple thoughts for American Samoa. I am not sure how the
other Delegates feel, but some of these issues that I worked
on, I have never heard anything from OIA. It was Congressional
Members working together on the Medicaid. It is over 2 years of
work.
So, I am going to ask. Did you hear any proposal this
morning that will get your economies growing, Governor Bryan?
Governor Bryan. We were the ones doing the proposing, in
terms of it growing our economy.
One of the things that came up key that I mentioned was
that we need to be aligned with U.S. foreign policy in the
Caribbean, as well as within the Pacific for my friends. We
don't really see a strategy that is beyond us.
I mean, we are so small, anything that happens--we also
pointed out the fact that Puerto Rico has been under duress for
several years now, and there has been no real definitive action
by the U.S. Congress or the Administration to help to create a
vehicle that would put us on a road to sustainability again.
And at the same time they watch us headed down the same track
as Puerto Rico has been, and there is no help in sight.
I mean, more than putting the PROMESA in there, there has
not been an act that would create more pharmaceutical
companies, an advantage to distillation, or some other economic
incentive that would create prosperity and sustainability----
Mr. Sablan. Governor, thank you. I have 5 minutes, so I
really--no disrespect.
Governor Bryan. Oh, I thought it was my 5 minutes. I am
sorry, sir.
[Laughter.]
Mr. Sablan. No, sorry.
Lieutenant Governor Palacios, did you hear any specific
proposals that would get the Marianas' economy growing?
Lieutenant Governor Palacios. Nothing specific. We pointed
out a lot of issues that need to be addressed. EDA was there.
Mr. Sablan. Yes.
Lieutenant Governor Palacios. There were several
departments, Federal departments, that offered the assistance.
But we always talk about capacity. And there are times when
we just don't have the capacity. Surely, with a nation like the
United States, which is the most prosperous country in the
world, there has to be a policy that would work for the insular
areas. Somebody within the Federal machinery could certainly
take a look at this issue and say, ``What can we do to craft
policies for the Virgin Islands, for the Commonwealth, for
Guam, as they are unique.''
Mr. Sablan. And the Department of the Interior, Governor,
is supposed to be our advocate in the executive branch. And I
would be remiss if I don't say that they have not exactly had
stellar records. I am not saying they have not done anything,
but there is a lot of wish--we wish they would do a little bit
more.
I have 47 seconds. Governor Guerrero?
Governor Guerrero. Thank you, Congressman. Yes. We actually
were driving the discussions. However, they did talk about
opportunity zones, and the process that they have done to help
us along, and encouraged us to take advantage of that tax
incentive program.
We also talked a lot about workforce development, and the
importance of apprenticeship, business-private partnerships.
But I think, as territories, we need to be the one aggressively
driving the agenda. That is what I would like to see.
And I just wanted to say we have a very good working
relationship with OIA. In fact, they were very, very visible in
our National Governors Association. So, I do appreciate that
working relationship.
And, of course, we have to bring in our Congressional
Delegates, also.
Mr. Sablan. Thank you. Thank you very much. My time is up.
I now recognize the Ranking Member, the gentlelady from Puerto
Rico. She has 5 minutes.
Miss Gonzalez-Colon. Thank you, Chairman Sablan. And again,
thank you, all the governors, for being here.
I know many of the situations that we all face are examples
of what it is like living in the territories. I will begin with
Lieutenant Governor for the Northern Mariana Islands,
specifically about the bill. And you were saying about--can you
discuss the importance of the capital improvement project
grants in CNMI, and how these capital improvement project
dollars aided during Typhoon Yutu recovery efforts? If you
can--and remember, I have just 4 minutes. So, if we can be
concise so I can do other questions.
Lieutenant Governor Palacios. The capital improvement issue
that I brought up is actually a funding that was under the
provision of our covenant, our agreement with the Federal
Government, to come into the U.S. family of $27 million a year.
Somehow, somewhere, some time that disappeared. I don't know
why it disappeared, how it disappeared. But the fact of the
matter is that today, instead of $27 million, the Commonwealth
only gets $9 million to do infrastructure development.
Some of those monies now go to our brothers and sisters in
Guam, our brothers and sisters in American Samoa, and our
brothers and sisters in the Virgin Islands, and I think even
Puerto Rico. We don't want to take those monies back from our
brothers and sisters in these other insular areas. We want and
we would like to see if Congress would consider increasing the
level of that funding for the insular areas, so that everybody
has a bigger piece of this pie.
Miss Gonzalez-Colon. Lieutenant Governor, I know that
tourism is one of the biggest areas in your economy, and I
don't know if the Department of the Interior is helping you
out, considering the coronavirus and many other things in the
Pacific, as well. But in terms of the territorial assistance
line item, which of the programs, in terms of technical
assistance, maintenance assistance, coral reef initiatives,
among many others, which one of them is the most important one,
the most that CNMI get more benefits from?
Lieutenant Governor Palacios. It is the CIP money, $9 to
$15 million, and perhaps the technical assistance program.
Miss Gonzalez-Colon. I am going to do kind of the same
question to the Honorable Governor of Guam. You ask in your
statement for support for an increase in the territorial
assistance. Which program under that umbrella is most helpful
to Guam?
Governor Guerrero. I would say they are all three equally
important. But I think, for the most part, the technical
assistance is very important, because it provides us with help
in whatever projects that we are going through. For example,
automation is one, and just maybe analytics and data
collection, so we can have a much better understanding of our
issues in Guam.
I believe they are all equally important, but if I had to
choose, I would say technical assistance.
Miss Gonzalez-Colon. I would never put you to choose, but I
just want to know which one of them is the most important in
terms of helping you out, has the most positive impact. I was
thinking about when we went there, we saw the brown tree snake
control program, among many others. See, I remember.
So, if you can have some of those programs specifically,
you say technical assistance. And I will go back now to the
U.S. Virgin Islands.
Governor, I know tourism for you, as well, is one of the
most important tools. What is the U.S. Virgin Islands doing,
actually, to cope with the situation in terms of the industry
recovering from the hurricanes?
And what advantages for the U.S. Virgin Islands in the
budget are included, in terms of the budget that is included
there?
