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FY 2012 Budget Act, RPPL 8-40 2012

PALAU

AN ACT

To authorize the sum of $60,855,000 from the National Treasury and appropriate the sum of $59,394,000 for the annual budget of the Republic of Palau for the fiscal year ending September 30, 2012, and for other related purposes.

THE PEOPLE OF PALAU REPRESENTED IN THE OLBIIL ERA KELULAU DO ENACT AS FOLLOWS:

Section 1. Legislative Findings.

The Olbiil Era Kelulau finds that this Act is the result of a compromise between the President and both houses of the Olbiil Era Kelulau. The Olbiil Era Kelulau recognizes the existence of over-expenditures of the National Government for Fiscal Year 2011 and that this Budget Act may not fully reflect the actual budget needs of the National Government for Fiscal Year 2012. If a Supplemental Budget is needed later then that Supplemental Budget will address the essential services of the National Government that may have been underfunded. The Olbiil Era Kelulau anticipates a Supplemental Budget request being submitted to the Olbiil Era Kelulau by the President within sixty (60) days of the effective date of this Act. The Olbiil Era Kelulau agrees to a prompt consideration of such a Supplemental Budget request for Fiscal Year 2012.

Section 2. Short Title. This Act may be cited as AThe Fiscal Year 2012 Annual National Budget Authorization and Appropriation Act.@

Section 3. Estimated Revenues and Other Available Resources.

Pursuant to 40 PNC ' 323(a), the annual budget is required to contain a funds availability analysis. Pursuant to 40 PNC ' 326, the annual national budget is required to be a balanced or surplus budget in which the total of all estimated revenues and other available resources are equal to or greater than the proposed total appropriations. This Act is a balanced budget based on the following estimated revenues and available resources:

Section 4. Judicial Branch.

The amount of $2,175,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure or obligation for Fiscal Year 2012 for the purpose of covering the operational and contingent expenses of the Judicial Branch. All of the funds authorized and appropriated in this section shall come from local revenues. The total authorization and total appropriation shall be allocated according to the following schedule, respectively:

Section 5. Legislative Branch. The sum of $3,804,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure or obligation for Fiscal Year 2012 for the purpose of covering the operational and contingent expenses of the Legislative Branch. All of the funds authorized and appropriated in this section shall come from local revenues. Unless otherwise stated in this Act, the amounts appropriated in this section shall be allotted and administered at the direction of the appropriate Presiding Officers of the Olbiil Era Kelulau according to the following schedule:

Section 6. Executive Branch Operations.

The sum of $31,726,828 is authorized for appropriation and is hereby appropriated for expenditure and obligation for Fiscal Year 2012 for the purpose of covering the operational and contingent expenses of the Executive Branch. The Total amount authorized to be appropriated and that is hereby appropriated in this section shall be made up of the following available revenues: The amount of $13,726,828 shall come from local revenues; the amount of $250,000 shall come from ROP UMDA dividend and the amount of $17,750,000 shall come from: the Compact Section 211(f) Trust Fund Investment Earnings, from the direct assistance provided to Palau pursuant to the Compact Review Agreement, from another appropriation by the United States Congress, or from a combination of the above. The total authorization and total appropriation shall be allocated according to the following schedule, respectively:

Section 7. Boards, Commissions, and Authorities. The sum of $633,183 is authorized for appropriation and is hereby appropriated for expenditure and obligation for Fiscal Year 2012 for the purpose of funding the operational and contingent expenses of Boards, Commissions and Authorities. The entire amount of funds authorized and appropriated shall come from local revenues. The total authorization and appropriation shall be allocated according to the following schedule, respectively:

Of this amount, $50,000 shall be earmarked to fund the operations of the Financial Intelligence Unit.

