The Senate on Thursday reached a consensus that state governors were responsible for the dwindling financial fortunes of their respective states, warning that urgent steps must be taken to forestall further decline of the 36 states’ economies.
Considering the report of its Joint Committee on National Planning, Appropriation, States and Local Governments, which investigated the looming bankruptcy of states, the senators said they were convinced that the states could do more in the area of revenue generation than relying totally on proceeds from the Federation Account.
The report was based on an earlier motion by Senator Olubunmi Adetumbi, raising the alarm of a likely financial catastrophe in the states going by economic indices, and calling for urgent measures to track the problem.
The Senate, in response to the motion and by a resolution, mandated the committee to look into the matter and report back. The committee said nearly all the states depended fully on statutory allocations from the Federation Account and the Excess Crude Account, which are in turn dependent on the volatile oil market.
It said after reviewing the economic factors in the states, there were clear reasons to believe that the states were facing a looming danger of bankruptcy.
The report stated, “The over dependency on oil revenue at the expense of Internally Generated Revenue by states is responsible for their continued call on the Federal Government to share the proceeds of the Excess Crude Account to meet the growing cost of governance in states.
“For instance, the sum of $1.5bn was shared in three equal instalments from the Excess Crude Account in 2011 alone, out of which the states received the sum of $400.8mn. The final payment amounts to $500m.”
Senator Emmanuel Paulka, who also faulted the practice of governors waiting for allocations from the Federation Account, argued that states should come up with ways of generating revenue.
In its recommendations, which was wholly accepted by the Senate, the committee called for the review of the present Revenue Allocation Formula, noting that Sections 313 and 315 of the 1999 Constitution had provided that it should be reviewed periodically.