19th August, 2011
Governor Babatunde Fashola of Lagos State has cried out that the new minimum wage has taken a large chunk of the 2011 budget, a situation that was not planned for when the budget was being considered.
This, he said, has resulted in the slow pace of projects being executed by the government just as he added that the capital expenditure as proposed for in the budget had under-performed judging from a mid-term assessment.
According to Governor Fashola, though the total budget performed at 57 per cent half of the year, recurrent expenditure took a better part of it.
Of the N129.063 billion so far achieved, the recurrent expenditure gulped N86.816 billion while the capital expenditure got only N42.247 or 33.5 per cent performance.
He said the personnel cost which is part of the recurrent expenditure ate deep into the budget N37.964 billion as a result of the implementation of the new minimum wage.
â€œRecall that in the budget which was approved by the House for this year, capital expenditure got N252.593 billion, but half of the year, it has only got N42.247 billion.
â€œIt is against this backdrop that it has become necessary to re-distribute identified non-utilised provisions to other areas of critical need to engender optimum budget performance in the state,â€ the governor said in a letter sent to the House of Assembly yesterday.
He explained that apart from the minimum wage problem, the two other issues that affected the budget performance are disruptions caused by the elections and extensive flooding in the state.
The state lawmakers were confused on the action to take after the letter from Governor Fashola explaining the performance of the budget was read to them by the Deputy Clerk, Ibisola Ogayemi.
The three-page letter, personally signed by the governor, was a request for the House to approve the augmentation of the 2011 budget of the state owing to its poor performance.
The governor said he was not seeking for a supplementary budget because the internally generated revenue is running below budget and would not do the state any good. He said he was only requesting the House to approve the prioritisation of projects so that allocations to some projects in the budget could be stopped and the money re-allocated to other areas that are more important.
The governor proposed that recurrent expenditure should be augmented with N 7 billion while capital expenditure should be augmented with N16.6 billion as against the earlier proposal in the budget that was approved by the House.
It now means that N23.6 billion would be sourced from other areas within the 2011 budget for the two expenditures.
However, the confusion after the letter was read stemmed from the word â€˜re-orderingâ€™ as used by the governor with some of the lawmakers explaining that there was no such word in accounting or financial parlance.
It got to a point where the Speaker, Adeyemi Ikuforiji, had to explain to them that it is â€œtechnical supplementation of the budget.â€
The House then set up a seven-man committee headed by the Majority Leader, Ajibayo Adeye, to critically review the letter and report to the House next Monday.