Republic of Palau
Office of the President

April 23, 2015
Serial No. 15-2084 

The Honorable Camsek E. Chin
Senate President
Ninth Olbiil Era Kelulau 
P. O. Box 8
Koror, Republic of Palau 96940 

Subject: Senate Bill No.9-150, SD6, HD3, PD1 

Dear Senate President Chin: 

I would first like to thank the Olbiil Era Kelulau for your timely action to include a contribution in the supplemental budget to help our friends and neighbors in the South Pacific and here in Micronesia in their recovery efforts from the devastation caused by Cyclone Pam and Typhoon Maysak. As you know, the President of the Federated States of Micronesia was here as our guest for the visit of Japan's Imperial Family and your quick action enabled us to directly present their share of the contribution and show our concern and willingness to help in their time of need. I take this opportunity as well to thank the OEK for your support of the visit by Their Majesties, the Emperor and Empress of Japan, to mark the 701J1 anniversary of the end of the battle for Peleliu. Your support of additional funding helped ensure the success of this historic occasion and further strengthened our friendship and relationship with the People and Government of Japan. 

Having said that, I am encouraged to see that the OEK acted favorably on the concerns that were raised in my referral of the supplemental budget regarding the appropriation for waterline installations in certain states, waiver of procurement of associated projects and forgiveness of past due utility billings including the balance of interest payments due to the Civil Service Pension Plan (CSPP). We fully support water project initiatives at the state level that promote economic growth and sustainable development. Such projects are in line with our ongoing efforts to develop visitor attractions sites, recreational parks, aquaculture and livestock production that are all aimed at expanding economic activity and ensuring sustainable livelihoods and food security at the community level. 

However, while understanding emergency situations, it is important that projects such as the waterlines planned are undertaken through proper planning frameworks. We must be able to start and complete the projects and with the desired outcomes. We must also ensure that we do not duplicate efforts and incur unnecessary costs. The planned waterlines are intended to be implemented under Force Accounts, or as community projects, with the respective states and we must be mindful of the risk that the projects may take longer and possibly cost more. 

Overall, I am pleased to note that the supplemental budget is able to address our funding obligations to replenish our passport stock, enable Team Palau to participate in the Pacific Games, host the visit of Japan's Imperial Family, and begin Phase I works for a new correctional facility in Babeldaob. But, at the same time I also note a number of funding requests for priority and important program areas were only partially or not addressed at all. Additional funding requests for the Belau National Museum and the Financial Investigations Unit (Fill) were rejected and place both activities at risk of shutting down operations due to budget shortfalls. The work of the Fill in particular is crucial to the effective surveillance and enforcement of our financial institutions and inadequate funding resources undermine their enforcement capacity. 

Other key funding requests that were not adequately addressed included those for the invasive species program initiative for the Bureau of Agriculture; additional visitor arrival forms provided by the Palau Visitors Authority; programs assistance for the Palau Community Action Agency; and more urgently the CSPP. As we are all aware, the current shortfall between monthly pension plan contributions and benefit payments has seriously affected the financial viability of the Pension Fund and as I requested in our State of the Republic Address, we must begin the urgent work of identifying and providing the funding resources necessary to ensure the financial integrity of the CSPP. In this regard, the proposed National Marine Sanctuary includes a $25 per tourist fee to supplement that Pension Fund with as much as $3 million annually. In addition, new requirements by the Govenunent Accounting Standards Board will require us to include the unfunded liability of the CSPP in our financial statements beginning fiscal year 2015. This makes it even more imperative that we continue to build our reserves while ensuring sufficient financing support to CSPP to reduce their unfunded liability and strengthen its overall financial position. 

The supplemental budget further includes funding support for Ngiwal State to hold their Constitutional Convention and for the procurement of a vehicle for the National Archives. We support the efforts of Ngiwal State to undertake this important initiative but we are concerned that this may set an undesired precedent where the National Govenunent may not have the resources to meet future state constitutional conventions especially if such funding support is demanded for the larger states. Towards this end, we will work with Ngiwal State to identify and secure alternative funding resources to ensure the successful outcome of their Constitutional Convention. We are also working on mobilizing grant funding support for the construction of the National Archives in Melekeok State and funding may be available for the purchase of a vehicle. 

