Updated Palau Supplemental Budget Bill Lacks Overspending Section

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Discussion delayed until 2011 financial audit available

By Aurea Gerundio-Dizon

KOROR, Palau (Island Times, July 12, 2012) – The supplemental budget bill is up for third reading in today’s session of the House of Delegates after passing second reading yesterday in Palau.

The bill excluded the controversial over expenditure issue. The committee on ways and means recommended the removal of the section on over expenditure due to lack of information made available to the committee to conduct the necessary review and to determine the actual cause of over expenditures.

The committee said in its report, signed only by Delegates Eldebechel, Rengulbai, Kanai, Ngirturong, Madrangchar, Rafael and Kesolei (other members include Delegates Kemesong, Andrew, Nabeyama and Basilius), that any ratification of expenditures beyond what was authorized for any budget activity requires the Olbiil Era Kelulau (OEK) to fully understand the actual amount overspent and the cause of such over expenditure.

The committee recommended that the OEK wait for the Fiscal Year 2011 audit report before considering the issue on over expenditure.

The committee also took into consideration the suggestions of other organizations such as Palau Chamber of Commerce and Governors’ Association to remove the over expenditure provision in order that it not delay the enactment of the supplementary funding for the necessary government agencies.

Earlier, a memorandum from the Ministry of Finance already warned of furlough of government employees if the supplemental budget bill will be delayed.

Following review of the bill and conduct of hearings, the committee agreed with the Ministry of Finance’s overall projection of local revenue.

But as regards the allocation of funds, the committee commented on the allocation of about 90 percent of the total requested amount to the executive branch. Although President Toribiong said that the amount requested is the absolute minimum that the executive branch needs to operate throughout FY 2012, if approved, the executive branch will reportedly have the largest budget ever authorized and appropriated.

The committee recommended that the supplemental budget be allocated based on prior year expenditure level.

The House version proposed the authorization of additional $4,206,400 and appropriation of additional $4,467,400 (the amount already includes $261,000 that has been authorized from the FY 2012 Unified Budget Act as payment for judgment) to supplement the general operations of the national government.

The House version is lower compared to the proposed amounts by the president and the Senate. The president proposed authorization of additional $4,215,000 and appropriation of additional $4,476,000 while the Senate proposed authorization of additional $4,270,000 and appropriation of additional $4,531,000.

Other allocations

The bill that passed second reading in the House excluded additional funding for Ngardmau Free Trade Zone. The committee recommended increase of their funding only after full justification of the $100,000 that was appropriated in FY 2011 will be provided to the OEK.

For the water and sewer operations, the committee urged the president to use the proceeds from the Asian Development Bank loan to supplement budget shortfalls for this particular sector.

As for the supplemental allocations to state governments, the committee recommended the lump sum appropriation of $100,000 to be earmarked as follows: $20,000 for the repair and maintenance of Angaur State boat; $40,000 for the completion of Bai for the Asahi Club in Guam – a group of people from Ngiwal, Melekeok and Ngchesar; $20,000 for purchasing navigation and life-saving equipment for the Hatohobei State boat; and $20,000 for supplementing state boat service in Peleliu State.

For the Judiciary, the committee decided to supplement $25,000 for the hiring of new justice.

The committee also recommended appropriation of $25,000 for the purchase of new copier machine at the OEK, $15,000 for Palau National Museum, $20,000 for PNOC, $15,000 for Palau’s delegation to the 2012 World Expo and $11,792 for funding of necessary equipment for the National Archive.

On the cost of living allowance (COLA), the committee agreed with it but that it will be for all full-time state and national government employees, regardless of whether they are in civil service program or not.

The committee finds that the sum of $325,000 will most likely be sufficient to extend the COLA to all full-time state and national government employees.

Other items removed

Aside from the over-expenditure provision, the committee also decided to remove the proposed minimum wage increase.

The Senate’s amendment to Social Security Act, which is to remove current earnings test, was also removed by the committee from the bill.

The earnings test is a test to determine whether the person who is receiving the benefit is retired or otherwise dependent on the SS benefit.

The committee said that SS Administration may currently be performing an actuarial report. Therefore, if so desired, a request should be made to the SSA to include the proposed amendment in such actuarial study and that the OEK perhaps entertain such proposal after the completion and review of such actuarial study.

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