Governor Bryan. We don't see any direct benefit to the
budget.
But on the other question, I think at this point in time,
the coral reef is very important, only because we have a new
blight in the Caribbean. That is, we really don't have an
answer, and no one has an answer for it. The reefs also
sustained damage in both storms. And I know Puerto Rico was
getting some money--and then it stopped at FEMA--for coral reef
repair and revitalization.
The CIP money is very important to us, too, but at this
time we have a lot of other Federal aid that helps along with
that. And it just patches those little holes that we don't have
local money for, or Federal funding. But the coral reef is
something that we really need to bump up and pay attention to
as we move forward.
Miss Gonzalez-Colon. Thank you. I yield.
Mr. Sablan. I thank the Ranking Member. I next recognize
the distinguished gentleman from Guam, Mr. San Nicolas, for 5
minutes.
Mr. San Nicolas. Thank you, Mr. Chairman. I want to begin
by thanking you for your leadership on this Committee, and also
thanking you for your leadership with respect to our recent
achievements on our Medicaid funding. I know that you have been
working with that for many years.
I would also like to thank my colleague to my left,
Congresswoman Plaskett, for her leadership in pushing for the
EITC issue for many years.
I would like to thank our Ranking Member and our colleague
of Puerto Rican descent for our Puerto Rican brothers and
sisters always being here for us, as well; and our brother from
Hawaii, thank you so much also, as well, for always looking out
for the needs of our territories.
I was very interested to listen to the responses to the
question from my Chairman with respect to economic development
initiatives that were discussed today. I think that, as much as
we want to secure more Federal funding for the needs of our
territories, our ability to grow into our own capacity is
something that is going to benefit all of us, regardless of
whether or not we are going to be successful in securing
legislation for more Federal funding.
And I wanted to just inform the governors that one of the
things that I am going to be working on is something that we
worked on earlier with respect to trying to secure an office of
territorial exporting within the Export-Import Bank of the
United States. Right now, there is no specific focus on
territories. That is about $145 million of export-import
financing support that has not been reaching territories.
I know that my colleague from Puerto Rico has about maybe
30 different companies that have been able to avail of that.
But as far as the U.S. Virgin Islands, the Commonwealth of the
Northern Mariana Islands, and Guam, we have still not been able
to tap into that resource. Hopefully, we can get that
legislation through the Financial Services Committee. But in
the meantime, I think that it will be great for the respective
administrations to begin looking at that opportunity, so that
we can begin to align local policy with Federal policy.
One of the things that has allowed us to be successful in
this past year for something as dramatic as Medicaid, is the
fact that, if we are able to identify common denominators
within each of the territories, and focus our energies on
advocating for that specific common denominator, then we are
not taking as much of a shotgun approach. We are able to laser
in and actually make some major achievements.
So, I wanted to ask the governors, because I know that you
all had your own individual lists of needs. And we are not
going to neglect those lists, but if the governors can come
together and inform us of what they can agree on as a common
denominator that all of us up here can advocate for within our
respective capacities.
Governor Bryan, I guess you can go ahead and begin.
Governor Bryan. Thank you. I think, immediately, Medicaid
is one that is really huge. And then the other one is the visa
waivers. We have been asking for that for quite some time. They
are the GILTI tax changes in the law that make other tax
incentive areas that are foreign more attractive than we are. I
think those are three right off the cuff that would give us
that sustainability, and give us the ability to do a lot of
things.
Mr. San Nicolas. Is the EITC something that is a major
issue that the Virgin Islands wants to have addressed here by
this body?
Governor Bryan. To make out how important that is, it
accounts for almost 40 percent of our tax returns in any given
year. We are behind a year-and-a-half. This past year we kind
of made a record with $70 million in tax returns. It is more
than have ever been returned in the Virgin Islands in one year.
But we are still----
Mr. San Nicolas. Thank you, Governor. I don't mean to cut
you off, but I do have limited time. Thank you, Governor.
Lieutenant Governor Palacios?
Lieutenant Governor Palacios. Thank you. I was just
listening to some of the testimonies of the two governors.
Actually, Governor Lou mentioned something regarding Federal
payment, taking control of the EITC issue so that the
territories don't have to be burdened with this requirement,
whereas in the mainland United States, the Federal Government
pays out.
This is a very, very critical amount of funding for our
governments. And if we are burdened with this, that is one
issue that I believe I can get on. Right now we don't pay that.
But in my very brief discussion yesterday with my
Congressman, he said we are actually risking being sued by
somebody in the Northern Marianas on this particular issue. And
I can assure you we will most likely lose. In that regards----
Mr. San Nicolas. Governor, I don't mean to cut you off, but
I do want to afford my governor a quick opportunity to respond.
Lieutenant Governor Palacios. Thank you.
Mr. San Nicolas. Thank you.
Governor Guerrero. Yes, thank you very much. Of course,
Medicaid is a benefit of all that. We did write a letter
uniting together in this common issue, and I am going to look
forward to also coming forward with the EITC issue, as it does
affect each of us.
And Congressman, I have been in communication with the
Governor from the U.S. Virgin Islands, and I have been in
communication with the Governor from the CNMI, so----
Mr. San Nicolas. Thank you, Mr. Chairman, I yield back.
Mr. Sablan. Thank you, Mr. San Nicolas.
Mr. Soto, sir, you have 5 minutes.
Mr. Soto. I am all about empowering our U.S. territories.
And with that spirit in mind, I yield to the gentleman from
Guam.
Mr. Sablan. The gentleman has 5 minutes.
Mr. San Nicolas. I thank my colleague. Thank you.
So, as we were discussing that common denominator of EITC,
I think that that is something that we all should begin
rallying around. I would like my colleagues to just kind of put
that on notice, because the EITC, I know for Guam, accounts for
about one-third of the total tax refund liability paid out by
the territory of between $56 to $60 million. So, you are
talking about 30 percent of a component on the Guam tax refund
budget, 40 percent on the U.S. Virgin Islands.
Lieutenant Governor Palacios, I know that on the CNMI they
recover the EITC by taxing it back. So, I am not even sure if
it is necessary to make any changes, because if the language is
written that the rebate would still kick in, then even if we
taxed it back, you would still get that rebate on top of it.
