July 21, 2005

By Tom Burkindine
The Kaselehlie Press

In a standing committee report, the Pohnpei State Legislature joint committees on Judiciary and Governmental Operations and on Resources and Development questioned the viability of the Economic Development Authority.

The July 7 report referred to an earlier report from the Committee on Finance, concerning $250,000 in additional personnel costs for the EDA. The report said the funds were to cover deductions from employee's paychecks, "which were not offset by contributions to social security, or payments to insurance carriers or lending financial institutions. In other words, employees had allotments withheld, but the withheld funds were not used for the purposes of the withholding."

The report went on to say the Committee on Finance recommended not making the appropriation, and suggested that the administration and the EDA come up with a "permanent solution to EDA's problems, instead of expecting the legislature to bail the EDA out, one problem at a time."

The debate sparked by the Committee on Finance report caused a June 15 floor motion from the Chairman on Land that the Committees on Judiciary and Governmental Operations and Resources and Development work with EDA and the Attorney General's Office to find a solution to the current problem of employees' whose funds were withheld but were not applied towards payments of social security, insurance carriers, financial institutions, and other allotted payees.

The July 10 Committee on Finance report suggested several steps EDA and the legislature might take to correct the problems."Your committee notes that EDA and the administration have alternatives to the legislature bailing out EDA with an appropriation. If there appears to have been fraud or wrongdoing, the governor can ask the attorney general to investigate. The EDA also has the power to sue to seek damages from those responsible. The EDA also has the power to sell assets, seek to settle any claim against it, reduce staffing to realize savings, and take other management steps to resolve the problem."

In May, the Attorney General's office recommended a committee be formed to conduct a legislative investigation and file a formal report. The committees on Judiciary and Governmental Operations and on Resources and Development pointed to this type of request as the ongoing problem with getting the matter resolved.

"The Attorney General's recommendation is indicative of the current administration's consistent response to resolving EDA's problems. The administration's position has consistently been, 'DELAY, DELAY, DELAY.' Form a committee, conduct an investigation, write a report, reconcile it with someone else's report, review the law, and have yet another party determine if further action should be taken. This is a formula for getting nothing accomplished, and so far it has been successful."

Both in 2003 and 2004, the legislature has sought to abolish EDA, transferring its primary functions to other government entities. The EDA fishery functions would have been transferred to Pohnpei Fisheries Corporation, its investment assets to Treasury, and all other considerations to the Office of Economic Affairs. In 2004, the bill was enacted, but vetoed by the governor.

The joint committee report suggested the abolishment of EDA be brought back before the legislature, suggesting action commence immediately following its introduction.

"With administration input and gubernatorial support, or with a legislative override of a governor veto, should that be found necessary, your committees feel that action can replace inaction, and the prospects for a better future can replace the regret generated from our past experiences with the operations of EDA."