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National Government Releases Chuuk CIP Funds to Moch Municipality

Palikir, Pohnpei (FSM Information Services): July 23, 2010 - On July 22, the National Department of Finance (the "Department of Finance"), as a result of a Presidential Order issued by President Mori back in January 2010, approved the wire transfer of $37,481 to Moch Municipality in Chuuk. Moch is the first of 27 Chuuk municipalities who will be receiving funds directly from the National Government, as part of an attempt to ensure proper disbursement of the remaining balance of Compact I Capital Improvement Project (CIP) Funds owed to these municipalities.

As of this date, the National Government is holding $2,442,215 in a savings account with the Bank of Hawaii, in CIP funds on behalf of certain Chuuk municipalities. At the close of the first Compact, the restriction regarding the use of these funds for capital improvements was lifted and the funds, once appropriately disbursed by the Department of Finance, can be used by the municipalities for all purposes, including operating expenses.

Pursuant to the 1983 Compact Agreement, Section 211 provided that 40% of all annual compact grants shall be dedicated to CIP. In December 2003, Public Law 13-24, as amended by Public Law 13-51 in September 2004, recognized that the 40% requirement of Section 211 had been met by the FSM with respect to CIP funds and allowed for the balance of these funds to be transferred to the States and their municipalities; however, the balance of the Chuuk CIP fund was never transferred.

From a procedural perspective, once any of the 27 Chuuk municipalities presents to SBOC its government legislation seeking appropriation of their respective funds, SBOC can then issue an allotment for the municipality to the Department of Finance. In turn, the Department of Finance will directly transfer the funds to the municipality.