I am glad that the governors were able to share with us
that particular common denominator on EITC. And I would just
like to put my colleagues on notice, because that is something
that actually we were able to move forward recently. And I know
that my colleague to my left spoke very passionately about some
components of that particular bill. I know that my colleagues
from Puerto Rico were very active in getting that bill passed
through the House, H.R. 5687.
And that key language in there that also addressed the EITC
for our territories is language that I am hoping we are going
to be able to protect if the bill goes into conference. And if
we run into any kind of problems getting the bill through,
because the Administration has already signaled that they have
issues with it, I am hoping that my colleagues can help us to
find additional avenues for our EITC concern to still be able
to find that channel.
Because one of the very significant things about having
that language pass through H.R. 5687 is that it at least
indicates that Members of the House of Representatives are open
to allowing for that kind of language to be included, not just
in the recent legislation that was passed, but any future
legislation that we may be able to find a vehicle for.
With that, I don't want to use up all of my colleague's
time. I will yield back to my colleague from Florida.
Mr. Soto. I reclaim my time and yield to the gentlelady
from the Virgin Islands.
Ms. Plaskett. Thank you very much for your cooperation and
support of the territories all of the time.
Mr. Sablan. The gentlelady is recognized.
Ms. Plaskett. Thank you so much, sir. I wanted to ask,
Governor Bryan, you talked a little about the coral and how
important it is. What effect would the decaying coral reef have
on tourism that fuels our local economy?
Governor Bryan. The Virgin Islands is home to several
national monuments, including the one on St. John and the Buck
Island National Monument in St. Croix. Depletion of this coral
not only harms us in terms of our tourism product--the wall at
St. Croix is not only a national monument, but it is also a
world-famous diving site. The depletion of our coral not only
hurts our tourism product, but hurts our fisheries, hurts our
ability for our fishermen to make a living. As you know, the
parrot fish is one of the fish that feed off the coral. That
would be greatly affected by this blight.
Furthermore, the scope of this is way beyond our
capabilities as an island, and we have been finding it
difficult just to identify and get the support. We continue to
be plagued by invasive species and blights.
The lionfish is still a problem for us. The blight now in
the coral, a second blight that we are discovering now, and
also we have recently been invaded by boas, and we have a real
boa problem on the island that we never had seen before on St.
Croix.
Ms. Plaskett. Thank you. Under the President's
Administration budget request for Fiscal Year 2021, under the
Coral Reef Initiative in OIA's budget, it is proposed to cut
that coral reef program by $1.6 million. Will that have an
effect on your work to sustain the coral reef?
Governor Bryan. It will absolutely have an effect. Even
though we have been bolstered by the Nature Conservancy trying
to grow coral in small farms, this blight is something that we
weren't dealing with before. As a fisherman, a hobbyist
fisherman and spear fisher, I could tell the difference in the
coral reefs from the time I was in high school to then in 1989,
with the storm.
Buck Island had just begun to come back almost 30 years
later, and now we have had great damage to the reefs again. The
waters pound and break the coral reefs and they fall over, and
it takes them a really long time to recover. And that damages
fishing grounds, fish and wildlife, and, as I said, the
tourism.
Ms. Plaskett. Thank you.
Mr. Soto. I reclaim my time and yield back.
Mr. Sablan. Thank you very much. And just for the record,
the cut to the Coral Reef Initiative and natural resources in
their proposed budget is 64 percent from, like the gentlelady
said, $2.6 million cut to $946,000.
I now recognize the gentleman from Hawaii, Mr. Case, for 5
minutes.
Mr. Case. Thank you very much, Mr. Chair. And it is truly
an honor for me to be a member, together with my colleagues
here of our Island Jurisdiction Caucus, and my colleague to my
immediate right from Florida. He is an honorary member, so he
is participating here, too.
Look, this is pretty serious. Yesterday, we saw the
President's budget. And I assume that you have all taken at
least a preliminary look at it. And if you haven't, it is
devastating to the Office of Insular Affairs. It is a
reduction, again, of somewhere around 20, 25 percent. That is
after the prior year, in which the same thing happened, and
Congress had to restore the funding to the Office of Insular
Affairs for a number of different projects.
We see here that technical assistance is reduced very
significantly, from $20 million to $14 million. Maintenance
assistance, from $4 million to $1 million. The brown tree snake
control, $3.5 million down to $2.8 million. Coral Reefs, as the
Chair just noted, $2.6 million down to $950 thousand. Emerging
insular communities, $6.2 million down to $2.8 million. And a
complete zeroing out of the discretionary Compact Impact aid, a
complete zeroing out of $4 million of Compact Impact aid. Now,
there is mandatory Compact Impact aid, but there is
discretionary over and above that, and that is what this
Administration has gone after.
And it puzzles me. I don't know if that is the right word--
I am amazed. I don't understand it. There seems to be some
level of actual animus inside somewhere in this Administration
to Federal funding to our territories through the Office of
Insular Affairs. And I don't know whether any of you have any
explanation for it.
Is this some miscommunication between our territories and
our Federal Government?
Is it a lack of advocacy inside the Administration? Because
certainly Congress is favorable to this funding. We have
restored it and increased it in many areas.
And it is a little bit of a rhetorical question I am going
to leave you with, because I want to ask you, Governor
Guerrero, some very specific questions about Compact Impact
aid, which we share a great concern about. You spoke earlier
about Compact Impact aid, and about how strongly you felt about
that. I think the figure is that we both get $14 million--or
have, at least in mandatory Compact Impact aid. CNMI gets a
little bit, as I recall. And that is about it for Compact
Impact aid.
My state's direct expenses for Compact Impact assistance
are quantified at $187 million. I think your colleague, my
colleague here, as I recall, Congressman, quantified it
somewhere in the range of $200 million. So, we are talking
about the same amount. You have more Compact residents. And in
some cases your cost differential is correct.
Would you say that that is--and we have, by the way, taken
the position, collectively, that in the renegotiation of the
Compacts, we are not willing to just roll over and accept and
ratify--which is Congress's obligation, and duty, and choice--
another set of Compacts as they come up for renegotiation,
unless there are substantial increases in Compact funding.
