January 24, 2011

By Bill Jaynes
The Kaselehlie Press

Palikir, Pohnpei-The 16th Congress convened for it final regular session at 10:00 on January 10, 2011. The session is expected to adjourn on the 29th of January.

The members of the Special Committee, appointed and tasked by Speaker Isaac V. Figir to look into allegations of violations of the Financial Management Act by FSM Cabinet members, arrived in Pohnpei days before the regular session was scheduled to begin and have been holding a series of public hearings on the matter since January 6.

The Speaker had earlier told The Kaselehlie Press that he would be referring the matter to the FSM Office of the National Public Auditor. He did do that but during the November special session he also established the Special Committee whose members include Vice Speaker Frederico O. Primo as chairman, and Senators Paliknoa K. Welly, Joseph J. Urusemal, and Tony H. Otto as members.

Vice Speaker Primo said that the Special Committee held its final hearing on January 18 and that the report to Congress on the matter would be submitted before the end of the Sixth Regular Session.

On the first day of the current Congress Session, Speaker Figir assigned Senators Claude Phillip of Kosrae, Tony Otto of Chuuk, Dion Neth of Pohnpei, and Joseph Urusemal to the Special Committee to Wait on the President. The committee met with President Mori and staff members at 3:00 on the opening day of the Congress Session. Senator Urusemal was absent.

President Mori, along with some of his staff members discussed Executive Branch priori ties for the regular session. The priorities included an agreement on the government's final total budget projection for 2011, the finalization of the government's 2010 supplementary budget request, pending tax reform legislation, the FSM fisheries loan, the pending nomination for the COM-FSM Board of Regents and the temporary relocation of the Personnel Office to be directly under the President's Office.

On the matter of the Fisheries Loan, Committee Chair Dion Neth told the President that since Congress had passed a resolution authorizing the President to negotiate the deal the ball was now in his court and requires no further action by Congress until the deal is ready to be mobilized.

According to a press release from the President's Office, Secretary Marion Henry of the FSM Department of Resources and Development updated the Committee on the status of the fisheries loan. He said that a total of 11 agreements needed to be negotiated in order to lay out the duties and obligations of all parties involved in the agreement. The Government of the People's Republic of China would potentially be acting as the lender through China Exim bank, a bank that is fully owned by the Chinese Government. The FSM National Government would be the borrowing party, FSM Development Bank the loan manager and Luen Thai Fishing Ventures (LTFV) the operator for the four rehabilitated State processing plants. LTFV would make lease payments to the FSM Government for the use and operation of the plants and the FSM Government would in turn use the lease payments to reimburse the loan to Eximbank.

The Committee report added that he has formed a Committee to negotiate the loan on behalf of the Executive Branch. Henry also told the Congress Committee that many people have been on vacation, so things have stalled for a short time. He said that LTFV would be back from vacation on January 15. He said that time is also needed in order to visit all of the States in order to finalize all of the agreements. He added that the rehabilitation of the fisheries infrastructures in the four States is a long project and that even if the agreements are approved this year not all components will be fully implemented for three years.

The Committee asked Henry questions regarding the matter of Luen Thai as the operator. He told them that it would be negligent to go with a newer or less experienced company. He said that Luen Thai is the most experienced and the largest in the area, and the only one with guaranteed freight service, which is a key element to the success of the project.

On 2011 revenue projections President Mori told the Congress Committee that he disagreed with the recent revenue projections of approximately $37.7 million provided to Congress by the Acting Secretary of Finance Rose Nakanaga. He asked Congress to instead use the budget projections of $39 million that were submitted with the FY2011 Budget Book. Since the total revenue amount for 2010 had been approximately $40 million and because he saw no indicators for the revenue projection to decrease in 2011 the 2011 figure should be at least $39 million. He reasoned that since more of the infrastructure projects are "on stream," revenues would be increased by taxes paid to the National Government. He also said that the issue could be revisited again after the second quarter and if the $39 million does not look feasible adjustments could be made at that time. He said that the National Government has never run a deficit and he is certain that a deficit will not occur this year if the $39 million projection is used.

