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Written by SHARLA TORRE MONTVEL-COHEN
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Monday, August 15, 2011
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GUAM – A financing solution for the Japan 2011 national budget should be enacted next week, according to Japan Parliament leaders. The budget contains hundreds of millions of dollars for the Guam military buildup -- including $420 million to upgrade the island's wastewater utilities.
Special bonds legislation to finance the country's regular fiscal year spending plan cleared Parliament's Lower House on Thursday, according to a Yomiuri Shimbun report. It is expected to pass in the Upper House as early as Aug. 24, following an agreement last week among the chairmen of the Upper House Diet Affairs Committees of the ruling and opposition parties.
The budget, passed in March and now on its way to being financed, includes hundreds of millions of dollars to realign Marines to Guam and relocate Futenma air base elsewhere in Okinawa, a Pentagon pre-requisite for the Guam buildup.
The special bonds legislation has been needed to cover Japan's regular 2011 budget, which is separate from emergency budgets to finance post-tsunami reconstruction. When the regular budget was enacted on March 29, the government had set aside money for only 60 percent of it, saying borrowing was needed to fund the rest.
The budget includes 53.2 billion yen for relocating the Marines to Guam and 6.3 billion yen for a new facility to replace Marine Corps Air Station Futenma, according to the Defense Programs and Budget of Japan: Overview of FY2011 Budget at the Ministry of Defense's web site.
14.9 billion yen is allocated for direct cash contributions "for development of facilities, such as headquarters buildings" in Guam, the report said. Another 37 billion yen will be provided to Japan Bank for International Cooperation "as a source of loans to the U.S. for utilities improvements associated with relocation of Marines from Okinawa to Guam."
The Navy has slated $120 million of the expected JBIC loans to develop, operate and manage a new Navy-owned fresh water system in Guam. The balance will fund the first round of upgrades to the Government of Guam's wastewater infrastructure.
The wastewater loan -- $420 million to Guam Waterworks Authority – will be used to pay for $340 million in critical upgrades to the Northern and Hagatna Wastewater Treatment Plants and $80 million will enable the agency to install collection sewer lines that will feed the expanded plant, according to Simon Sanchez, chairman of Guam's Consolidated Commission on Utilities.
"Now that we know Japan is going to finance the loan, maybe our talks on how to structure the loan will speed up," Mr. Sanchez told GuamBuildupNews.com in an interview. "But it's difficult for Japan and Guam to move to closure until the Department of Defense moves."
The Department of Defense is a critical third leg in structuring the Japan loan to Guam because the Navy would be a customer of Guam's new wastewater system, paying customer rates designed to cover the debt service on the loan.
"The lender is ready to go, but the repayer, DoD, doesn't appear to be ready to go," Mr. Sanchez said. "If the guy going to repay it is still not saying anything despite the willingness of the lender, the middle guy [the Government of Guam] is stuck."
The Navy may have to wait for more clarity on how deeply the new U.S. debt ceiling law passed on Aug. 2 will cut the overall budget for the Department of Defense. They'll be looking to see if and how utilities work and the rest of the construction program for the Guam buildup must be adjusted to meet the nation's reduced spending on defense.
Congress has until Thanksgiving to clarify the nature and depth of cuts to defense and other federal programs.
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Image used in this article courtesy Renjith Krishnan / FreeDigitalPhotos.net
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