Section 8. State Block Grants. The sum of $4,822,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure or obligation for Fiscal Year 2012 for the purpose of the Palau state governments= operational and capital improvement projects expenses. The entire amount of funds authorized to be appropriated and that is hereby appropriated in this section shall come from local revenues. The amounts authorized for appropriation shall be available for expenditure for operations and CIP projects in accordance with 40 PNC Chapter 22. All State Block Grants shall not lapse at the end of the Fiscal Year. The total authorization and total appropriation shall be allocated according to the following schedule, respectively:

Until such time that Ngatpang State has validly elected and installed the officials of its executive and legislative branches of government, of the amount appropriated herein to Ngatpang State, the Ministry of State shall expend and account for the amount necessary to maintain state government operations. Of the amount appropriated herein to Ngatpang State government, thirty-five thousand ($35,000) shall be expended or obligated for the salary and functions of the Ngaimis and shall be disbursed by the Ministry of State in accordance with the laws and Constitution of

Ngatpang State and the Republic of Palau.

Section 8 Total $4,822,000

Section 9 Independent Agencies. The sum of $1,920,411 is authorized for appropriation and is hereby appropriated for expenditure or obligation for Fiscal Year 2012 as operating grants or subsidies for independent agencies of the National Government. The entire amount of funds authorized to be appropriated and that are hereby appropriated in this section shall come from local revenues. The total authorization and appropriation shall be allocated according to the following schedule, respectively:

Section 9 Total $1,920,411

Section 10. Other Agencies and Activities. The sum of $1,422,524 is authorized for appropriation and is hereby appropriated for expenditure or obligation for Fiscal Year 2012 as grants or subsidies for recurring programs and activities. The entire amount of funds authorized to be appropriated and that are hereby appropriated in this section shall come from local revenues. The total authorization and appropriation shall be allocated according to the following schedule, respectively:

The amount appropriated herein shall be used solely for the direct support of the Small Business Development Program, Apprentice Program, and the Food Production and Employment Program managed by the PCAA; provided, that no portion of the funds appropriated herein shall be used to fund travel or per diem expenses. At the request of the Minister of Finance, the PCAA shall forthwith produce and permit the Ministry of Finance to inspect its records relating to the expenditure of the funds appropriated herein.

Section 10 Total $1,422,524

Section 11. Education Assistance. The sum of $4,601,200 is hereby authorized to be appropriated and is hereby appropriated for expenditure or obligation for Fiscal Year 2012 to subsidize the educational institutions and scholarship programs set forth below. The entire amount of funds authorized to be appropriated and that are hereby appropriated in this section shall come from local revenues. The total authorization and appropriation shall be allocated according to the following schedule, respectively:

Section 12. Hospital Trust Fund. The amount of $2,000,000 or the actual amount collected is hereby authorized to be appropriated and is hereby appropriated for Fiscal Year 2012 for purposes of the Hospital Trust Fund. The amount authorized to be appropriated and that is hereby appropriated shall come from revenues derived from clinical and public health medical and dental services fees and charges during the fiscal year; provided, that the actual expenditures or obligations shall not exceed actual revenue receipts. Any unexpended or unobligated balance of the appropriation of this section shall not lapse at the fiscal year=s end.

Section 13. Infrastructure Maintenance Matching Fund. The sum of $600,000 is authorized for appropriation for Fiscal Year 2012 for the purpose of fulfilling Palau=s obligation under Section 2 and Appendix A of the Compact Review Agreement to contribute the required such sum of money to match the $2,000,000 grant to be provided to Palau by the United States in Fiscal Year 2012 to fund an Infrastructure Maintenance Fund. The entire amount authorized to be appropriated in this section shall come from local revenues. Any unexpended or unobligated balance of the appropriation of this section shall not lapse at the fiscal year=s end.

Section 14. Financial and Compliance Audit. The sum of $425,000 is authorized for appropriation and is hereby appropriated for Fiscal Year 2012 for the purpose of fulfilling Palau=s obligation under Section 6 and Appendix D of the Compact Review Agreement to perform a financial and compliance audit (ASingle Audit@) of the uses of the funding provided pursuant to the Compact Review Agreement for each fiscal year during which the Compact Review Agreement is in effect. The entire amount authorized to be appropriated and that is hereby appropriated in this section shall come from local revenues.