With these in mind, I trust that you would agree that we need to continue to exercise expenditure restraint and as much as possible, try to maintain the same levels of budgetary resources in order to provide us with the ability to fully address our funding commitments as well as unanticipated expenditure demands that may arise in the remainder of the fiscal year. Accordingly, we ask for your understanding and support as I again exercise Article IX, Section 15 of the Constitution to line-item reduce the appropriations identified below -

Section	Line Item	Appropriation	Item-Reduction	Reduced	
Section 3. Amendment to Section 4 of RPPL No.9-34			
4(1)	Senate	$1,908,000	-$50,000	$1,858,000	
4(5)	Joint Staff	$325,000	-$50,000	$275,000	
Section 15	Ngiwal State Constitutional Convention	$20,000	-$20,000	$0	
Section 17	Vehicle for National Archives	$15,000	-$15,000	$0	

With these line-item actions, I am pleased to sign into law Senate Bill Number 9-150, SD6, HD3, PDl, The Fiscal Year 2015 Supplemental Budget Authorization and Appropriation Act, as RPPL Number 9-44. 

We look forward to working with you to implement a budget that is responsive to the needs of the People of Palau and that keeps us on track toward long term fiscal sustainability. 

Sincerely, 

Tommy E. Remengesau, Jr.
President of the Republic of Palau

____________________

NINTH OLBIIL ERA KELULAU

RPPL No. 9-44
Passed as Senate Bill No.9-150, SD6, HD3, PD1

Fifteenth Special Session, March 2015

AN ACT

To authorize and appropriate the additional sum of $4,007,000 from the National Treasury for general operations and capital improvements of the Republic of Palau for the fiscal year ending September 30,2015, to amend Chapter 20 of Title 33 of the Palau National Code to reduce to six percent (6%) the annual interest rate that accrues on delinquent government contributions owed to the Civil Service Pension Plan, and for related purposes.

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

Section 1. Short Title. This Act may be cited as "The Fiscal Year 2015 Supplemental Budget Authorization and Appropriation Act."

Section 2. Amendment. Section 2 of RPPL No. 9-34, as amended, is hereby amended to read as follows:

"Section 2. Executive Branch Operations. The sum of $39,252,500 is authorized for appropriation and is hereby appropriated for expenditure and obligation for Fiscal Year 2015 for the purpose of covering the operational and contingent expenses of the Executive Branch. The total amount authorized to be appropriated shall be made up of the following available revenues: The amount of $21,105,500 shall come from local revenues; the amount of $13,147,000 shall come from anticipated USDOI-OIA Fiscal Year 2015 grant assistance provided to Palau; and the amount of $5,000,000 shall come from Compact Section 211(f) Trust Fund investment account. The total amount authorized for appropriation and that is hereby appropriated in this section shall be allocated according to the following schedule, respectively: 

...

(2) Office of the Vice-President 

(a) Vice President's Office	304,000	
Sub-Total	$428,000	

(3) Ministry of Finance 

.....

(g) Bureau of Revenue, Customs & Taxation	1,555,000	
Of this sum, the amount of $15,000 is hereby earmarked to perform the necessary renovations and improvements for the installation of x-ray machines in the Palau International Airport arrival and cargo areas and the Palau Post Office building; and $50,000 is earmarked for the hosting of the 17th Oceania Customs Organization Annual Conference. 	
Sub-Total	$3,024,500	

(4) Ministry of State 

....

(b) ROP Consulate Office in Guam	107,000	

....

(g) ROP Embassy in Manila, Philippines	150,000	
		
(h) United Nations Representation Office	305,000	

...

j) Bureau of Trade & Foreign Affairs	482,000	

Of this sum, the amount of $82,000 is hereby earmarked for inter-agency preparation and hosting of the upcoming visit of the Imperial Family of Japan in April 2015. 

....

(I) Passport Office	127,000	

Of this sum, the amount of $75,000 is hereby earmarked for the purpose of replenishing the Republic's passport supply stock. 

....

