Governor Rauf Aregbesola of Osun State has come out to defend his administration’s inability to pay staff salaries for the past few months.
There has been widespread condemnation from several quarters after it was discovered that he has owed workers up to six months salaries.
Speaking at the inauguration of the Sixth Osun State House Of Assembly, on Tuesday, June 2, 2015, Governor Aregbesola gave the following speech, which has been abridged.
“When our administration was inaugurated over four years ago, we met many daunting challenges, including a debt burden and infrastructure decay.
We were able to execute the biggest social welfare programme in this country; programmes that impacted directly on every family and household in the state.
When it was time to raise the level of capital projects in the state, we approached financial institutions and within the bounds of best practices, we secured facilities at favourable terms. We never exposed the government unnecessarily.
Problem began in 2012 when our expenditure increased as a result of the spike in minimum wage. This was when we applied the increase to junior workers only. Then, our total emoluments rose to N2.7 billion from the N1.4 billion I met in November 2010. By December of that year, it hit N3.5 billion. At the same period, our statutory allocation (from where we are required to pay salaries) increased marginally from N2.1 billion in 2010 to N2.5 billion in December 2012.
By July of 2013, our total emoluments hit N4 billion while our statutory allocation was N2.1 billion. By then we had extended the increase to other workers.
The summary of five years reveal that in the two months of 2010, we received a net allocation of N4.2 billion and paid a total emoluments of N3.6 billion. This left us with a net gain of N573 million from our statutory allocation.
In 2011 also, we got N29.9 billion net statutory allocation and spent N25.8 billion on emoluments with a net gain of N4 billion. However, in 2012, we got N28.4 billion and expended N31.6 billion on emoluments.
This left us, for the first time, with a deficit of N3.2 billion. The following year, 2013, our statutory allocation had dropped to N26.4 billion while our emoluments rose to N36.9 billion. This gave us a whopping N10.4 billion deficit.
In 2014, our statutory allocation fell further to N19.3 billion and by which time we were already defaulting on some of our obligations on emoluments, which had also dropped to N22.4 billion, but still left us with a deficit of N3 billion.
In summary, between November 2010 and December 2014, we got a total statutory allocation of N108.3 billion and our expenditure on emoluments was N120.4 billion. It left us with a total deficit of N12 billion.
In the period under review, our total recurrent expenditure was N206 billion while our statutory allocation was N108.3 billion.
If we add other accruals from Abuja to our income, it will only add up to N176.5 billion and we will still be left with a deficit of almost N30 billion, which means that the state would not have been able to run government.
Even when we add our internally generated revenue, we were still only able to muster N204 billion and still short by N2 billion.
It simply means that all our earning from all sources between 2010 and 2014 could not carry our recurrent expenditure.
In 2015, the net statutory allocation in January was N1.25 billion, in February, it was N1.12 billion, in March, it dropped scandalously to N624 million while April figure dropped further to N466 million.
Our statutory allocation began a precipitous fall in 2013 while our salaries and emoluments began a steady climb. The contrasting state of our allocation from the federation account is highlighted by the peak of our allocation of N5 billion we received in February 2013 against the N466 million we just received for April.
These details will put a lie to the accusation that we were profligate. How could we have been profligate when our statutory allocation alone cannot meet our obligations on salaries and other emoluments? The financial challenge we faced was enormous and daunting and a disaster was mitigated by our prudent management and sheer financial wizardry that made us to get so much from so little. We should see the cup as half full, instead of half empty.
Another factor that raised our emoluments expenditure was our commitment to pensions. When we began in November 2010, we were paying N200 million pension monthly and so for 2010, we committed N400 million.
However, in 2011, we increased our monthly pension obligation to N250 million and we had to pay N3 billion in that year.
By March of 2012 our pension obligation has risen to N300 million monthly which cost us N3.5 billion for that year.
But in December 2012, about 5,000 retirees were added to the 9,000 strong army of pensioners in the state and in the following year, 2013, we increased our monthly pension bill to N520 million and paid out N5 billion in that year.
That same year, another set of 3,500 workers retired at the local government to enlist in the local government pension brigade. By the time we started defaulting in 2014, we had already committed a total of N4.9 billion to pensions.
I was the first to raise the alarm in 2013 that the mysterious drop in allocation amounts to waging war against the states. I was vilified then by a section of the press and the Federal Government was not even ready to listen to our cry. But we survived this by the infinite grace of God and the unflinching support of our people to emerge triumphant in the governorship election of 2014 and the General Elections earlier this year.
While our capital expenditure for the period we are reviewing was N85.3 billion, our total recurrent expenditure was N206 billion of which emoluments alone constitute N120.4 billion (58.5 per cent). This makes capital expenditure only 29.3 per cent of our total expenditure. This is anomalous and calls for creativity in order to bring development to our people.
We still have an outstanding debt of N75 billion. Our outstanding mandatory expenditure in salaries and pensions for 2014 is N13.1 billion.
Between January and May this year, we have accumulated mandatory expenditure of N16.5 billion in arrears. But we must run the government, provide infrastructure, etc.
The only way we can survive is to generate our own revenue and be self-sufficient. I made the case for self-reliance and severance of our dependency on allocation from Abuja.
We have abundant human and material resources and we can sustain ourselves if we look inwards. The difficult can be done at once; while the impossible only takes a little longer.”