Section 15. Debt Service. The sum of $2,713,000 is authorized for appropriation and is hereby appropriated for Fiscal Year 2012 for the purpose of payment of periodic interest and principal payments pursuant to the promissory notes under the $20 million International Commercial Bank of China (AICBC@) (Taiwan) loan agreement for the purpose of completion of Phase II of the national capitol construction project in Melekeok State; and the $8 million Mega International loan agreement for the purpose of undertaking various improvements to the Palau International Airport. The amount authorized to be appropriated and that is hereby appropriated shall come from local revenues. Any unexpended or unobligated balance of the appropriation of this section shall not lapse at the fiscal year=s end, and the total authorization and appropriation amount shall be allocated according to the following schedule:

Section 15 Total $2,713,000

Section 16. Compact Review Office. The sum of $150,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure or obligation for Fiscal Year 2012 for the purpose of undertaking Compact of Free Association review and its associated activities. The entire amount authorized to be appropriated and that is hereby appropriated in this section shall come from local revenues. The services purchased with funds appropriated by and for the purposes in this section are exempt from the competitive procurement requirements of Chapter 6 of Title 40 of the Palau National Code.

Section 17. Payment of Judgments. The sum of $261,000 is hereby authorized for appropriation for Fiscal Year 2012 for the purpose of paying outstanding judgments against the Republic of Palau. The entire amount authorized to be appropriated in this section shall come from local revenues.

Section 18. Low-Income Assistance. The sum of $75,000 is hereby authorized for appropriation and hereby is appropriated fo expenditure in Fiscal Year 2012 for the purpose of providing subsidies to households by way of paying a stipend of $100.00 per month to each of the families identified by the 2009 Household Income Survey conducted by the Ministry of Finance as having no income. The Minister of Finance shall provide a monthly report to the Olbiil Era Kelulau and the Public Auditor on each $100.00 stipend provided to low-income families. The entire amount authorized to be appropriated in this section shall come from local revenues and apportioned and paid at the direction of the Minister of Finance in accordance with the procedures established by regulation.

Section 19. Outside Grants and Development Assistance. All external funds received from development partners and donors, including, but not limited to, grants provided to Palau pursuant to or from; the Compact of Free Association, the Compact Review Agreement; other U.S. Federal Program Grants; Japan Grant Aid; Republic of China (Taiwan) grants; and grants from other countries, organizations, or individual donors; are hereby authorized to be appropriated and are hereby appropriated for Fiscal Year 2012 in the amounts received for those specific programs or projects for which they are granted, donated, or otherwise contributed. Cost recoveries associated with such program grants may be retained for use by the Minister of Finance for such purposes as are needed to implement such programs or projects for which they were granted. The Minister of Finance shall report monthly to the Olbiil Era Kelulau the receipt of any outside grant or development assistance in the preceding month. In addition to all other reporting requirements established by law or regulation, the Minister of Finance shall submit quarterly reports to the President and the Olbiil Era Kelulau setting forth expenditures and obligations of all funds received from outside sources and expended or obligated pursuant to this section. Insofar as the provisions of Chapter 6 of Title 40 arc inconsistent with grant terms imposed by foreign donors, the President shall advise the Olbiil Era Kelulau and the Public Auditor, in writing, of any expenditures of grant funds for which he has suspended or that he intends to suspend the application of Chapter 6 of Title 40 and, unless both houses of the Olbiil Era Kelulau reject such suspension of provisions of Chapter 6 of Title 40 and the expenditures by Joint Resolution within twenty (20) calendar days of the President=s submission, all such expenditures after the twenty (20) day period for rejection by the Olbiil Era Kelulau shall be deemed to have been made in accordance with Palau law.

Section 20. Apportionment and Allotment. Unless otherwise stated in this Act, amounts appropriated in this Act shall be apportioned and allotted at the discretion of the President.

Section 21. Presidential Reprogramming. The sums appropriated under sections 6, 7, and 9 of this Act may be reprogrammed by the President in accordance with 40 PNC ' 351.

