Lagos State budget under-performs, Governor Fashola

“Reasons given by the state government include the general elections, new wages, and floods.”

The mid-year review of the Lagos State budget fell notably short of the state’s usual sterling performance and this is partly due to disruption in the state’s revenue pursuit, caused by the 2011 general elections. 

This revelation is contained in a letter addressed to Speaker of the House of Assembly, Adeyemi Ikuforiji, by Governor Babatunde Fashola on August 11.

According to the governor, the review, done on July 15, recorded 57.3 per cent, just a few nudge better than the all-time low value of 49 per cent recorded for the first quarter budget review of 2010.

While the political feud between the executive and legislative governments of the state was responsible for the first quarter 2010 low performance, Fashola attributed the mid-year low performance to “disruption caused by the elections, the implementation of the new salary scheme and extensive flooding of the state.”

In the letter titled ‘Re: Y2011 Re-ordering/augmentation exercise,’ Fashola noted that “some of the state-wide votes are almost exhausted while some other areas of the budget have not witnessed much in terms of performance.”

The review showed that the state’s economy in the past six months has taken on a consuming nature with its disproportionate balance between personnel cost and capital expenditure. The latter appeared to have even been sacrificed to cater for the demands of personnel and recurrent expenditure.

While capital expenditure recorded an abysmal low value of 33 per cent, recurrent expenditure recorded 87.6 per cent, and overhead costs recorded a performance of 75.2 per cent. Conversely, the personnel cost exceeded its target, recording 111.3 per cent.

On the revenue side, however, the internally generated revenue is not performing to expectation and this forecloses the option of considering a supplementary budget as it will be difficult to come up with a realistic financing source.

The state government has therefore settled for the option of reshuffling budgetary allocations to different ministries, departments, and agencies, in order to shore up its capital project performance as the year runs to end.

“It is against this backdrop that it has become necessary to redistribute identified un-utilised provisions to other areas of critical need to engender optimum budget performance in the state,” the letter stated.

In reshuffling allocations, the state government was careful to leave the state budget size intact as approved in the 2011 Appropriation Law; only moving monetary allocation from one MDA to another. This was done “based on the budget policy of giving pre-eminence to settlement of outstanding liabilities [and] completion of on-going critical projects/programmes.”

The state government proposed a total re-ordering of N23.6bn; constituting the re-ordering of N7bn from within the recurrent expenditure and N16.6bn from within the capital expenditure.

However, the 7-man ad-hoc committee, setup by the House of Assembly and headed by Ajibayo Adeyeye (Kosofe II), recommended the re-ordering of N22.1bn, which was immediately approved by the House on Monday.

N6.5bn was reordered from within the recurrent expenditure, while N15.6bn was reordered from within the capital expenditure. The discrepancy was put down to the committee’s finding, after dialoguing with the affected MDAs, that the Ministry of Economic Planning and Budget did not consult the affected MDAs on the likely impact of the proposed deductions from their allocations before proceeding to do so.

For instance, the committee, in its report, stated that, “the proposed sum of N500m could not be deducted from the recurrent expenditure of Lagos State Judiciary because this will drastically affect its overhead cost and violate the principle of self-accounting as enshrined in the Y2011 Appropriation Law.”

Meanwhile, Governor Fashola on Tuesday terminated, with immediate effect, the appointment of Tunde Durosinmi-Etti, his Senior Special Assistant on Revenue and Investment and Acting Group Managing Director of the Lagos State Investment (IBILE) Holdings.

No reason was given in the statement signed by the Head of Service, Adesegun Ogunlewe.

-By Godwin Akanfe 

Source: DailyTimes