Government of the Federated States of Micronesia

Fiscal Year 2012 Budget signed into law

Palikir, Pohnpei (FSM Information Services): October 21, 2011 - President Manny Mori signed Congressional Act 17-24 as Public Law 17-19 on October 3, approving the appropriation of $44,251,617 from the general fund of the FSM to fund the operations of the National Government's branches, agencies and programs and to provide for other obligations under grants, subsidies and contributions for FY2012.

Relevant to Article XII, Section 2 of the FSM Constitution, the President submitted to Congress on April 1 the Fiscal Year 2012 (FY12) recommended budget of $56,224,827, which includes investments in "capital formation" and "human resource development", along with a projection of anticipated revenues to be derived from domestic sources, Compact Sector Grants, Supplemental Education Grants, Federal Programs and Foreign Grants understood to be available during this fiscal year.

The Executive Branch estimated that the total FY12 domestic revenue would be at $41,650,000, which would be $439,523 in excess of the $40,810,477 actual collection in FY10 as indicated in the Departmental Communication 17-26 provided to Congress by the Department of Finance and Administration on September 2, before the Second Regular Session of the 17th Congress convened.

According to Congress, as indicated in C.R.17-59, FY12 domestic revenue would be in the amount of $38,655,000 based on advice by Congress budget staff - a decrease of $2.2 million from FY10 actual revenue level, and also less than the President's domestic revenue projection by $3 million.

In recommending the passage of the budget bill in the amount of $44,251,617, the Ways and Means Standing Committee Report 17-52 states:

"Your Committee recommends using the Revenue Projection provided by Congress's own budget office in September 2011 as the projection of domestic revenue available for appropriation during fiscal year 2012", the report says.

The report also states, "The President's recommended budget of $51,138,886 exceeds this amount (Congress's own projection) by $4,746,310".

In expressing his views on the FY12 Budget Act by Congress in his October 3 Signing Statement, first of all, President Mori noted that "the budget process for FY2012 has significantly improved for both the Executive Branch and the Legislative Branch", the President wrote.

Further on in the Signing Statement, the President lamented the fact that Congress submitted the budget back to Executive Branch only two days before the end of the fiscal year. Given the inadequate period of time for a thorough review of the substantively changed budget, the President said, "there is no meaningful justification in approving or disapproving the budget".

"For purposes of transparency, Congress should inform the President if there is any major change in the proposed budget. While Congress may alter the budget in any respect, for practical purposes the President being delegated the constitutional duty to faithfully execute the budget should know how the changes were arrived at and how those changes will impact on the delivery of services", the President further expressed.

With regards the difference in FY2012 revenue projection between what had been submitted by the President and that provided by Congress's Budget Office, the President pointed out that the authority to submit annual budget to Congress, along with the projection of all revenues as well as other monies that are to be available to the national government in the next fiscal year, is a duty vested in the President by the FSM Constitution.

"Revenue is always understated year after year, when in fact the economy has the capacity to generate the projected revenue. For instance, we believe that for FY2012, the economy will generate revenue of $41 million", the President stated.

The President said in the Signing Statement that he grudgingly signed the budget act to prevent a shutdown of government services.

For the past four fiscal years, the national government continually realized an average carry over amount of $4.5 million.

According to Mrs. Rose Nakanaga, Acting Secretary of the Department of Finance and Administration, the collecting of receivables under FY11 will be concluded by the end of October, at which time the total FY11 collected revenue will be conclusive.

For further information on this release, please contact:

FSM Office of the President
Public Information: Press, Radio, Video
P.O Box 34
Palikir Station, Pohnpei, FM 96941
Tel.: (691) 320-2548/2092
Fax.: (691) 320-4356