Would you agree with that, Governor?
Governor Guerrero. I certainly do. And I am very thankful
for your passion and your advocacy for it.
Governor Ige and myself are in communications of how we can
calculate it so that GAO becomes much more favorable to maybe
looking at our report and giving us more confidence and
credibility in our reports.
We average about $115 million a year. And if you
extrapolate that out, it is almost to a billion. We are very
concerned about it. We see it in our public safety, we see it
in our health, and we see it in our education.
But I also want to say that we welcome our brothers and
sisters to help improve their quality of life. But I think the
Federal Government has a responsibility to help us along with
that, as we are not part of the negotiations, and decisions are
made without our input.
Mr. Case. Governor, we are intending to insert ourselves
into the negotiations on this point, and already have. Because
if we simply do what we did the last time around, your bill and
my bill is going to be well over a couple hundred million
within a very short period of time. And that is unfair to both
of us.
Governor Bryan, my time is up, but I appreciate your
comments on the coral reefs, as well. This is a major area of
funding that has been slashed. We have the same goals in the
oceans that we live and work and play in. And we are completely
supportive of--I am completely supportive of your comments, as
are many Members of Congress. Thank you.
Mr. Sablan. Thank you. The gentleman's time is up.
Again, just for the record, the Department of the
Interior's Office of Insular Affairs has decreased every line
item on their budget, except for their operations, the office.
Everything else is a decrease. But they gave their operations,
the cost of operations, an increase.
We are going to have a second round of questioning.
Oh, I am sorry. I apologize sincerely. I recognize the
distinguished gentlelady from the U.S. Virgin Islands, Ms.
Plaskett, for 5 minutes.
Ms. Plaskett. Thank you. I first want to thank you for
allowing me to be a part of the Committee testimony today. I
think it is so important, these discussions, and I am grateful
for the care that you take in addressing the issues of the
territories in this Committee.
One of the things that I wanted to ask, as you know, so
many of us are dealing with recovery from natural disasters--
the Northern Marianas, Puerto Rico, as well as the Virgin
Islands.
Governor Bryan, what are some of the primary issues that
the Virgin Islands may be having with Federal agencies involved
in their recovery, like FEMA and HUD?
Governor Bryan. Thank you, Delegate.
First of all, one of the major things for us is power,
energy in the Virgin Islands. Our power bills are four times
that of the average of the Nation. It was very disruptive for
us for HUD to take out the ability for us to use CDBG-DR funds,
community grant funds, to use to help us rebuild our power
systems and create a cheaper, more efficient power in the use
of propane, as well as solar and other things that we are
doing.
The other thing that I keep pressing is the 10 percent
waiver. It really doesn't make sense for FEMA to require us to
have a 10 percent match, and then us to take the money out of
HUD. That is the same community development block grants that
the Federal Government is giving us to pay it. It is not like
we are paying it out of our own.
And then last----
Ms. Plaskett. Excuse me, could you tell us how much money,
then, that you would have to use of your own CDBG grant funding
to utilize for the 10 percent?
Governor Bryan. That would be about $500 million, which is
over 25 percent of the money that we are being granted in order
to make the 10 percent grants, which makes absolutely no sense.
Ms. Plaskett. When this body, Congress, gave the authority
for those agencies to waive that statutory requirement?
Governor Bryan. That is correct--$550 million is more than
75 percent of our general fund budget. That is a lot of money.
The other piece is there has to be a different approach.
FEMA is good at response, but they are not so good at recovery.
Island nations cannot be forced to wait 10 years to recover. We
have storms that come every season. This is Year 2--we are in
Year 2\1/2\, and we still haven't finished our temporary
hospital. We need to have an expedited way so we skip all of
these NEPA, Army Corps, and all of the other processes, and be
able to rebuild our schools, hospital, roadways, infrastructure
in a quick way.
Ms. Plaskett. I know one of the things that you have talked
about is on the island of St. John, which is really important
to this Committee on Natural Resources, the relationship with
the national parks. That also leads to issues that local
residents have on St. John with property tax. I know that you
have a proposal to address that. Would you like to share that
with this Committee?
Governor Bryan. There is a real terrible relationship now
by the people who live on St. John and the Park Service. It
is--66 percent of the land on St. John is park land and can
never be developed or built on. This creates the unintended
consequence, a very inflated land price. An acre of land on St.
John can go for a million dollars, just raw land.
That creates a situation where you are having a high tax
impact on St. Johnians who have large tracts of land. Because
of this million-dollar acre next to you, you have 20 acres,
your land taxes could be $30,000-$40,000 a year, while the
Federal Government only pays $30,000 for all the land they have
in the Virgin Islands, including that in St. John. If there was
a mechanism that allowed for St. Johnians to benefit from that
Federal land being there by an investment in their
infrastructure, whether it be in their schools, their hospital,
or their recreational facilities, it would soften the blow and
make people understand.
Also, the Delegate has a piece of legislation to stop the
Park Service from buying any more or taking on any more land in
St. John. The park is big enough. They have way more land than
they will ever use. And I ask you to support the Delegate's
measure in Congress.
Ms. Plaskett. Thank you. Is there anything else you wanted
to share with the Committee in the remaining time that I have?
Governor Bryan. The one thing that I always stress is that
no matter what state you are in, you are probably going to be a
victim of disaster. When you compare Puerto Rico's place to
where we are in the Virgin Islands, you can see where we are
far ahead, not only because we are good, but because Puerto
Rico has many layers of government, and it is very complicated
to get that aid to where it needs to be. That is the same type
of situation you are going to be in in your state, when you get
into a disaster.
The Virgin Islands is a good place to test programs that
expedite the Federal recovery process, so that when it happens
in your state, it won't take you 10 years to get back to where
your residents once were. Thank you, Delegate.
Ms. Plaskett. Thank you. I know that Congressman Graves and
I have a piece of legislation that we have in the
Transportation and Infrastructure Committee to expedite that
process, and we are hoping to get that to the Floor some time.
Thank you so much, Mr. Chairman, for the opportunity.
