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U.S. Department of the Interior - Office of Insular Affairs
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President Proposes $392 Million in FY 2006 for Assistance to U.S. Territories, Freely Associated States



(Washington, D.C.) President Bush has proposed a FY 2006 budget of $392.4 million to assist seven insular areas, including four U.S. territories and three island nations who enjoy the unique status of "free association" with the United States. The Department of the Interior's Office of Insular Affairs administers these program funds.

The total includes $313.3 in permanent funding that reflects long-term commitments made to the territories and the freely associated states as well as $79.1 million in current funding for assistance to the insular areas.

The President's current funding for the U.S. territories in FY 2006 includes $23.1 million to support the operations of the government of American Samoa; mandatory funding of $27.7 million for capital investment in the U.S. territories; and $8.5 million in technical assistance funding for the insular areas.

The budget proposal also includes a $1.0 million increase to strengthen core water and waste water activities in the U.S. Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa. These territories face a myriad of water problems on a daily basis, including a lack of continuously available running water, wastewater infrastructure deficiencies that have caused violations of Federal environmental laws, and drinking water quality which is not always up to the U.S. standards.

"OIA's top two priorities for the insular areas are promoting private sector economic development and strengthening accountability for Federal funds," said David B. Cohen, Deputy Assistant Secretary of the Interior for Insular Affairs. "We promote economic development in a variety of ways, including by funding critical infrastructure such as schools, hospitals, roads and environmental facilities. We also help the insular areas make stateside businesses aware of the exciting opportunities that exist in the islands, and help the islands make reforms to improve their business climates. As for accountability, we provide technical assistance to help the insular areas become better stewards of Federal funds, and a number of our grants are now awarded according to criteria that reward good fiscal management."

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The FY 2006 budget contains funding for the third year of the amended Compacts of Free Association with the Republic of the Marshall Islands and the Federated States of Micronesia. Under the amended Compacts, these freely associated states receive financial assistance over a 20-year period. The Republic of the Marshall Islands is scheduled to receive $62 million in grant assistance during fiscal year 2006, including an $8.2 million contribution to its trust fund. The Federated States of Micronesia will receive $95 million in grant assistance, including a $16.4 million contribution to its trust fund.

Fiscal year 2006 marks the eleventh year of the Compact of Free Association with the Republic of Palau. Under the provisions of its Compact, Palau will receive $10.6 million in direct FY 2006 assistance.

OIA's budget includes a provision under the amended Compact of Free Association for a $30 million fund to address the social impact of migrants from the freely associated states on U.S. territories and states. Under the current formula for FY 2006, the State of Hawaii will receive $10.5 million, Guam will receive $14.2 million, the Commonwealth of the Northern Mariana Islands will receive $5.1 million and American Samoa, which has very few migrants from the freely associated states, will receive $14,000.

The President's Budget request for FY 2006 continues to promote the Department's mission of assisting the insular areas to develop quality communities and economic self-sufficiency. Efforts for FY 2006 include continued implementation of improvements to financial management practices in the insular areas. Approaches include providing technical assistance to carry out specific plans for financial management improvements and to provide assistance to bolster and institutionalize improvements to local public auditors' offices. This is carried out through peer reviews, direct classroom training, membership and attendance at audit conferences and coordinated on-the-job training in the Department of the Interior's Inspector General's Office.

The Office of Insular Affairs is the Executive Branch's liaison organization with the U.S. territories of Guam, the Commonwealth of the Northern Mariana Islands, the U.S. Virgin Islands and American Samoa. OIA also administers financial assistance to the three freely associated states: the Federated States of Micronesia, the Republic of the Marshall Islands, and the Republic of Palau.