Palau Lawmakers Race Against Clock to Avert Government Shutdown as Key House Members Remain Off-Island

Budget Impasse Threatens Government Operations

KOROR, Palau – Palau's government faces the imminent threat of a shutdown as lawmakers struggle to finalize the national budget for fiscal year 2026 before the deadline of September 30. The Senate has taken steps to prevent a lapse in funding by advancing a stopgap budget plan, but progress in the House of Delegates remains stalled, primarily due to the absence of several key members who are currently off-island.

The new fiscal year is set to begin on October 1, leaving only days for the bicameral legislature to reconcile differences and approve a spending bill. Delays in budget passage are not unprecedented in Palau, with the FY2025 budget signed just hours before its deadline in 2024, and similar situations occurring in 2020 and 2016. However, the current situation is complicated by the significant number of absent lawmakers at a critical juncture.

House Negotiations Stalled by Absent Delegates

On September 19, the House of Delegates rejected the Senate's version of the FY2026 budget and subsequently formed a conference committee to address discrepancies. However, shortly after its formation, most House conferees, including Ways and Means Chairman Delegate Mengkur W. Rechelulk, departed the country. Other absent delegates include Stephanie Ngirchoimei, Warren Umetaro, Yutaka Gibbons Jr., Sebastian Marino, Francesca Otong, Blesoch Aderkeroi, Nace Soalablai, and Silverius Tellei. House Speaker Gibson Kanai also left Palau, while Delegate Portia Franz-Kesolei is in the Philippines for medical treatment. Some members are reportedly accompanying President Surangel Whipps Jr. to the United Nations General Assembly in New York, while others are in Taiwan.

The mass absence has left the House without the necessary quorum to convene a session, form a conference committee, or act on any temporary spending measures. Vice Speaker Mario Gulibert, one of the few leaders remaining in Palau, has confirmed he is in close contact with his overseas colleagues. He stated, 'We don't want the government to shut down and we will do everything we can to ensure that the government does not shut down.' Gulibert anticipates Delegate Rechelulk's return by Saturday, with other members expected by Sunday, acknowledging the tight timeline for compromise. 'We will do our best in those 2 to 3 days to iron out the differences and come to an agreed budget,' he added.

Senate Advances Stopgap Measure Amid Policy Disagreements

In response to the House's inaction, the Senate passed a continuing budget authorization bill aimed at preventing a shutdown when the fiscal year concludes on September 30. This stopgap measure, however, still requires approval from the House and the President to become law. Senate Ways and Means Chairman Mark Rudimch indicated the Senate's readiness to meet with the House conference committee since September 19, but their efforts have been on hold due to the House's lack of a quorum.

Beyond the procedural hurdles, underlying policy disagreements between the Senate and the President have contributed to the budget stalemate. Key points of contention include:

• Audit Reports: The Senate advocates for independent audit reports to ensure transparency and accountability, citing both Palauan law and U.S. Compact requirements. President Whipps, conversely, believes quarterly financial reports are sufficient.
• Salaries: President Whipps supports a 10 percent across-the-board pay raise for government workers, arguing it addresses rising costs. The Senate, however, prefers targeted cost-of-living adjustments.
• Government Structure: The President seeks to establish new offices to enhance efficiency, while the Senate suggests strengthening existing offices with similar mandates.
• Taxes and Subsidies: The Senate has proposed reducing the Palau Goods and Services Tax (PGST) and increasing subsidies.

The Senate's proposed continuing authority is for six months, though Vice Speaker Gulibert noted that a quicker compromise could end the authorization sooner. The focus remains on preventing a government shutdown and ensuring the budget is not rushed at the expense of essential programs.