Section 22. Amendment. Section 3413 of Chapter 34 of Title 24 of the Palau National Code, as amended by RPPL Nos. 7-42, 7-57, 8-9, 8-15, 8-18, 8-29, and 8-31 is hereby amended as follows:

A' 3413. Environmental Protection Fee (Green Fee)

(a) Every non-Palauan passport holder departing from the Republic shall be assessed, and shall pay, an environmental protection departure fee (the Green Fee) of thirty dollars ($30.00) upon departure; provided that persons traveling on a passport issued by the Republic of Palau, diplomats, transiting passengers, and masters, pilots, and other crew members of any vessel or aircraft lawfully operating as a common carrier, are exempt from assessment and payment under this section. The money generated from collection of the green fee shall be deposited into two separate accounts within the National Treasury that shall be separate and distinct from all other accounts as set forth in subsection (c) below. Nothing in this Act shall preclude the states from collecting tourist and visitor fees for visiting or using state resources and sites, including Protected Areas Network (PAN) sites.

(b) Allocation of Green Fee. In each year=s national government fiscal budget Act,

(1) fifty percent (50%) of the funds generated from the collection of the Green Fee shall be authorized and appropriated for the sole purpose of the operation of PAN, to be transferred to the Protected Areas Network Fund as set forth in subsection (c) below. No more than ten percent (10%) of such funds may be used for administrative costs of the operation of the Protected Areas Network; and

(2) fifty percent (50%) of the funds generated from collection of the Green Fee shall only be authorized and appropriated for the sole purpose of improving the water and sewer system of the Republic.

(I) The first two hundred thousand dollars ($200,000) collected from this fifty percent (50%) shall go to the Airai State Government for the sole purpose of the protection and preservation of the water source and its ecosystem in Airai, which provides eighty percent (80%) of Palau=s potable water.

(ii) The two hundred thousand dollars ($200,000) shall be subject to an agreement between the National Government and the Airai State Government that includes a plan detailing how these funds will be expended or obligated for the purposes under this subsection (b)(2). None of the funds authorized and appropriated under this subsection (b)(2) shall be used for any administrative costs including but not limited to salaries and office supplies.

(c) Once the funds generated from the collection of the Green Fee have been authorized and appropriated as set forth—

(1) in subsection (b)(1), the Minister of Finance shall transfer the funds collected to the Protected Areas Network Fund; and

(2) in subsection (b)(2), the Minister of Finance shall transfer the funds collected into a separate and distinct account within the national treasury for use in accordance with subsection (b)(2).

. . . .

(h). . . .@

Section 23. Repealer. Sections 1401 and 1407 of Title 40 are hereby repealed in their entirety.

Section 24. Amendment. Section 1401 in Title 40 of the Palau National Code that is repealed in Section 23 of this Act is hereby replaced with a new Section 1401 of Title 40 of the Palau National Code, which shall state as follows:

ASection 1401. Hotel room and vessel cabin occupancy tax.

(a) An excise tax of twelve percent (12%) of the net room charge for the room of vessel cabin, or twelve dollars ($12) per room or per vessel cabin whichever amount is greater is hereby levied and imposed against transient occupants of a room in a hotel, motel, lodging house, or similar facility located in the Republic; in addition, such excise tax shall also apply against any transient occupants of a cabin on ship or other water vessel owned or operated by persons or business entities licensed to do business in the Republic.

(b) The tax imposed pursuant to subsection (a) shall not be assessed on each transient occupant; rather, the tax shall be assessed per room or per cabin, per day, for every day that the room or cabin is occupied by at least one transient. If the room or cabin is rented more than once within a twenty-four hour period, each time of occupancy shall be subject to the tax for such accommodation.

(c) Every hotelkeeper doing business in the Republic, and every owner or operator of a ship or water vessel whose customers are subject to this tax, shall be responsible for collecting the excise tax imposed by this Section and shall transmit all of the tax collected pursuant to this Section to the Director on or before the fifteenth day of each month. The Director of the Bureau of Revenue and Taxation shall be responsible for the collection of the taxes imposed by this Section.

(d) This tax shall apply and be collected by the hotelkeeper when the sale for occupancy is made, regardless of the time when the price is paid or delivered by the transient occupant.

(e) As used in this Section Atransient occupant@ means those persons who occupy a room or cabin in a specific location in the Republic for less than thirty (30) days.