Mr. Sablan. Thank you. And you don't mind going to a second
round, Governors?
Thank you. OK, we are going to have a second round. I yield
myself 5 minutes.
And just a commentary on Mr. Case's comments about the
Department maybe having some kind of an agenda against the
territories. I will say that I am not sure, because it hasn't
always been like this. We have an Assistant Secretary in the
room, and he came, he consulted Delegates, he consulted us
about what we thought about his plans. So, it was not always
like this.
Mr. Case. Would the Chair yield, just for a quick comment?
Mr. Sablan. Yes.
Mr. Case. I certainly didn't want to--my comments were very
non-specific as to where the problem is. And I have always
found the Department of the Interior and the folks that work in
DOI to be very committed to the territories. So, I suspect
strongly that the issue as to why this funding continues to be
cut lies in another area than the actual Department of the
Interior.
Mr. Sablan. So, I will go back. Congress provided $20.8
million for--let me go to Compact Impact.
The Pacific governors know that the Federal Government made
an error in how it counts the number of freely associated
states immigrants--in Hawaii, Samoa, Guam, and the Marianas.
So, as a result, the OIA has proposed cutting what Samoa, what
Guam, and the Marianas get in Compact Impact to make up for
what Hawaii did not get in past years. Hawaii should get more
money. But the other insular areas should not have to pay for
OIA's mistake.
Lieutenant Governor Palacios, Governor Guerrero, do you
think we should reduce the administrative budget of OIA or the
Secretary's budget to make up for their mistake, rather than
making you pay?
[Laughter.]
Mr. Sablan. Yes or no?
Governor Guerrero. Oh, is he yielding to me? I really
believe I do not agree, and I strongly oppose any kind of
deductions from our Compact.
First of all, we have never been over-funded. And one of
the comments made was that we were over-funded the last 4 years
as a result of not having correct census numbers.
Mr. Sablan. That wasn't your mistake, Governor.
Governor Guerrero. It was not my mistake.
Mr. Sablan. So, do you think that your Compact Impact money
should not be cut, and----
Governor Guerrero. I do not believe it should be cut.
Mr. Sablan. So, your answer is no.
Governor Guerrero. No.
Mr. Sablan. OK, thank you.
Governor Guerrero. Absolutely not.
Mr. Sablan. Lieutenant Governor Palacios?
Governor Guerrero. And could I just say Governor Ige agrees
with me?
Mr. Sablan. Lieutenant Governor Palacios, yes or no?
Lieutenant Governor Palacios. No.
Mr. Sablan. OK, thank you. Let me ask you also, does your
administration, does the Northern Marianas provide reports on
the cost of housing, Compact Impact migrants, as required?
Lieutenant Governor Palacios. Costs?
Mr. Sablan. Yes.
Lieutenant Governor Palacios. Cost of housing?
Mr. Sablan. I mean hosting.
Lieutenant Governor Palacios. Oh, hosting. We do submit a
report to OIA for the small amount of funding that we get, from
Compact Impact----
Mr. Sablan. No, I am a small census count of how many COFA
citizens reside in the Marianas. I think we have been
negligent, Governor, at this point. Guam has been reporting----
Governor Guerrero. Guam has more, yes.
Mr. Sablan. On this count, the Northern Marianas has not
been a part, so we actually wrote a letter asking the Governor
to come back in compliance with the law.
Lieutenant Governor Palacios. I will take a look at that.
Mr. Sablan. Yes. But I have no scruples in getting up and
amending the next fiscal year budget, which, to be very honest,
would probably be next January. It would be between the
Election Day and the new year, the new Congress.
But let me also ask--well, I have 40 seconds. Congress
provided $20.8 million for technical assistance to the insular
areas last year and this year, but the Administration keeps
trying to cut it. This year it is $14.7 million. We are going
to work hard to increase that money.
OIA hands out technical assistance money in response to
requests from governors and others. Congress gives them free
reign. But I want to ask whether you would prefer more control
of the money. Would you like us to take some of the technical
assistance slush fund and put it into implementing specific
programs--the coral reef, the Compact Impact, the CIP money?
What do you think?
My time is up, but you could respond, as quick as possible,
and then I will yield.
Governor Guerrero. I wouldn't mind putting it in other
projects, but would like to give input in where we can
prioritize that.
Mr. Sablan. Thank you.
Lieutenant Governor Palacios. That could be a workable
solution.
Mr. Sablan. Thank you. I now yield to Miss Gonzalez-Colon
for her 5 minutes.
Miss Gonzalez-Colon. I will reserve.
Mr. Sablan. You could yield.
Miss Gonzalez-Colon. No, I reserve.
Mr. Sablan. She reserves. She won't give it to me.
[Laughter.]
Mr. Sablan. So, she will give it to Mr. San Nicolas. You
have 5 minutes.
Mr. San Nicolas. Thank you, Mr. Chairman. Hopefully, she is
reserving so she can give it to me.
But I wanted to follow up with your line of questioning,
Mr. Chairman, and your commentary with respect to the concern
about the Compact funding error that the Administration is
going to be looking to recover. And I wanted to put on the
record, Mr. Chairman, that we need to be very, very cautious
about the kind of precedents that the ``solution'' is going to
set with respect to what this is going to entail.
If the census is making errors in counts, and those errors
in counts are resulting in some areas getting over-funded and
some areas getting under-funded, how we address that census
error, I think, is going to set a precedent in this case with
respect to every other census error that may happen in the
future.
For example, if the census makes an error in the counts for
veterans in a number of states, and that impacts the funding
available for veteran services in the various states, are the
states then going to take the reductions in future veteran
funding in order to offset miscounts by the census in prior
years?
Those are the kinds of things that I think need to be put
on the table, because right now it is very easy for territories
to just be thrown this very roughshod solution of ``Oh, well,
we overpaid you then. We are just going to underpay you now.''
But if we are going to be looking at fairness in terms of the
allocation of dollars with respect to census counts, then we
need to understand that if we are going to be doing this to the
territories today, every other state that may be impacted by a
census miscount in the future would have the door open to
having the same consequence.