(n) Southwest Island Field Trips	96,000	

The sum of $96,000 shall be apportioned and allotted at the direction of the Ministry of State in cooperation with the governors of Sonsorol State and Hatohobei State. $48,000 of these $96,000 in funds is allotted for Sonsorol State and $48,000 is allotted for Hatohobei State. Each allotment shall require prior written approval from the governor of Sonsorol State, the governor of Hatohobei State and the Minister of State. Government agencies participating in the Southwest Islands Field Trips shall contribute funds to assist in covering the cost at the direction of the Ministry of State. Funds for this appropriation not fully expended in Fiscal Year 2015 shall be non-lapsing. 

(o) ROP Embassy for European Union/Climate Change	185,000	

Of this sum, the amount of $150,000 is hereby earmarked for the purpose of establishing ambassadorial level representation dedicated to Climate Change and environmental issues including participation and access to Global Environmental Fund (GEF) and other funding facilities and the amount of $35,000 is hereby earmarked to hire legal counsel to assist in the process of obtaining grants and other requirements. 

Sub-Total	$3,110,000 	

(5) Ministry of Community & Cultural Affairs 

.....

(c) Bureau of Youth, Sports & Recreation	251,000	

Of this sum, the amount of $60,000 is hereby earmarked to undertake a Youth Survey and the update of the Republic's National Youth Policyand its implementation. The final report shall be submitted to the Olbiil Era Kelulau. 

.....

Sub-Total	$1,175,500	

(6) Ministry of Education 

....

(c) Bureau of Curriculum and Instruction	495,000	

Of these funds, $100,000 is earmarked for SAT 10 tests. These tests will be administered by Palau Community College. 

....

(e) Food Service Program	821,000	
		
Sub-Total	$8,353,000	

(7) Ministry of Public Infrastructure, Industries and Commerce 

.....

(b) OMIP, UNDP & Other Match	515,000	

Of this sum, the amount of $100,000 is hereby earmarked to cover the required matching fund for the Island Conservation Project Grant. 

....

(d) Bureau of Commercial Development	320,000	

....

(f) Bureau of Aviation	1,660,000	
		
(g) Bureau of Lands and Survey	839,000	
		
(h) Bureau of Public Works	1,329,000	

Of this sum, the amount of $3,000 is hereby earmarked for a safety officer for the Bureau of Public Works. The amount of $60,000 is hereby earmarked for the purpose of repairing and remodeling the Bai ra Ngerbesang in Kayangel State which was destroyed by Typhoon Haiyan in November 2013, and any unexpended or unobligated balance of this amount shall not lapse at the end of Fiscal Year 2015. 

....

(I) Waterline from Ibobang to Ngimis, Ngatpang State	150,000	

Funding shall be expended to undertake survey works and develop cost estimates and begin the implementation of the project for the installation of a waterline from Ibobang water tank to Ngimis in the state of Ngatpang. Funds shall be administered by the Ministry of Public Infrastructure, Industries and Commerce (MPIIC) as a community project initiated by the Ngatpang state government. In order to ensure the successful completion of the waterline project, MPIIC shall disburse the funds upon request by a team that the leadership of Ngatpang state establishes at the community level. The entire amount authorized to be appropriated and appropriated in this subsection shall come from local revenues. Funds for this appropriation not fully expended in Fiscal Year 2015 shall be non-lapsing. 

(m) Pipes for the waterline in Melekeok State connecting the Techobei water treatment plant and the Eastern Community Health Center	10,000	

Funding shall be expended to undertake survey works and develop cost estimates and begin the implementation of the project for the installation. The entire amount authorized to be appropriated and appropriated in this subsection shall come from local revenues. Funds for this appropriation not fully expended in Fiscal Year 2015 shall be non-lapsing. 

(n) Waterline between Airai and Aimeliik, administered by CIP	150,000	

Funding shall be expended to undertake survey works and develop cost estimates and begin the implementation of the project for the installation of a waterline from Airai Shell Gas Station to Tebedal Area in Aimeliik State. Such national appropriation of $150,000 requires a matching fund of $100,000 from Airai State and another $100,000 from Aimeliik State. Upon appropriation of each state's funds, the Ministry of Public Infrastructure, Industries, and Commerce shall consult with the state leaders and establish a team to begin the project of laying water pipes.. This establishes such work as a community and state project. The entire amount authorized to be appropriated and appropriated in this subsection shall come from local revenues. Funds for this appropriation not fully expended in Fiscal Year 2015 shall be non-lapsing. 

