Sen. Mark Rudimch , chair of the Senate Committee on Ways and Means said the House of Delegates version of the budget projected higher revenue collection which is contrary to the June 30 quarterly financial report which showed that the government has fallen short of its target collection.
“The House version states that they are convinced that FY 2011 will be much better than FY 2010 as they chose to create a new and more appropriate FAA to reflect the ‘re-allocations’ to reinstate the presidential cuts in the proposed budget,” Rudimch said.
However he said that the Senate now has to figure in new information such as the latest collection and expenditure report received from the Ministry of Finance which shows a six percent collection shortfall for the 3rd quarter of FY 2010.
From this figure, he said his committee is now comparing the two dissimilar budget proposals for FY 2011.
“I’m of the belief that Palau can recover from the realized setbacks by making the necessary changes and corrections for the betterment of opportunities to create a safe and friendly setting for a sustainable economic standing; on the other hand, continued setting of the national budget at levels beyond the means compounds the problem acknowledged in RPPL 8-9 stating the finding that the Republic has outstanding debts due to such shortfall in collection. The inability of the Republic to pay its debts in a timely basis is affecting the ability of the National Governmentt to obtain goods and services and to provide important government services,” he said.
Rudimch said the members of the committee will meet to review both versions and other information received before setting any hearing schedule.
He added that the panel does not plan to hold a top-down, line by line hearing for each budget line as most of the information has been collected from the government sectors and the House committee hearings on the FY2011 budget.
The financial report showed that the government as of June 30 only collected 69 percent of its projected local revenues which could result to at least $2 million shortfall for FY2010.
The House version of the Committee on Ways and Means in its report stated that based on its analysis of financial information, local revenues can be projected at $37 million and is convinced that FY2011 is a lot better than 2010.
Rudimch however said the 3rd quarter report says otherwise compared to the “optimistic” version of the HOD.
As of June 30, the government has only collected $25,484,409 local revenues and the target amount is $37,009,000.
The government needs to collect $11,524,591 by the end of the fiscal year in order to avoid accumulated deficit.
Finance Minister and Vice President Kerai Mariur said that the current deficit is at least 11 million.
Rudimch added that his committee would also utilize other relevant Senate committees to do oversight hearings as necessary for further verification and clarification of information and base its work on their findings and recommendations.
The senator said that the facts showed that revenue collection has fall behind the expected target.
Del. Secilii Elbedechel , chair of the House Committee on Ways and Means said that when they reviewed the budget, they did not have the 3rd quarter yet but based their analysis on the average of revenues being collected every month to come up with an optimistic collection.
He said that July is the month of payment of gross revenue taxes which is the biggest source of revenue for Palau.
Elbedechel remains upbeat that in the last months of the Fiscal year collections will improve given the tourist influx during the recent Micro Games.
