Congress of the Federated States of Micronesia

Congress adjourns stressing fiscal management and continues investigations on allegations of mismanagement of funds by the Executive Branch

PALIKIR, Pohnpei (FSM Congress): November 25, 2010 - The Fifth Special Session of the Sixteenth Congress of the Federated States of Micronesia adjourned sine die on November 24th following two weeks of intense deliberations and public hearings into the night and through the weekend.

Speaker Isaac V. Figir called for the Fifth Special Session to convene November 15 - 19, 2010 to consider three major items: the loan from China (C.B. 16-124), adjustments to the FY-2011 Budget and pending nominations. Congress extended an additional five days to allow the committees more time for the contentious and time-consuming issue involving requests for supplemental funding.

In a letter to President Emanuel Mori prior to the convening of the special session, Speaker Figir explained that during the session, 'adjustments' to the FY-2011 Budget would be considered to pay for obligations incurred in FY10, an objective of which is to reduce the amount the National Government owes to third parties.

The special session according to Speaker's letter "should not be deemed as an occasion for revisiting requests that Congress had previously denied funding or to request new substantial expenditures." Regardless of Speaker's appeal to use restraint in requesting supplemental funding, Congress began session and was once again faced with an extravagant supplemental budget request from the Executive.

A supplemental request of $4,812,860 was received, which far exceeded the available revenue projections of $2,907,577. After lengthy hearings and deliberation, Congress opted to fund only two small items and safeguard the financial stability of the Nation.

The Committee on Ways & Means held a three-hour public hearing with members of the Executive Branch on Saturday, November 20, 1010, to consider the supplemental requests. Of the projected revenues available for appropriation, $1,174,340 was deemed to come from Sector Grants of the Amended Compact.

It quickly became apparent to the Committee that no Amended Compact funding could be considered for appropriation until the January 2011 regular session. Pursuant to witness testimony, a significant portion of those Amended Compact funds may come from the States' share of Amended Compact funding per the distribution formula.

When faced with this issue in the past, Congress has taken a firm stance that it will not approve for National Government use any portion of Amended Compact funds which may rightfully belong to the States. The Committee will continue to investigate the source of these funds in the January 2011 regular session of Congress.

The Committee then tackled the remaining budget requests of $3,638,520 to be funded from domestic (non-Compact) revenue. According to the projection provided by the Secretary of the Department of Finance and Administration, the requests considerably surpassed the available domestic revenues of $1,733,237.

Committee members had expressed their intent to fund only those items necessary to keep the National Government running efficiently and were not interested in re-hearing budget requests that Congress had denied in the September Budget Session, such as the $1 million dollar subsidy to the FSM Development Bank. It was clear that many of the items in the President's supplemental were either previously rejected items, or were not time sensitive and could wait until the next regular session of Congress with no adverse effect.

At the end of a long day of testimony, the Committee opted to recommend funding only two items which are the National Prayer Day and personnel shortfalls for the Office of National Archives, Culture and Historic Preservation - the only National Government employees still owed regular salary for fiscal year 2010.

Despite expressing a preference to get to the bottom of the shortfall prior to appropriating the funds, the Committee members voiced strong concerns that these employees should not be victimized by possible mismanagement of funds beyond their control.

The Committee specifically declined to recommend any additional supplemental funding for the Department of Justice this session. Substantial supplemental funding had been made available to both the Division of Immigration & Labor and National Police in September 2010.

At that time the Committee, in Standing Committee Report 16-132, expressed "great dismay at the multiple violations of the Financial Management Act and the inability of the Department of Justice to properly budget funds as appropriated."

The Committee concluded that the only responsible action was to wait for results from the Office of Public Auditor and from the Special Committee that has been tasked with investigating apparent violations of the Financial Management Act by Department of Justice in FY2010.

Congress concurred with the recommendations made by the Committee on Ways & Means, and passed Congress Bill No. 16-137 appropriating $20,063 for the two items as recommended by the Committee.

Speaker Figir was satisfied with the decision of Congress to use caution in appropriating additional public funds so soon after passing the FY2011 Budget, "I'm proud of the decisions made by Congress in regards to the supplemental funding, we are very early in the fiscal year and it would be financially reckless to appropriate funds that do not exist, or to bring the General Fund down to a zero balance.

"This money belongs to the people of the FSM and we have an obligation to appropriate it wisely," said Speaker Figir.

Congress will meet for the final Regular Session of the Sixteenth FSM Congress on January 10, 2011.

For further information on this release, please contact:

Congress of the Federated States of Micronesia
Public Information Office
P.O Box PS-3
Palikir Station, Pohnpei, FM 96941
Tel.: (691) 320-2324/2325
Fax.: (691) 320-5122