The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

THE MINISTER of State for Finance, Michael Halkitis, said yesterday that in developing the 2012-2013 Budget, the Christie administration inherited recurrent spending commitments of some $938 million with respect to personal emoluments and debt servicing.

During his contribution to the Budget debate, Mr Halkitis said the Christie administration's hands were "tied" by recurrent spending commitments made by the previous Ingraham administration, which carry over into its first term.

Mr Halkitis said: "Our hands are tied by recurrent expenditure commitments entered into by the previous government that carry over into our first year in office, in respect of the promotions exercise, back pay, salary increases and the payment of new insurance benefits. These total some $21.5 million in 2012-2013."

He added: "The other very significant constraints that we faced in framing this year's Budget relate to the share of the budget that is allocated to personal emoluments (PE) and debt service obligations.

"The former are difficult to modify, at least in the short-term, and especially in the current economic environment. The latter represent legally-binding commitments that must absolutely be met if the Government is to maintain its current good standing in international capital markets.

"The PE allocation in 2012-2013 is in the order of $640 million or 35 per cent of total recurrent expenditure, excluding the transfers that are allocated to public corporations for personal emoluments. If we take out the debt servicing component of recurrent expenditure, P/E accounts for 42.9 per cent of spending."

Mr Halkitis said that in developing the 2012-2013 Budget, the Christie administration had faced recurrent spending commitments of some $938 million in respect of personal emoluments and debt servicing, over which it had little discretion given the short time available.

"Fully 52 per cent of the total Budget expenditure was accounted for," Mr Halkitis said.

"Debt service comprises both debt redemption and interest charges which will amount to $121 million and $207 million, respectively, in 2012-2013. Their total at $328 million will account for just over 18 per cent of total recurrent expenditure."

Mr Halkitis said the Christie administration had "held the line" on recurrent expenditure in 2012-2013 to the extent possible. He noted that recurrent expenditure is up by $114 million from 2011-2012, "but fully $55 million of that increase is counted for by increased debt redemption requirements from $66 million in 2011-2012 to $120 million in 2012-2013."