ARTICLE XII. FINANCE
Section 1
There shall be a National Treasury and a state treasury for each of the states. All revenues derived from taxes or other sources shall be deposited in the appropriate treasury. No funds shall be withdrawn from any treasury except by law.
Section 2
- A Public Auditor shall be appointed for a term of six (6) years by the President subject to confirmation by the Olbiil Era Kelulau. The Public Auditor may be removed by a vote of not less than two-thirds (2/3) of the members of each house of the Olbiil Era Kelulau. In such event, the Chief Justice of the Supreme Court shall appoint an acting Public Auditor to serve until a new Public Auditor is appointed and confirmed. The Public Auditor shall be free from any control or influence by any person or organization.
- The Public Auditor shall inspect and audit accounts in every branch, department, agency, or statutory authority of the national government, and in all other public legal entities or nonprofit organizations receiving public funds from the national government. The Public Auditor shall report the results of his inspections and audits to the Olbiil Era Kelulau, at least once a year, and shall have such additional functions and duties as may be prescribed by law.
Section 3
- The President shall submit an annual unified national budget to the Olbiil Era Kelulau for consideration and approval. The Olbiil Era Kelulau may amend or modify the annual budget as submitted by the President. Except appropriation bills recommended by the President for immediate passage or to cover the operational expense of the Olbiil Era Kelulau, no appropriation bill may be enacted by the Olbiil Era Kelulau until a bill appropriating money for the budget has been enacted.
- The chief executive of each state shall submit, with the assistance of the national government, an annual budget to the state legislature for consideration and approval. The state legislature may amend or modify the annual budget as submitted by the chief executive of the state. Except appropriation bills recommended by the chief executive of the state for immediate passage or to cover the operational expenses of the state legislature, no appropriation bill may be enacted by a state legislature until a bill appropriating money for the budget has been enacted.
Section 4
The national government and the state governments shall have the power to make investments pursuant to law.
Section 5
Except where a particular distribution is required by the terms of the assistance, all block grants and foreign aid shall be shared by the national government and all the states in a fair and equitable manner based on needs and population.
Section 6
- Each state shall be entitled to revenues derived from the exploration and exploitation of all living and non-living resources, except highly migratory fish, and fines collected for violation of any law within the marine area extending from the land to twelve (12) nautical miles seaward form the traditional baselines.
- The national government shall be entitled to all revenues derived from the exploration and exploitation of all living and non-living resources, except highly migratory fish, and fines collected for violation of any law beyond the areas owned by the state.
- All revenues derived from licensing foreign vessels to fish for highly migratory fish within the jurisdictional waters of Palau shall be divided equitably between the national government and all the state governments as determined by the Olbiil Era Kelulau.