And I don't think that territory should suffer this
consequence today, any more than states should suffer a similar
consequence tomorrow. If there was an error in census counts,
the census budget should absorb that error, and this body
should open up the possibility of appropriating not just the
funding for the census, or for the census activities, but also
backstop funding for any census errors that need to be
corrected as a result of funding misapplications.
Another precedent that we all seem to be very mindful of,
Mr. Chairman, is if we insist on that, if we insist on going
back and reducing the funding for territories as a result of
miscounts in the past, then when our territories finally do
come up with a formula that properly prices the cost of the
Compact Impact, then equally, Mr. Chairman, the precedent
should be that we should go back to all those prior years and
correct the funding that was not properly allocated as a result
of those costs.
So, let's put that on the table in this hearing today, Mr.
Chairman, that not only is this conversation about a simple
mathematical solution to a funding problem, it is about
precedents. What kind of precedents are we going to set, and
how we are going to impact territories with respect to that
precedence?
As a closing, Mr. Chairman, on that subject of Compact
Impact, I wanted to afford our governors an opportunity to
clarify certain statements, because I know that in the dialogue
it was expressed that we were over-funded in Compact Impact
over those prior years. But the reality is for all these years
we have been grossly under-funded in Compact Impact. So, I
wanted to afford our governors an opportunity to speak to
Compact Impact funding, how short it actually has been with
respect to the actual costs to the territories.
Governor Guerrero. It has been tremendously short. We have
never been over-funded, we have never been overpaid. To give us
only $14 million a year for an expenditure of about $150
million a year, $30 million in health care, $68 million in
education, and the remainder in public safety, to say that is
really an injustice to our island. We have always been working
very hard and struggling to get our due expenses.
And exactly, we are not, and I totally agree with my
Congressman in his comments and his analysis of the Compact
Impact monies.
Mr. San Nicolas. Lieutenant Governor Palacios, did you want
to chime in?
Lieutenant Governor Palacios. Compact Impact has been an
issue of contention ever since it was implemented. At one
point, we were up in arms because we had a lot of migrants from
the free-state--FAS citizens. But obviously, the issue has
become larger in the territory of Guam and Hawaii.
So, whatever could be done to address the issue needs to be
done. We cannot continue to see this issue linger on in the
CNMI, in Guam, and now the state of Hawaii. Thank you.
Mr. San Nicolas. Thank you, Governor. I yield back, Mr.
Chairman.
Mr. Sablan. Thank you. I now recognize the Delegate from
the Virgin Islands, Ms. Plaskett.
Ms. Plaskett. Thank you.
Governor Bryan, I wanted to give you some time to discuss
the issue of an idea that we have been talking about, which is
a special visa waiver program similar to what has been given in
Guam, and in the Pacific area. How would that be supportive and
beneficial to the economy of the Virgin Islands?
Governor Bryan. One of the things that I discussed today at
the IGIA was how both of our islands are in places where they
are surrounded by foreign countries. While we regularly look to
the United States for support, whether in tourism, or business,
or investment, there are 60 million people in the Caribbean at
any given time. Because we are not a country, we can't
negotiate with any of those countries, we can't trade with any
of those countries fairly, and we can't exchange commerce.
There is a huge potential for us, because we are in the
English-speaking Caribbean, for health care to be provided. One
of the things that has adversely impacted us since the storm is
our hospitals I mentioned aren't together yet. We are paying
upwards of $250,000 per person to fly individuals from the
Virgin Islands to Florida for emergency care, per person. If we
were able to expand our hospital systems and the care that we
are able to provide in the Caribbean, it would open us up to a
lot of new traffic that would come to us on the English-
speaking Virgin Islands, rather than go to Miami, which is much
further away.
Also, there are over a million other tourists cruising
around in the Caribbean who are coming from European ports that
come to the Virgin Islands and can't clear in time because it
takes too long. If we had the special visa waivers, these
people would be able to disembark off those boats, and be able
to participate in our economy, and thereby boost our tourist
numbers--not only boost them, but there are days in the Virgin
Islands when there are no ships at the ports, and then there
are other days where they are totally clogged. So, it is feast
or famine. It would help us to better utilize our ports and see
a new customer come to the Virgin Islands, bringing in dollars
that are otherwise being spent in foreign ports.
Ms. Plaskett. Yes, I know you talked about the hospitals,
rather than people from other islands--Saint Kitts, Antigua--
going to Canada, or to London, or other places, they would
utilize the Virgin Islands for healthcare benefits. Even our
children would be able to compete on a level playing field,
rather than having to come--it is much cheaper to go to another
island than it might, in some instances, to go to Miami or
other places.
Governor Bryan. Right.
Ms. Plaskett. But one of the things that I didn't hear
discussed at IGIA, which you might have an opportunity here to
talk about, is some of the initiatives or support that this
Congress can give you in terms of dealing with your retirement
pension plan, and support that couldn't be coming from us, as
the Virgin Islands Government has to deal with the large issues
with this retirement program in the same way that Northern
Marianas and some of the other places have had to deal with
that in the past.
Governor Bryan. There are over 8,000 people on our current
government retirement system right now, and over 9,000 people
in the government. That is 17,000 people that rely on this
retirement system directly, and probably 34 percent or 40
percent--34,000 to 40,000--who rely on it indirectly. That is
40 percent of our population that depends on this system being
viable.
Currently, we have a $2.8 billion shortfall--anywhere from
a $1 billion to $2.8 billion, depending on whose math you are
using. The recaptures of the gasoline tax would be the first
part in providing a steady funding stream in order to float a
bond that we would hope that Treasury would be willing to
extend to us in order to put a billion-dollar base in that
retirement system.
We are not looking for a straight handout. We are just
looking for a situation where maybe we would get 10 years
interest only, and then start to pay back the principal. That
would give us enough time for the system to catch itself. We
are not simply just throwing money into it. We have our other
plan that downgrades the system and allows for a 401(k) program
to be re-instituted, rather than padding up a retirement system
that we know is not sustainable, and that we can't afford.
Ms. Plaskett. Lieutenant Governor Palacios, I know that
Northern Marianas has dealt with this in the past. Is there any
insight you want to give us with regard to how to save a
government retirement system?