Sub-Total	$6,627,000	

(8) Ministry of Justice 

.....

(b) Bureau of lmmigration	426,000	

(c) Bureau of Public Safety	2,903,000	

Of these funds, $355,000 are earmarked for the Division of Fire and Rescue; and the amount of $50,000 is earmarked to pay for the assessment that was conducted by experts regarding jail conditions, to renovate the secure cells ("Solitary Confinement") mandated by court order, the completion of the minimum security extension ("Halfway House") in order to help relieve overcrowding and congestion of the jail facility, and for weapons and ammunition. 

(d) Bureau of Labor and Human Resources	301,000	

.....

Sub-Total	$4,872,000	

(9) Ministry of Health 

(c) Health Admin & Support Service	3,008,500	
		
Health Administration	(2,673,500)	

Of these funds, the amount of $11,000 is earmarked for the Division of Medical Records for a copy machine. 

(h) Bureau of Nursing	2,025,000	

Of these funds, $250,000 is earmarked for the hiring of 15 nurses. 

.....

(j) Division of Oral Health	44,000	

Of this sum, $20,000 is earmarked for two portable dental units, $12,000 is earmarked for two portable heat sterilizers, and $12,000 is earmarked for two autoclave sterilizers.

Sub-Total	$9,229,500	

(10) Ministry of Natural Resources, Environment & Tourism 

....

(c) Bureau of Agriculture	506,000	

Of this sum, the amount of $15,000 is hereby earmarked to cover staffing support of Invasive Species Program initiatives. 

(d) Bureau of Tourism	205,000	
		
Sub-Total 	$1,319,000	
		
Section 2 Total	$39,252,500"	

Section 3. Amendment. Section 4 of RPPL No. 9-34 is hereby amended to read as follows: 

"Section 4. Legislative Branch. The sum of $5,021,500 is hereby authorized to be appropriated and is hereby appropriated for expenditure or obligation for Fiscal Year 2015 for the purpose of covering the operational and contingent expenses of the Legislative Branch. The entire amount of funds authorized and appropriated in this section shall come from local revenues. The total authorization and appropriation shall be allocated according to the following schedule: 

(1) Senate	$1,858,000	

....

(3) House of Delegates	2,355,500	

....

(5) Joint Staff	275,000	

Of this fund, $45,000 is earmarked for the purchase of copier machines. 

....

Section 4 Total	$5,021,500	

Section 4. Amendment. Section 7 of RPPL No. 9-34 is hereby amended to read as follows:

"Section 7. Independent Agencies. The sum of $2,544,000 is authorized for appropriation and is hereby appropriated for expenditure and obligation for Fiscal Year 2015 as operating grants or subsidies for independent agencies of the National Government. The entire amount of funds authorized and appropriated in this section shall come from local revenues. The total authorization and appropriation shall be allocated according to the following schedule, respectively: 

(1) Office of the Public Auditor	$532,000	
		
.......		
		
(4) National Postal Service	389,000	
		
(5) Palau Visitors Authority	840,000	
		
......		
		
Section 7 Total	$2,544,000"	

Section 5. Amendment. Section 8 of RPPL No. 9-34 is hereby amended to read as follows: 

"Section 8. Other Agencies and Activities. The sum of $1,748,000 is authorized for appropriation and is hereby appropriated for expenditure or obligation for Fiscal Year 2015 as grants or subsidies for recurring programs and activities. The entire amount of funds authorized and appropriated in this section shall come from local revenues. The total authorization and appropriation shall be allocated according to the following schedule, respectively: 

(1) Palau National Museum	200,000	

Of these funds, $25,000 are earmarked for publishing Kramer. 

....

(3) Palau Community Action Agency	275,000	
		
(4) Head Start Program	113,000	

.....

(13) Peace Corps Contribution	70,000	

Section 8 Total	$1,748,000"	

Section 6. Civil Service Pension Plan Accrued Interest Charges. 

