Overview:
Palau faces a likely government shutdown on Oct. 1 after the House of Delegates amended the Senate’s stopgap budget bill by inserting its full FY 2026 budget. The Senate had passed a temporary measure to continue spending at 2025 levels for six months, but it adjourned sine die, officially closing its session and leaving no time to consider the House changes. Lawmakers cannot act again until the Fourth Regular Session begins on Oct. 10, making a shutdown almost inevitable.
By: L.N. Reklai
KOROR, Palau — A budget standoff between Palau’s two legislative chambers has left the government on track for a shutdown on Oct. 1, after the House of Delegates rewrote the Senate’s temporary spending measure and forced a new showdown.
The Senate had passed a continuing budget authorization to keep the government running for up to six months at 2025 spending levels, capped at 50% of that budget. The stopgap plan protected Social Security benefits, subsidies for the Palau Public Utilities Corporation, retiree and disability payments, and included $195,000 for Independence Day celebrations and $45,000 for boat racing. Senate leaders argued that with the Oct. 1 deadline looming and many House members off-island last week, there was little chance of finishing the full 2026 budget on time.
When the House returned Saturday, Sept. 28, lawmakers amended the stopgap bill by inserting their entire version of the 2026 budget. In its committee report, the House said the Senate’s bill was “insufficient to meet fiscal and legal requirements of the Republic” and warned that a stopgap could disrupt debt payments, delay state block grants and prevent legally mandated salary increases. “A continuing budget authority is only a temporary stopgap measure and cannot substitute for a comprehensive budget law,” the report said.
The move left the Senate with limited options: accept the House version as is, reject it and trigger a shutdown, or delay action until its next regular session on Oct. 10. By procedure, the House’s action means the bill must go back to the Senate. But the Senate had already adjourned its Third Regular Session sine die, formally closing it. That decision effectively closed the door on entertaining the bill any further. Once the Senate reconvenes for its Fourth Regular Session, all pending bills must be reintroduced from the start and go through three readings in both houses.
House Speaker Mario Gulibert has said a six-month continuing budget law does not mean lawmakers must wait that long to agree on a budget. “If we can reach a compromise in two weeks, that would end the continuing authorization,” he said last week. Still, with the House finalizing its amended bill after midnight on Sept. 29 and Senate rules requiring 24 hours before a session can convene, no action can be taken before Oct. 1.
The deadlock leaves Palau almost certain to enter the new fiscal year without a budget, with lawmakers unable to act until Oct. 10, when both chambers resume session.