(e) The tax levied under this Section shall not be levied against any transient occupant who pays no room charge in connection with an authorized promotional activity on behalf of Palau=s tourism industry, nor shall any hotelkeeper have a legal obligation under this Section to collect or pay any excise tax for any room by a transient occupant who pays no room charge in connection with an authorized promotional activity on behalf of Palau=s tourism industry. Palau Visitors Authority shall be responsible for keeping a record of all guests who are authorized under the exception in this subsection and for reporting to the Ministry of Finance, on an annual basis, how many guests stayed in a room or cabin without charge under the exemption contained in this subsection, for how many nights, and in which hotels.

(f) Subject to annual authorization and appropriation, one percent (1%) of the excises taxes collected pursuant to this Section or one hundred thousand dollars ($100,000), whichever amount is less, shall be accounted for separately within the National Treasury and earmarked for appropriation to defray the costs associated with the procurement and maintenance of a decompression hyperbarie chamber at the Palau National Hospital.@

Section 25. Medical Savings Fund -- National Government=s share as employer.

The sum of $600,000 is hereby authorized for appropriation to the Medical Savings Fund that is administered by the Social Security Administration for the purpose of funding the National Government=s responsibility as an employer to pay 2.5% of its employees= total remuneration into the Medical Savings Fund pursuant to 41 PNC 924(e), as amended by RPPL No. 8-14. The source of funding shall come from local revenues. All funds received by the Social Security Administration from the National Government that are designated to be deposited into the Medical Savings Fund shall be deposited into the Medical Savings Fund.

Section 26. Medical Savings Fund -- Subscription costs.

The sum of $400,000 is authorized for appropriation and is hereby appropriated to the Medical Savings Fund and the Palau Health Insurance that is administered by the Social Security Administration for the purpose of funding the National Government=s responsibility to pay subscription costs for citizens who are age sixty (60) years and older and not working, or who are disabled and not working pursuant to 41 PNC ' 952(a), as amended by RPPL N 8-14. The source of funding shall come from local revenues. The funds authorized and appropriated pursuant to this section shall not lapse at the end of the fiscal year.

Section 27. Amendment. Section 6 of RPPL No. 8-34, as amended by RPPL No. 8-35, is hereby amended to state as follows:

Section 6. Authorization and Appropriation. The sum of $1,125,854 is hereby authorized to be appropriated and is appropriated for expenditure and obligation for the purpose of covering the prompt procurement of goods, equipment and services and payments of the costs related to those actions described in Section 2 above. The total appropriation shall be made up of the following revenues: The amount of $1,125,854 shall come from local revenues.

Section 28. Approval of State of Emergency Expenditures.

The Olbiil Era Kelulau hereby deems the authorization and appropriation contained in RPPL No. 8-34, as amended by RPPL No. 8-35 and Section 27 above, as being in compliance with House Joint Resolution No. 8-62.

Section 29. Protected Areas Network Fund.

The amount of $1,400,000 or the actual amount collected is hereby authorized to be appropriated and is hereby appropriated for Fiscal Year 2012 for the purposes of the Protected Areas Network Fund. The amount authorized to be appropriated and which is hereby appropriated shall come from the local revenues derived from the collection of the environmental protection fee (AGreen Fee@) that is collected during the Fiscal Year.

All funds authorized and appropriated under this section that are not expended or obligated at the end of the Fiscal Year shall not lapse.

Section 30. Effective Date.

(a) This Act shall take effect upon its approval by the President of the Republic of Palau or upon becoming law without such approval, except as otherwise provided by law and as set forth in subsection (b).

(b) Notwithstanding subsection (a), the following shall have an effective date of October 1, 2012, or six (6) months after the effective date of this Act, whichever later:

(1) The amendment to increase the environmental protection fee, and the newly established fifty percent (50%) collection for the improvement of the water and sewer system of the Republic as set forth in Section 22 of this Act.

(2) The repeal of Section 1401 of Title 40 of the Palau National Code and the repeal of Section 1407 of the Palau National Code as set forth in Section 23 of this Act.

(3) The enactment of the newly created Section 1401 of Title 40 of the Palau National Code as set forth in Section 24 of this Act.

PASSED: March 8, 2012

Approved this 25th day of March , 2012.

/s/
Johnson Toribiong
President
Republic of Palau