The sum of $500,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure and obligation for Fiscal Year 2015 for the purpose of paying the accrued interest payable for the employer contribution amounts not paid on or before the date prescribed for such payment by the National Government of Palau for the Civil Service Pension Plan for prior fiscal years; provided that the amount of $100,000 may be utilized as contributions from the Republic of Palau toward disaster recovery efforts associated with Typhoon Maysak and Cyclone Pam. The entire amount authorized to be appropriated and appropriated in this section shall come from local revenues. The President and the OEK shall work together to identify appropriate funding resources to satisfy the balance of the accrued interest payable not later than the end of fiscal year 2016. 

Section 7. 15th Pacific Games. The sum of $175,000 is authorized for appropriation and is hereby appropriated for expenditure or obligation for Fiscal Year 2015 for the purpose of funding the participation of Team Palau in the rs" Pacific Games to be held in Port Moresby, Papua New Guinea in July 2015; provided that any unexpended or unobligated balance of such sum after the conclusion of the rs" Pacific Games shall be used for repairs and improvements to the Palau National Gymnasium in Koror, The entire amount authorized to be appropriated and appropriated in this section shall come from local revenues. 

Section 8. Uighur Detainees Temporary Settlement Assistance. The sum of $15,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure and obligation for Fiscal Year 2015 for the purpose of supporting housing, living and other temporary settlement-related costs for the Uighur detainees. The entire amount authorized to be appropriated and appropriated in this section shall come from local revenues. 

Section 9. New Correctional Facility Construction Phase I. The sum of $500,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure and obligation for Fiscal Year 2015 for the preparatory works associated with the construction of the Republic's new Correctional Facility including environmental assessments, road access, site clearance and basic infrastructure connections. The entire amount authorized to be appropriated and appropriated in this section shall come from local revenues. Any unexpended or unobligated balance of the appropriation of this section shall not lapse at fiscal year end. 

Section 10. Peleliu State Road Slurry Seal. The sum of $250,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure and obligation for Fiscal Year 2015 for roads and other improvements in Peleliu State in preparation for the upcoming visit of Japan's Imperial Family. The entire amount authorized to be appropriated and appropriated in this section shall come from local revenues. Funds for this appropriation not fully expended in Fiscal Year 2015 shall be non-lapsing. 

Section 11. Ongedechuul Youth Organization in Ngardmau State. The sum of $20,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure or obligation for Fiscal Year 2015 to the Ongedechuul Youth Organization in Ngardmau State for educational and sports activities. Funds for this appropriation not fully expended in Fiscal Year 2015 shall be non-lapsing. The entire amount of funds authorized and appropriated in this section shall come from local revenues. These funds will be expended at the discretion of the Youth Board. 

Section 12. Peleliu Marine Transportation Authority. The sum of $30,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure and obligation for Fiscal Year 2015 to the Peleliu Marine Transportation Authority to subsidize fuel, maintenance and operations. Funds for this appropriation not fully expended in Fiscal Year 2015 shall be non-lapsing. The entire amount of funds authorized and appropriated in this section shall come from local revenues. The funds shall be disbursed directly to the Peleliu Marine Transportation Authority. 

Section 13. Belau Modekngei School. The sum of $10,000 is hereby authorized to be appropriated and is hereby appropriated for expenditure and obligation for Fiscal Year 2015 as supplemental financial assistance to Belau Modekngei School to be disbursed directly to Belau Modekgnei School for repairs and maintenance of the school's main building. The entire amount of funds authorized and appropriated in this section shall come from local revenues, and funds for this appropriation not fully expended in Fiscal Year 2015 shall be non-lapsing. 

Section 14. Amendment. Section 18 of RPPL No. 9-34, as amended by RPPL No. 9-37, is hereby amended to read as follows: 

"Section 18. Subsidy to PPUC for Water & Sewer Operations. The sum of $3,919,000 is authorized for appropriation and is hereby appropriated for expenditure in Fiscal Year 2015. Of this sum, $1,704,720 is a subsidy for water and sewer operations to the Palau Public Utilities Corporation (PPUC). The remaining balance of $2,214,280 will be used for capital expenditures as follows: 

....

