He told the state assembly that strict spending control and increased land charges had helped stabilise the state’s finances, which came under scrutiny earlier this year.

Chow said the state’s deficit for 2025 was now estimated at RM33.6 million, with the 2026 budget projecting a further drop to RM19.9 million, compared with a deficit of RM514.5 million in 2024.

He also said the state was on track to collect more than RM1 billion in revenue this year, a level last reached in 2016, when Penang recorded RM1.029 billion in income.

“We see the results of the steps taken to raise land tax and premiums, and to control spending,” he said in his winding-up speech.

In May, Chow had admitted that the state was facing a “cash flow problem” and a possible deficit of up to RM500 million, which prompted the RM100 million federal advance as a buffer.

He attributed the cash flow issue to “a failure to control spending” and general increases in government operating costs.

Arrears spike ‘an accounting issue’

Responding to the opposition’s claims that state arrears had surged, Chow said the jump in the state’s “Akaun Belum Terima” from RM94.65 million in 2023 to RM315.80 million in 2024 was “an accounting issue”.

Chow said this was due to land premiums still under appeal being recorded as receivables, inflating the figure on paper.

After adjustments, he said the true arrears stood at RM122.35 million.

Rare earth deposits worth US$21 billion on radar

Chow said the state was also drafting new mineral laws after early surveys by the minerals and geoscience department found about 1.7 million tonnes of non-radioactive rare earth elements (REE) in Penang.

He said the “inferred deposits”, worth an estimated US$21 billion, were spread across hilly areas in Teluk Bahang, Balik Pulau, Bukit Mertajam and Bukit Panchor near Nibong Tebal.

“These are only inferred resources. Any proposal will be vetted by the technical agencies, and we will put rules in place before any work can start,” he said.