Senate rejected the House version of the Continuing Budget bill for FY 2021 and now the bill will go to conference committee. If no deal is reached in the next 19 days, the government will be forced to close.
President Remengesau submitted a Continuing Budget bill, proposing to maintain the same level of funding for regular budget activities as FY 2020, and allow the new incoming government to develop its own budget.
Senate version of the continuing budget bill SB 10-181, SD1 proposed to amend the bill to include supplemental SS benefit payment and subsidies for Pension Plan and PPUC’s Lifeline subsidy. It also appropriated $100K for inauguration, $700k for hospital trust fund and cut $10 million from the $20 million earlier appropriated for the CROSS Act.
The Senate version also slashed across the board budgets for Executive, Legislative, Judiciary, Boards and Commissions and state governments, some by 5% and others by 15%. It justified the reductions as ways to help the next administration adjust to the expected revenue shortfall in 2021 and 2022.
House of Delegates Ways & Means Committee Report said that the Senate version of the bill was unconstitutional in terms of the legislature’s authority to amend a Continuing Budget bill.The report says that the amendments of the appropriation bill adjusting funding levels of budgets for government operation and adding new appropriations “are likely in conflict with Article XII,§3(a).”
To get around the legal interpretation which says that the Senate version may be illegal, the House version proposed a Continuing Budget Authority for FY 2021 and amended sections the FY 2020 Budget Act.
The House amendments to this year’s budget, the FY 2020 Budget, included appropriating $100k for inauguration, removing appropriation of Pension and PPUC subsidies and amending the language of the FY 2020 Budget Act to make the Social Security Supplemental Benefit payment as regular budget activity, which would enable the payments to continue under the Continuing Budget.
The House also took out Senate amendments that slashed budgets of government branches, agencies and state governments across the board in the Continuing Budget bill, anddeleted Senate proposal to cut $10m of the funding from the CROSS Act.
Earlier, Minister of Finance ElbuchelSadang has reported that they will not be spending $10m out the $20m that was appropriated for the CROSS Act.
Sadang also reported that $10m dollar loan has been approved by ICDF Bank of Taiwan for Civil Service Pension Plan and needs authorization of OEK in order to be drawn down. The loan is meant to help Pension Plan with its funding shortfall and has 2 years grace period before loan payments start.
In addition, PPUC has also been approved for a $10 million dollar loan from ADB to help it with its operations and aging infrastructure. The loan too requires OEK approval.
The Continuing Budget bill needs to be approved by September 30th to avoid government shutdown.

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