(4) $500,000 will be used to fund pending requests from Ngeremlengui and Airai State for power and water service extension, whereas $200,000 will go to such requests from Ngeremlengui State and $300,000 will go towards such requests from Airai State. The use of the funds shall include, but not necessarily be limited to, the purchase of utilities materials and accessories, such as water and power lines, electric poles and water pipes. All funds authorized and appropriated in this subsection shall not lapse at the end of the fiscal year. PPUC shall submit quarterly reports to the President of the Republic and the Olbiil Era Kelulau, detailing its expenditures under this subsection, and provide an itemization of what materials and accessories were bought with these funds. 

Funds allocated to items 2 and 3 may be used to pay for water system repairs and new waterlines instead of those itemized capital expenditures in addition to the funds already appropriated for such purposes. The PPUC is exempt from any regulations requiring a permit from the Environmental Quality Protection Board promulgated under Title 24 of the Palau National Code and from the PPUC's own procurement regulations promulgated under Section 65 of RPPL 5-7, and any other applicable procurement law or regulation, for the purpose of repairing the water lines connecting Koror and Babeldaob that run along the Japan-Palau Friendship Bridge. Of the amount authorized to be appropriated and appropriated in this section the sum of $2,263,000 will come from Tranche 2 of the ADB WSIP Program Loan. The sum of $1,156,000 will come from Green Fee collections. The sum of $500,000 will come from local revenue. The amount allocated for water and sewer operations is directed to cover costs for fiscal years 2014 and 2015 and is a one-time subsidy that is not intended to be a recurring budget item because PPUC is expected to follow plans described in the ADB loan for cost recovery." 

Section 15. Ngiwal State Constitutional Convention. The sum of -0- is hereby authorized to be appropriated and is hereby appropriated for expenditure and obligation for Fiscal Year 2015 to Ngiwal State for the Ngiwal State Constitutional Convention. Funds for this appropriation not fully expended in Fiscal Year 2015 shall be non-lapsing. The entire amount of funds authorized and appropriated in this section shall come from local revenues.

Section 16. Peleliu State Government. The sum of $5,000 is hereby authorized to be appropriated and is hereby appropriated to help cover the cost of preparation for the upcoming visit by the Emperor of Japan. These funds shall be administered by the Peleliu State governor. Funds for this appropriation shall come from local revenues.

Section 17. Vehicle for National Archives. The sum of -0- is authorized to be appropriated and is hereby appropriated for expenditure and obligation for Fiscal Year 2015 to the National Archives for the purchase and maintenance of a vehicle. The entire amount of funds authorized and appropriated in this section shall come from local revenues, and funds for this appropriation not fully expended in Fiscal Year 2015 shall be non-lapsing. 

Section 18. Authority to Enter into Loan and Purchase Agreements for United Nations Representative Office. The President is hereby authorized to borrow on behalf of the national government an amount up to $2 million USD from a Financial Institution for the purpose of purchasing office space for the Republic of Palau's United Nations Representative Office in New York City, New York. The President is further authorized to negotiate an agreement or agreements to expend such loaned funds on behalf of the national government to purchase the office for a price up to $2 million USD, including purchase price and associated costs. Funds to repay the loan shall come from money heretofore appropriated for payment of rent under the United Nations Office budget. 

Section 19. Amendment. Section 2030 of Title 33 of the Palau National Code is amended to read as follows:

"§ 2030. Contributions. 

...

(b) Government Contribution. 

(1)... 

....

(4) The Board may seek injunctive and other equitable relief, including writs of attachment, to order member agencies to pay over contributions to the Plan in accordance with this subsection. Delinquent sums owed pursuant to this subsection shall accrue interest at the rate of 6 percent (6%) annually commencing three calendar days following the distribution of the payroll upon which such sum is owed. All such sums delinquent as of the effective date of this section shall have a penalty added thereto in the form of 6 percent (6%) annual interest retroactive to the third calendar day following the distribution of the payroll upon which each such sum was due."

Section 20. Effective Date. 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. 

PASSED: April 09, 2015

Approved this day of April 23, 2015. 
________________________________
HE Tommy E. Remengesau, Jr.
President
Republic of Palau