OEK makes major policy changes in FY2018 budget bill

  08 Sep 2017

By: L.N. Reklai

September 8, 2017 (Koror, Palau) Senate passed HB 10-53-3,HD2, SD1 in its second reading adding in major policy decisions to those already added by House of Delegates.

The Senate version increased budget authorization to $92,216,614, increasing it by $141,614 over House version. Of the total authorized, only $87,014,614 is appropriated for expenditure. [restrict]

House version removed the maximum ceiling on the amount of salary that can be taxed by Social Security effective October 1, 2017.  At the same time the total contribution from each employee and employer to SS will increase from 6-7%.

The two policy changes will add additional $2.6 million to Social Security.  This additional revenue will be the source of fund for the $50 dollar additional benefit payment to retirees that until now is funded by  national government subsidy.

Another major policy change was the change to the Environmental Protection Fee or PPEF from departure fee to arrival fee.  This will be incorporated into airline tickets and those exempted persons may request refund upon arriving in Palau.

Senate removed all earmarked language in the budget allowing greater flexibility for each entity with allocated budget.

Senate retained the subsidies for Pension Plan and PPUC but included language mandating each entity not to increase rates in the next fiscal year.

Another major policy decision is to withhold portion of budgets for Public Auditor, PPUC, and Compact Review Office until required reports are submitted President of the Republic and Presiding Officers of the Olbiil Era Kelulau.

Senate Committee on Ways & Means report on the bill states that it has “taken testimony, met with stakeholders, and received several letters” relating to the FY 2018 Budget and have carefully considered them all.

It further states that it has reservations about the President’s Funds Availability Analysis but it was “cautiously optimistic about projected revenues”.

President’s version of the budget authorized and appropriated $86,093,000 for FY 2018 Budget.  House authorized $92,075,000 and appropriated $87,073,000.  Senate authorized $92,216,614 and appropriated $87,014,614.  Both houses of OEK exceeded President’s appropriation by over $900,000.

Senate is expected to adopt the proposed budget on 3rd and final reading on Monday, September 11th. [/restrict]