Lieutenant Governor Palacios. Well, somebody took us to
court and got a court injunction that we have to pay, make sure
that we pay at least 75 percent of those pensions.
That was one of the most difficult situations that I have
ever faced as Lieutenant Governor. Thirty days after I got in,
the pension trustees called me up. I actually e-mailed the
governors that we are not going to pay, we are not going to
push the button to pay the retirees unless you can come up with
$5 million by Tuesday afternoon. Those are the type of horror
stories that we have. But we have put ourselves on a payment
schedule, and that becomes a priority in our budget.
Can we use the help to pay for those obligations in the
past? Definitely. But we don't want to keep coming to the
Federal Government for help.
Ms. Plaskett. Thank you. I don't think it is the intention
of any of the territories to ask for handouts, we are just
asking for equity and the tools to be able to sustain and grow
our economies.
Thank you so much, Mr. Chair.
Mr. Sablan. Thank you, Ms. Plaskett. And now the gentlelady
who has reserved her 5 minutes is recognized for 5 minutes.
Miss Gonzalez-Colon. Thank you, Chairman. I know we have
been discussing many, many issues here. And one of the issues
that has been part of the discussion is that requirement that
now relies on the hands of the local governments to make the
estimates for the migrants that used to be part of the
Department of the Interior, and then they changed it to allow
you to do that without reimbursement of the cost of doing that.
And I think, having the discussion, we should go back to
the law President Reagan signed, allowing those goals to be
part of the DOI. And in that sense, if not that, at least the
reimbursement of the funds you are using to make those
calculations.
But I want to, in terms of--another area that we can work
with is in the renewal of the Compacts that Secretary Pompeo is
saying are going to be renewed in a few months. We should
include that opportunity. That is something that we have on the
horizon, and should be included there. And thanks to God we
have this kind of a hearing just to get all that information
together, and do it in a bipartisan way.
Another area that I just want to mention--and I said it at
the beginning of the hearing--is the issue of the cockfighting.
I know that, in the case of Puerto Rico, it has been a tough
issue, because it is part of our economy, and it has been
legislated. It is a state-regulated economic area since 1922,
so this is not new. This is highly regulated. We have judges, a
complete industry around the cockfighting. So, that amendment
was passed. And I remember Stacey Plaskett and I were on the
Floor when that was discussed, and an ultimate-minute
amendment.
So, in the case of Puerto Rico, we did a new legislation in
December of last year allowing this to be treated as a state
issue, not interfering with the interested interstate commerce.
But again, as territories, we don't have Senators, we don't
have many Members with votes on the Floor of the House.
So, I just want to tell you that anything that we could do
together to push for this, and how this is impacting our
economies and our way of life, should be really appreciated. I
know we may not have enough time to discuss this issue, but if
you can do something in terms of writing, let's have a meeting
or something. All the Delegates, I need to say we were all on
the same page on this issue. We even filed and dropped a bill
regarding this. Nothing has happened in the Committee of
Agriculture. So, we should push together again to see if we can
have at least a 1-year or a 2-year waiver to see the economic
impact of banning that kind of industry. That is what we are
asking. That legislation was approved without any study of the
impact of that ban in our respective territories, as well.
One last issue, in the case of Puerto Rico, we do have an
erosion problem in our beaches. And we managed to secure some
funds from the Army Corps of Engineers to make a study in that
sense. And I know all islands should have the same situation,
specifically U.S. Virgin Islands and us.
And I congratulate the U.S. Virgin Islands in getting
access to the CDBG-DR funds immediately. In our case, as you
may say, we have several layers. And plus to that, an Oversight
Board, and plus to that we have a monitor, and plus to that we
have an inspector for all of those agencies. So, everything is
getting longer to get access to those funds.
What should be the main issue to develop the economic
activity? Will it be in tourism, will it be in manufacturing
for all of the territories, should it be CDBG funds, should it
be to be treated as equal in all Federal programs? If we can
have that decision today, Governor Guerrero, what will be
Guam's choice?
Governor Guerrero. I think we should create a different
funding source called ``Territories Economic Development
Improvement,'' and to focus primarily on our each unique ways
of our economic development.
For us, of course, tourism is one of the biggest drivers of
our economy. And I am very concerned about the issue of the
coronavirus, because it is already affecting our economy in
terms of cancellations.
So, maybe we should think more creatively and create a
different funding source, and create a different funding unit
to, say, economic development for the territories, or tourism.
Miss Gonzalez-Colon. I know my time has expired, but I will
really appreciate, Lieutenant Governor Palacios and Governor
Bryan, if we can continue this conversation later on, in terms
of writing or a phone call. I will really appreciate it.
Thank you. I yield back.
Mr. Sablan. Thank you very much. I now recognize the
gentleman from Florida, Mr. Soto.
Mr. Soto. Thank you, Mr. Chairman. Before, I thought it
would be appropriate to give your Delegates my time, because 5
minutes just isn't enough. Even 10 minutes.
But I want to welcome you all. Some of you traveled for
hundreds of miles to get here, and others thousands. And we
welcome you.
In Florida, we have some of the same issues you all are
facing. We are just a giant state with these disaster relief
issues, reef issues, pythons, lionfish, and we have bills that
we are working on in this Committee to address some of those
things.
We heard about the disaster relief already. And when I
think about everything from Super Typhoon Yutu, to Hurricanes
Irma and Maria, to Super Typhoon Hagibis, all of you have
either seen destruction or had close calls regarding disaster
relief. So, it is something we are going to continue to work
on.
And with reefs, I have a bill with my Puerto Rican sister
here, Miss Gonzalez-Colon, and with Mr. Case and others, that
we are hopeful, with movement in the Senate, we are going to
see pass through, this bill, as well as we have python hunts in
Florida, and we have a lionfish bill that many of us have co-
sponsored, as well, that we are hopeful to address some of
those issues.
But I want to follow up on what Resident Commissioner
Gonzalez-Colon had talked about, which is how could we promote
some of these high-growth industries. And I am going to first
start with Governor Bryan.
What would probably be the industry with the most potential
right now in the Virgin Islands that we could assist to really
boost? Of all the industries you are working on.
