Spies rejects Statia’s budget Amendment

May 26, 2012 10:08 AM

ST EUSTATIUS - Dutch Minister of Home Affairs and Kingdom Relations Liesbeth Spies has rejected the first amendment of Statia's 2012 budget, but has advised the Statia government to present a new amendment based on the US $1.3 million per month "free allowance" recently approved by the Dutch Government for the public entity.

And, according to Finance Commissioner Koos Sneek, in spite of the negative advice on the budget the minister had received from the Committee for Financial Supervision (CFT), in a letter to the Government Spies praised the measures the executive council has taken to reduce a possible deficit by placing a freeze on new financial commitments and on recruiting personnel.
 
Sneek said "the fact that Statia still received praise from the minister for its efforts to present a balanced budget and [for] the measures it took to reduce expenses is a clear indication that the minister realizes that the island is between a rock and a hard place."
 
It was also evident, that the minister appreciated the way in which attempts were made to comply with the advice of the CFT to substantiate the presented budget amendment.
 
He said that in the minister's decision to reject the first amendment, she took into consideration certain risks involved in the realization of some expected revenues and expenditures, which she felt, if not materialized would result into a deficit which is not allowed in accordance with the Financial Law BES (FINBES).
 
He explained that the budget amendment had been unanimously approved by the island council, prior to presenting it for approval to the minister. At that time, the island council was aware of the possible risks in the budget amendment, but had agreed with him because they saw no alternative to present a balanced budget amendment in any other way.
 
"The main risk in the budget amendment was the revenue the government expected to be received 'from the minister herself in the form of compensating the employer part of social premiums, which amounts to US $1.2 million dollars," Sneek explained, adding that these expenses were never provided for in the 2011 budget, the first approved budget for Statia as public entity, and they represented the main contributor to the 2011 deficit.
 
He said since no correction, by means of adjusting the free allowance was made, there was the same shortfall in the 2012 budget.
 
"Another burden on government's budget is the payroll of more than 20 persons, who are actually working for the schools," even though since January 1, 2011 education is the direct responsibility of the ministry of Education.
 
As a result of that new reality, the Statia Government no longer has a budget for this, but on an annual basis this payroll burdens government with approximately half a million dollars.
 
He said that the increase in the free allowance of US 1.3 million dollars, was unknown to Statia at the time of presenting the budget amendment, but while this increase "may allow Statia to a certain extend to balance its 2012 budget, it will still not allow the island to adequately carry out its tasks and responsibilities or to carry out any new policies or build up reserves, as is a requirement by law."
 
He said he had already explained Statia's severe financial problems to the minister in their bilateral meeting during the BES week in The Hague in March, but it is clear that this has not resulted in a solution to the problem.

(The Daily Herald)