The FY 2011 Supplemental budget request submitted by the President for the Sixth Regular Session of Congress is based on the $39 million projection. Approximately $80,000 of that request is for new requests, the remainder of the money is to restore items previously cut by Congress.

On January 12 Congress passed CR 16-153 which set the ceiling for the 2011 budget at $45,211,829. $7,454,481 of that money is available under the Amended Compact of Free Association with the United State. $37,757,348 is from domestic revenues, the revenue projection submitted by the Department of Finance and Administration.

On the issue of Tax Reform President Mori announced that the National Economic Summit is scheduled to be held for one week in Chuuk beginning on February 7 and invited Congress members to attend. Vice President Alik told the Committee that the Tax Reform Project was discussed in the State Summits in both Kosrae and Pohnpei, and the proposals sent to Congress were endorsed.

A Chuuk Economic Summit began on January 11 preceding the National Summit. Technical people from the Tax Reform Project were there to participate in that summit. Technical advisors will also be present at the Yap Economic Summit when it occurs.

President Mori said that while he is mindful of the enormity of the Tax Reform Project he hoped Senators could hold hearings during the Sixth regular session. He said that what he'd really like to see is the legislation passed on its first reading during this session. Doing so, he said would indicate to the States that the National Government is serious about making progress on the Tax Reform; it may be in the best interest of the National Government to take the first step.

The Committee also discussed the three nominations for the COM Board of Regents, the need for the Personnel Office to be temporarily under the direct supervision of the President's office, and the matter of the lack of a Secretary for the Department of Finance and Administration. Chairman Neth said he understands that it may be difficult to find a Secretary of Finance to serve the short time period that is left before National Elections.

During the session, Congress acted on several items of interest including a Bill that changes the way so called "courtesy resignations" of FSM Ambassadors are handled after a new President takes office. In recent years Ambassadors have been required to submit resignations to a new President after the President takes office but the President has been under no obligation to accept that resignation. If a new President did not accept the Ambassadorial resignation then the Ambassador was essentially "grandfathered" into the position without further advice and consent of Congress.

Under the new law Ambassadors are still required to submit resignations to a new President within 90 days. The President may choose to reappoint an Ambassador from a previous administration but he or she must then re-nominate that Ambassador. That nomination would be up for the advice and consent of Congress in the same way that a new nominee for an Ambassadorial position would be considered. The past job performance of a nominee for Ambassador would be part of the information Congress would take into consideration when they consider the possibility of giving their consent.

Among other items Congress also passed a resolution congratulating Guam's new Governor Eddie Calvo and Lt. Governor Raymond Tenorio on their recent election in the Territory.

They passed another resolution expressing the profound sadness and sincere condolences of the Sixteenth Congress of the FSM to those affected by the acts of violence perpetrated in Arizona on January 8 and to the United States in this time of national tragedy. On that day U.S. Congresswoman Giffords and numerous others were injured and six were killed in a shooting including Chief Judge John Roll of the U.S. District Court in Arizona. The shooting took place during a personal appearance of Congresswoman Giffords. Congress also passed some special project bills and amended others.

Congress ratified a two and half year old implementing arrangement to the Parties to the Nauru Agreement.

Members were also invited by Pohnpei's Governor John Ehsa to attend a briefing session on the results of a Feasibility Study by an Airlne Task Force Team on a proposal by Easter Jet, Inc. Ltd to provide additional airline service to Pohnpei and the other FSM States.

The Kaselehlie Press could not find an Internet presence for a company by that name but did find a small airline based in South Korea carrying the name Eastar Jet, Inc. Ltd. That services four cities in that country using a very small fleet of 737's. By press time we were not able to get information from Pohnpei State on the details of the proposal.

At press time Congress still had a good deal of business to consider including a possible ratification of a treaty involving amendments to protocol to an agreement with the European Union on fishing in the FSM.

A Bill submitted by Setiro Paul (CB 16-175)is also up for consideration. Under that bill, State shares of tax would increase from 50 to 70 percent.

At press time, Congress still had another week of session days left in their final regular session.