President Surangel Whipps Jr. has forwarded a $15 million supplemental budget proposal to the Olbiil Era Kelulau, targeting various assistance programs. This move closely follows the enactment of the US Appropriations bill, which included the Compact Review Agreement, signed into law by President Biden this month.
The $15 million supplemental budget includes additional allocations across various agencies and programs, with significant enhancements in social assistance at the forefront. One notable provision involves amending the current tax law to include Palauans earning between $15,000 and $30,000 in the eligibility list for tax refunds. However, only 10% of the first $8,000 of their earnings will be refunded. Additionally, the proposal aims to double the current Child Subsidy from $100 to $200 per child and raise the eligibility threshold to $30,000 for annual wage earners. The current eligibility threshold is $15k annual wage.
Moreover, the bill suggests a $50 increase in benefits for the Severely Disabled. It also outlines a plan to provide $480 in annual social assistance to individuals over 60 who are not employed. These proposed increases in social assistance, dubbed by President Whipps as the “Palau Grassroots Support Tax” or “PGST,” are intended to become part of the annual recurring expenditures upon approval.
Whipps attributes the $15 million supplemental budget to local revenue sources, citing a $9 million surplus from 2023 and anticipated revenue growth in FY 2024. He notes that last year’s revenue uptick was driven by tourist numbers and the implementation of a new tax law. With this supplementary budget proposal, Whipps aims to align revenue projections for the current fiscal year with expected expenditures.
Historically, budget bills in election years have leaned heavily toward subsidies and social assistance programs. However, such policies have posed challenges to major social programs like the Social Security Administration and the Civil Service Pension Plan, both facing significant Unfunded liabilities. President Whipps suggests potential solutions, including raising the retirement age, increasing the minimum wage, and raising contribution levels, with these issues currently under consideration by the OEK.
Additionally, the supplemental bill introduces policy changes, such as removing the wage cap for Special Prosecutors and public auditors. Whipps advocates for adopting a minimum wage law, proposing a phased increase from $3.50 per hour to $5 per hour within the year.
The proposed budget also allocates additional funding to various government ministries, including Education, Health, Agriculture, Fisheries, Environment, State, Finance, HRCTD, Public Infrastructure, and Industries, as well as for events like the Festival of the Pacific Arts, Micro Games, Rubekul Belau Forum, 30th Independence Day celebrations, and Bais in Saipan and Guam.