Governor Franco Gibbons signed into law $9.85 million budget for Koror State Fiscal Year 2021 on December 30th, a day before Koror State’s FY 2020 budget expired. The budget reflected State reduced income as result of COVID-19 pandemic, 21% lower than FY 2020 and 30% lower than FY 2019.
The proposed FY 2021 budget submitted by Governor Gibbons on December 21st was for $11m and was adopted on December 23rd, after which it was assigned to Ways & Means Committee.
The bill that was passed by 16 hamlet legislators on December 29th, included this amendment as well as reductions across KSG’s Executive, Legislative, HOTL and Board & Commissions budgets, reducing the originally proposed $11 million budget to $9.85 million.
In his transmittal letter to Speaker Alan Marbou, Governor Gibbons informed that he had signed the budget into law even though he disagreed with the section of the law on Hamlet Projects that gave the Speaker the sole discretion over the expenditure of $100k budgeted for hamlet projects based on hamlet legislators’ requests.
He said that this language was in conflict with Koror State’s Constitution on Separation of Powers and in violation of Palau’s procurement laws. “Any expenditure by the Speaker to fulfill Hamlet Legislator’s request must still abide by the national procurement laws,” stated Governor Gibbons.
11th KSL Ways & Means Chairman Legislator Kyonori Tellames said that the language in the law does not violate any laws.
“The intent was not to circumvent procurement law. The intent was to make sure what the Speaker approves per hamlet legislator request, the Director shall, by virtue of his authority as the procurement officer, approve based on the projects merit. The procurement officer ensures that the bidding/implementation process, are within the procurement process,” expressed Legislator Tellames.
Koror State derives over half of its budget income from direct and indirect tourism related activities and has been impacted greatly by the coronavirus pandemic. It is currently seeking a loan from lending institutions, especially Asian Development Bank, to help balance its budget in the next two years as the economy slowly recovers.
It’s current budget taps into its Savings Reserve Fund to balance its budget, appropriating over $6 million from the Reserve Savings to fund over 66% to fund its operations. Remaining sources of funds for this year’s budget comes from projected local revenue and State block grants.

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