Koror State Legislature passed a $9.85 million budget bill for FY 2021, 21% lower than FY 2020 budget of $12.4m. The bill is pending before Governor Franco Gibbons which will need to be signed today in order to avoid state government closure. Koror State Government runs on a calendar year cycle and its fiscal year starts this January 1st, 2021.
Koror State Government, like the national government is heavily impact by the COVID 19 pandemic, with nearly half of its revenue derived from tourism activities. With few visitor arrivals in 2020, with only January and February arrivals, Koror State Government have experienced over 50% decline in its revenue reporting only 45% in total collections as of 3rd quarter of FY 2020.
Sources of revenue for its FY 2021 budget consist of $2.3 million from local revenues, $6.5 million from Savings Reserved Funds and $1.1 million from State block grants. Compared to its FY 2020 budget, $7 million was projected local revenue with $6 million coming from tourism activities. The new fiscal year budget only project $2.3 million from local revenue.
The FY 2021 budget bill itself budgets $6.29 million for Executive Branch, $563k for Legislative Branch, $211k for House of Traditional Leaders, $463k for Boards, Authorities and Commissions, $1.37 million for Insurance, Pension and Social Security contributions, $580k for Communications, Utilities and Prior Year Obligations. Included in this amount is $30k for travel and transportation. The budget also allocates $367k for State programs and Special Projects such as Koror State Youth Council with $75k and $200k for Hamlet projects. Of this $200k, a language is inserted giving Speaker special discretion over $100k to expend to “fulfil Hamlet Legislator Requests”.
When reached for explanation of this language, Koror State Speaker Alan Marbou said that budget items under each area of government all require approval of the appointed leader of that area such as under HOTL, Ibedul approves all expenditures. Under Legislature, Speaker approves all expenditures and under Executive, Governor approves all expenditures. “Speaker alone cannot just allocate budget to himself without going through the legal process,” expressed Speaker Marbou.
Regarding the specific language of this special project budget, he said that all 16 legislators were in favor and approved the bill. He said this was due to the fact that in previous 3 budgets which had hamlet allocations, their requests were not approved by administration and that is why this year, the hamlet projects budget was split in half with half administered by administration and half by the Speaker.
The proposed FY 2021 budget also makes funding for Koror State RISL facilities non-lapsing.
Meanwhile, Koror State Government had requested approval from the national congress to obtain $25 million dollar loan from financial institutions to help cover its budget shortfalls for FY 2021 and FY 2022. House of Delegates have approved the joint resolution for $15 million but this resolution is yet to pass the Senate.