Governor Bryan. Oh, financial services. If we were to get
those tax issues closed, it would have the most immediate
impact.
And then, of course, the visa waivers. It might come to you
as some surprise, but Congresswoman Colon can tell you that you
need to clear Customs to go to Puerto Rico. I can't sail to
Culebra from St. Thomas without getting cleared by Customs.
That is ridiculous.
And on the BVI, it is the British Virgin Islands. You could
swim from St. John to Tortola, and you need to clear Customs.
So, using the waivers in this sector would be tremendous for
us.
And then the flexibility of funds. We know, on a micro
level, where funds would best be utilized. Grant us the ability
to use them for energy, especially. That would solve a lot of
problems.
Mr. Soto. One Caribbean, one love, and many visas. That is
a disgrace. We have to fix that.
Lieutenant Governor Palacios, it would be great to hear.
What do you think is probably the biggest high-growth industry
you see? And how could we help?
Lieutenant Governor Palacios. Well, earlier today in my
statement, I stated that tourism is the one and only industry.
And its vulnerabilities are very obvious.
But there are policies that we have been working on, thanks
to Congressman Sablan, who has been helping us with our labor
issue, to make sure that the industry doesn't all of a sudden
collapse because of sudden applications of Federal labor
policies. He has introduced and had Congress pass legislation
that became law about a year or 2 years ago. Yet, Federal
agencies have yet to promulgate rules and regulations to
implement those on labor. I believe he has two legislation or
laws already.
So, sometimes it is prodding the Federal agencies required
to assist us in those policies to help with our industries and
the vulnerability of industries.
Mr. Soto. Thank you, Governor. Because my time is limited,
I want to make sure Governor Guerrero--what do you anticipate,
the highest growth industry right now, and how we could help?
Governor Guerrero. Our high growth industry right now, I
think, continues to be tourism, although I am looking to
diversify it, and I am really focusing on aquaculture to be a
main improved industry in Guam. And agriculture. So, budget
monies for OEI, if you would not have any decrease in any of
those, especially in the technical assistance, would be great.
And even increase it, so we can have some Department of
Agriculture research and data and so forth, in terms of
developing aquaculture and agriculture in our island.
Mr. Soto. Thank you so much, and I yield back.
Mr. Sablan. Thank you, Mr. Soto. I now recognize the
gentleman from California, Mr. Cox.
Mr. Cox. Thank you so much, Chairman.
I just want to say to Governor Bryan, we had the pleasure
this morning in Ag Committee to meet Sommer Sibilly Brown, the
Founder and Executive Director of the Virgin Islands Good Food
Coalition. You have a great one there, and her testimony was
very, very helpful for looking at farmers markets.
But I would like to yield my time to the Chairman, Mr.
Sablan.
Mr. Sablan. OK, thank you, Mr. Cox. Let me just, again,
because the team at IGIA was economic development, supposedly,
and sometimes it takes more than just money to assist the
territories. I mean I can speak for the Northern Marianas.
Lieutenant Governor Palacios and I had a conversation
yesterday. Regulations for two of the three workforce acts are
way overdue.
Lieutenant Governor Palacios, I need to confirm this, but
it has always been my position that the construction workers--
3,000 construction workers--do not need regulations, because we
already have a workforce regulation that they are using. Of
course, they need to go to the Department of Labor, but not new
regs for that. I need to confirm this, because we found out
today that I was correct the whole time. But don't quote me on
that, because you never know.
Lieutenant Governor Palacios. That would be great.
Mr. Sablan. Things like the Jones Act, I mean Puerto Rico
has been asking for that. Guam has been asking for that for a
while. We need the assistance of our main advocates in the
Administration to get something moving.
I am not saying that we can get it done immediately, but
get information out there, because educating, informing Members
of Congress, informing agencies in the executive branch, this
is sometimes, it is very important. I know, I have gone through
that, where I have to talk to many Members of Congress to make
them understand. I spoke to Mr. King of Iowa for 6 months,
trying to make him understand about the immigration program in
the Marianas, why it is different from the Nation.
I never could understand why Delta could fly from Narita to
Saipan and back to Narita, and fly from Narita to Guam and back
to Narita, and not be able to pick up passengers between Guam
and Saipan. That is something that I would really like to go in
again and try to see if we could get that. It needs
legislation, I would say.
But those are policies that would help the territories a
lot, and if it works, worth more than the technical assistance
money put together. Just give the territories the policy tools
that they need to develop themselves and help themselves pick
up. And because there is also a sense of pride in knowing that
we did something, that we helped ourselves, to improving our
economy, the lives of our community.
And the cockfight, everybody went to bat on that one. We
were not successful. I am telling you, the vote was like, wow,
400-something to very little. But in 2014, I was able to take
it out of the farm bill then. And it wasn't easy because Jim
McGovern was a member of the Committee, and I had to convince
him to let it slide, but this time it was just a really
difficult thing.
I know in Puerto Rico it is like a $100 million-a-year
industry. In the Marianas, I think you have 90 licenses. In the
Marianas, there are three licenses, one in Saipan, one in
Tinian, and one on Rota. The amounts are very small. And I am
not sure about Guam. I know there are more.
Again, we are continuing to carry on our work on the
Medicaid issue. We want to be--for the Marianas, at least, I
have the 6-year program so that we could get our Medicaid
office to put together the reporting system, electronic system,
and the fraud system, so that they meet all their requirements
of getting into the full program, and SSI, and those kind of
things for everybody, because we have it and the rest don't.
But please know that we work together, we work hard here.
And we don't give up. If we get turned down today, we ask again
yesterday.
So, again, thank you very much, governors, for coming. And
I have to go through this script now, so please excuse me.
The members of the Committee may have some additional
questions for the witnesses, and we will ask you to respond to
these in writing.
Under Committee Rule 3(o), members of the Committee must
submit witness questions within 3 business days following the
hearing, and the hearing record will be held open for 10
business days for these responses.
If there is no further business, without objection, the
Committee stands adjourned. Thank you very much.
[Whereupon, at 3:50 p.m., the Committee was adjourned.]
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