President Bush's proposed budget for Fiscal Year 2002 contains $341.3 million in financial assistance for the insular areas provided through the Department of the Interior's Office of Insular Affairs. Of this total, $248.6 million is in the form of permanent and indefinite appropriations that do not require additional action by Congress. This includes $104 million for advance payments to Guam of Federal income tax collections and advance payments to the Virgin Islands (VI) of Federal excise tax collections on rum. Also included in the permanent appropriations is $144.6 million for Compact of Free Association payments to the Federated States of Micronesia (FSM), the Republic of the Marshall Islands (RMI) and the Republic of Palau (Palau). The initial 15-year period of financial assistance for the FSM and the RMI expires at the end of Fiscal Year 2001. However, the Compact provides for a two-year transition period while negotiations continue on future assistance. During this transition period, assistance to the FSM will increase by nearly $17 million and assistance to the RMI will increase by about $5.5 million, based on a formula contained in Section 231 of the Compact. The proposed Fiscal Year 2002 budget for current appropriations is $92.7 million, a decrease of $6.5 million from the Fiscal Year 2001 appropriation. This reflects a moderate level of growth compared to the historical levels, as it is an increase of $2.2 million over Fiscal Year 2000. The budget includes a reduction of $6 Million in discretionary funding for the impact of the Compact of Free Association assistance to Guam and the Commonwealth of the Northern Marianas (CNMI). Guam will continue to receive $4.6 million in mandatory funding for impact assistance and the Administration is proposing a new $500,000 impact assistance grant to the CNMI under the mandatory covenant funding. This increase in mandatory funding is made possible by a proposed corresponding decrease in funding for Federal programs under the CNMI labor and immigration initiative. Most other programs remain relatively unchanged from the Fiscal Year 2001 enacted levels, including funding for general technical assistance (excluding the discretionary increase for impact of Compact of Free Association assistance provided by Congress in 2001), $7.5 million; operations and maintenance improvements, $2.3 million; brown tree snake control, $2.35 million; financial management improvements, $1.5 million; and coral reef assistance, $500,000. A small increase of $100,000 in the American Samoa operations grant is proposed, primarily to meet increased costs of the High Court, which is totally dependent on the Interior grant.
Discretionary Compact programs also remain relatively unchanged from 2001 levels. Proposed funding for Enewetak operational support is $1.4 million. Guaranteed Federal services from the Weather Service, Postal Service, Federal Aviation Administration, Foreign Service Institute and mandatory audits remains unchanged at $7.4 million. The RMI will receive an additional $2.5 million under the Military Use and Operating Rights Agreement with the United States as the U.S. exercises its option to continue military activities at Kwajalein Atoll.