FSM mulls firm decisions in response to JEMCO demands on budget matters

FSMIS (September 23, 2013): The Executive Branch and the 18^th Congress of the Federated States of Micronesia (FSM) mulled different scenarios in response to strict disposition from the Joint Economic Management Committee (JEMCO) on Compact sector grant allocations for the FSM National Government for fiscal year 2014.

The starring focus of the on-going second regular session directly relates to the National Government’s FY14 operation budget that begins on October 1^st.

The budget includes an amount of approximately $8.1 million requested to be sourced from Compact sector grants.  

However, during its meeting earlier this month, JEMCO already struck down these requests, except for a $2.4 million directed to the College of Micronesia-FSM from education sector.

Consequently, as Congress resumes discussion on the budget, the FSM faces a $5.7 million shortfall for some operational costs under the Department of Health and Social Affairs, Department of Education, Department of Finance and Administration, the Project Management Unit and SBOC as a result of JEMCO actions. 

On September 12, the Congressional Special Committee (Committee to Wait on the President) met with President Manny Mori to consult on priority items for the session. The committee consisted of Vice Speaker Paliknoa K. Welly, (Chairman), Speaker Dohsis Halbert, Floor Leader Florencio Harper and Yap Delegation Chairman Joseph J. Urusemal. This might have been an unprecedented appointment in which the Presiding Officers of Congress comprised the Committee to Wait on the President.

The Congress Special Committee and the President viewed options proposed by the Departments and Offices facing budgetary complications imposed by JEMCO.

Among options considered was to let go of the state-focused services in health management areas centralized at the National Government. For instance, operations for “state initiative”, “health system support”, “food and water testing”, and “environmental health services” are implemented at State but requested under National share.

  

On September 16, Congress passed a bill that would lower the National Government’s annual share of Compact grants from ten to five percent and increase State share based on existing distribution breakdown. This redistribution was done in the spirit of burden sharing with the States where Compact funds decrements are most felt. Moreover, this change might enable the National Government to wipe the unfunded requests off its plate and allow the States to pick them up in the long run under their compact shares. 

When they met in the Marshall Islands on September 6, President Mori made it clear with Secretary Sally Jewell, US Department of the Interior, that FSM did not appreciate the micro-management attitude by JEMCO members, especially with regards non-compact revenues.

This feeling had been raised on different occasions and was reiterated many times during the past two consultations between the Executive and Congress at the start of this session.

At their last two consultations, the President and Congress exchanged views on the need to persist with internally driven reform measures that go beyond the mere adjustment of budgetary and fiscal responsibilities and keep a focus on facilitating tax reform, responsible use of resources, and growing the economy while addressing complex issues. They agreed to keep open channels on big issues and be more upfront in forging a way forward amid external impositions.

For more information, email fsmpio@mail.fm.