CNMI Governor Arnold Palacios is calling for stronger federal support to boost the commonwealth's economy and infrastructure. In a letter to Delegate King-Hinds, Palacios highlighted the need for tourism recovery, transportation improvements, and restored funding while addressing challenges in U.S.-China relations.

The full letter stated, 

Dear Delegate King-Hinds:

First let me congratulate you and the entire Republican conference on uniting to pass the Continuing Resolution ultimately passed by the Senate and signed into law by the President. 

Subject to the recommendations of DOGE, the CR stabilizes our financial relations with Washington until the enactment of Reconciliation and the FY26 budget for the fiscal year beginning October 1. I will look forward to your reports on those two bills as they work their way through Congress. 

The actions taken by Congress are timely because they mesh well with our efforts over the last two years to stabilize government funding and implement key infrastructure projects. We have made significant progress in these areas by conducting audits for 2020 and 2021 and moving forward with subsequent audits to ensure accountability. For the first time in decades, we have kept government expenditure within the budget and have either completed or are nearing completion on numerous major infrastructure projects. This foundational work is essential as we strive for economic stability and growth. 

As you point out in your letter of March 11, the Commonwealth still faces serious economic challenges, and we are in full agreement on the importance of restoring and expanding tourism through a multi- pronged approach as a key element of our recovery. To that end, I met with then Deputy Secretary of State Kurt Campbell last fall to appeal for the State Department to ask our embassies in the region to make a special effort through the commercial attaches to promote CNMI as a tourist destination. With the change of administration, I renewed my appeal when meeting with the new Secretary of State Rubio. I welcome your support for measures such as the cabotage waiver and your own advocacy for tourism from neighboring countries. These efforts, which we have pursued for the past two years, are crucial as we work to revitalize our economy. 

Moreover, I was invited by Taiwan's representative in Washington to have lunch with a group of senior members of the Taiwan Parliament led by their Speaker of the House and members of the U.S. Congressional Taiwan caucus, where I made the same plea. At the same time, I underscored to them that I have not taken any steps to restrict legal Chinese tourism to the CNMI. We fully welcome legal tourists from all regions, including China. It is important for us to communicate this clearly, as fostering a diverse tourist base is essential for our economic stability. 

Your interest in concentrating on tourists from the PRC is noted, but both from the public discourse reported in various Mainland media outlets and my private meetings with congressional leaders and senior officials in the Trump administration during my two trips to Washington, there is little mood for increasing China's involvement in the Pacific in any sector in any of the islands. I realize you have made certain commitments, but I believe you understand you will be facing a lot of headwinds-even more so if the Trump administration is successful in wrapping up conflicts in Europe and the Middle East and turn their attention to the IndoPacific. I think Defense Secretary Hegseth's planned trip to our region in the near future is a strong indication of that. 

For now, our main focus will be negotiations with the federal government under section 902 of the Covenant. I seek your full support on other critical initiatives: restoring Covenant 702 funds, inclusion in Essential Air Service (EAS), reducing airfare between Guam and Saipan, and advocating for a ferry system connecting all the Marianas. Further implementing infrastructure projects, such as ports and utilities, and expanding on possible Department of Defense-related investments will also be paramount. Establishing the CNMI as a regional hub for health and education in the Pacific should remain a priority. I hope to be able to discuss these projects with Secretary Hegseth. 

With regard to asking for the restoration of our 702 funds that were withdrawn a number of years ago at the request of another governor, at the time it appeared to be a good way to wean ourselves away from federal support because our thriving garment industry provided a steady source of revenues. Of course, when that industry disappeared almost overnight, we were left high and dry. Fortunately, we have the federal government. Other Pacific Island groups have not been so lucky, and loss of Chinese-sourced revenue has been devastating. 

It would be a mistake to label restoration of these funds as a "bailout" because that was federal assistance promised in our Covenant and is no different than the direct budgetary support that American Samoa receives annually and similar to the help the other territories receive through other devices. Similarly, the use of the term bailout is a mischaracterization of what we are trying to accomplish with the repurposing of PUA funds. 

Congress will return next week after its current district work period, and I hope it finds you refreshed and filled with ideas after absorbing the sentiments of our mutual constituents. My first stop in Washington was a courtesy call on your office, as it should have been, and I came away from our visit with the sense that, other than Chinese tourism, our differences are not that great and I look forward to continuing to work with you in the vastly changed environment that the new Congress and administration have brought to the Nation's Capital. 

I know that, for my part, I already have developed some new and deep relationships in the Trump Administration that I believe will serve the people of our Commonwealth well. Please call me any time you believe I can be of help in your work. 

Sincerely yours, 

ARNOLD I. PALACIOS