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U.S. Department of the Interior - Office of Insular Affairs
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Administration Proposes FY 2004 Budget for Islands



EMBARGOED UNTIL: February 4, 2003 At 1 PM
FOR FURTHER INFORMATION: David Heggestad 202-208-6971, Keith Parsky 202-208-4070

The President's budget for Insular Affairs proposes a total of $377.0 million, including $87.5 million in current appropriations. This is a $3.5 million decrease from the 2003 request .

In accordance with the Compact of Free Association Act of 1985, the Administration is developing a proposal to renew financial assistance for the Republic of the Marshall Islands and the Federated States of Micronesia for an additional 20 years. The modified Compact will provide $149.4 million in a permanent appropriation for grant assistance to the two aforementioned freely associated states, as well as $1.0 million for audits. This modified Compact does not affect the grant assistance to Palau. The budget will also include a permanent $15.0 million appropriation for mitigation aid to Guam, the Commonwealth of the Northern Mariana Islands and Hawaii to be allocated according to a formulation that is currently being developed by OIA.

The modified Compact will dramatically improve the accountability requirements on the part of the FAS governments and provide for much more on-site monitoring of the grant funding being provided. To fulfill these new requirements, OIA will set up a Compact Office in Hawaii, as well as station personnel in the U.S. embassies. The budget includes $820,000 in current funding for OIA to continue supporting the additional staffing needed to monitor the Compact grant funding. The American Samoa grant will remain at $23.1 million.

Total funding for Covenant Grant capital improvement funds will remain at $27.7 million, however the budget proposes changes to the allocation as $5.4 million of Compact impact aid will be made permanent under the modified Compact. Additionally, a reduction of $160,000 is possible during 2004, as other Federal agencies pick up the costs associated with their involvement in the CNMI immigration, labor, and law enforcement initiative. These changes will allow for the reallocation of $5.0 Million to the Virgin Islands to remedy Clean Water Act violations in wastewater treatment and solid waste management, and $580,000 will be shifted to disaster assistance. Covenant funding will remain at $11.0 million and $10.1 million for the CNMI and American Samoa respectively.

Territorial assistance activities, including general technical assistance, maintenance assistance, insular management controls, brown tree snake control and the coral reef initiative are proposed at $14.2 million, an increase of $100,000 over the 2003 budget. This increase will be used to begin development of a marine invasive species early warning system. The 2004 budget reflects a transfer of $4.6 million to the Weather Service and the Federal Aviation Administration to cover the cost of the services they provide to the insular areas. This will promote greater control and accountability of the services being provided.