Budget review postponed as credibility of local revenue projections questioned

Pago Pago, AMERICAN SAMOA — The FY2025 budget review was postponed yesterday morning when Fono members could not reach a consensus on the credibility of the proposed budget's overall projected amount of $733,683,167, submitted by the Budget Office and Treasury.

The joint hearing was held at the Senate chamber yesterday morning controlled by the chairmen of the Budget & Appropriations Committees of the House of Representatives and the Senate — Faipule Vailoata Amituana'i and Senator Utu Sila Poasa.

According to the FY2025 budget document, the sources for the proposed FY2025 budget are Local Revenues, Capital Improvement Projects, [Special] Federal Grants and Enterprise Funds. 

Capital Improvement Projects at $10,629,667 account for 1% of the budget; [Special] Federal Grants at $282,683,500 is 39%; Enterprise Funds at $274,463,000 is 37%; and, Local Revenues at $165,907,000 is 23%.

(It should be noted that Enterprise Funds include ASG semi autonomous agencies, such as ASPA, ASTCA, and LBJ.)

According to the testimonies of Budget Director Catherine Saelua and Treasurer Malemo Tausaga, their projected amount of $165,907,000 for Local Revenues was done in accordance with the collected revenue from FY2024 which was the usual procedure.

The projected amount of local revenues added to the total of the other three sources ($567,776,167) makes up the overall amount of $733,683,167 for the proposed FY2025 budget.

Compared to the FY2024 Budget total amount of $687,533,500, this amount is an increase of $46,149,667 or 7 percent from FY2024.

Of particular focus to the lawmakers was the amount projected for Local Revenues in the proposed FY2025 budget.

Senator Utu asked what the ceiling amount was and how they reached the projected amount. Budget Director Catherine Saelua reiterated that the government ceiling amount was ascertained according to the collected revenues of the previous financial year.

Utu asked when these calculations started, as the current financial year still has one more month to go.

Saelua then revealed that directors were notified in May to start preparations for the FY2025 proposed budget using the FY2024 ceiling amount.

He pointed out that government directors were informed in May which means that two quarters and two months had already passed and asked if they had considered the progression of the trends — as reflected in the amounts of collected revenues in the time of the current financial year that has passed.

Utu informed the witnesses that the Fono had worked out their own projections using collected revenue amounts provided by the Treasury.

He emphasized that their analysis was based on the amount of the collected revenue for FY2024 and they had come up with the projected amount of $139,728,596.

(Samoa News notes that the Senate projection is around $26 Million less than what the Treasury and Budget Office are projecting.)

The senator explained that their projected amount had been calculated according to their analysis of the revenue amounts collected in the three quarters and two months of the current financial year that has already passed, rather than the ceiling amount as a determining factor.

He clarified that Fono was not trying to tell them how to do their job but was only trying to help them put together an appropriate and feasible budget that reflects the state of the Territory's economy.

Budget Director Catherine Saelua thanked Fono members for their concerns and advice noting that there were differences in how they interpreted the matter.

She commented on the issue of trends as mentioned and applied by the Fono in their revenue projections.

The Budget director said that she knows from experience that revenue collections are very slow in the first quarter and only just start to pick up towards the end of the second quarter and progresses into a steady flow as the third quarter begins increasing as it gets into the fourth.

She said that this has been her experience for the last five years and also when Senator Magalei was the government Treasurer.

Current Treasurer Malemo Tausaga addressed the joint hearing and stated confidently that according to their projections at the end of 9 months of the current financial year, the government will record a surplus of $4,317 Million.

He said that there might be a shortfall in the projected amount, but if this trend continues for the actual revenue and actual expenditure, he emphasized that there will be no deficit but in fact, the government will record a surplus based on the amounts of collected revenue for the past 9 months.

Senate President Tuaolo Manaia Fruean was not convinced and he asked if this was true that the government was recording a surplus, then why were the tax refund payouts being delayed.

Tuaolo said that the Fono has received many complaints from constituents who are saying that the current financial year is almost over but they were still waiting for their tax refunds.

Samoa News points out that social media is rife with negative comments about the government not releasing tax returns since February this year.

Malemo conceded that certain factors were disrupting the orderly disbursement of the tax refund payouts, but they are prioritizing the matter.

Senate Vice President Magalei Logovi'i who was a former treasurer, said there are many discrepancies in the numbers of the proposed budget projections compared to the Fono's projections.

Magalei said this was because they were basing their projections on the budget ceiling amounts, while the Fono's projections were based on actual collection amounts during the past 9 months including the average amount for the three months of the fourth quarter which ends the last day of September.

He pointed out however that there was a surplus in their individual tax projections, but then why is there such a long delay in the disbursement of tax refunds?

The former Treasurer reminded the current one that according to tax laws, April 30th was the last day to file taxes and many taxpayers have complied with this requirement, but the current financial year is nearly over and they are still waiting for their tax refunds as Senate President Tuaolo pointed out.

Senator Magalei also reminded Treasurer Malemo that once the FY2025 begins on October 1st, the administration cannot use any funds from the new financial year to fund tax refund payouts as stipulated by law.

He stated that the proposed overall for the FY2025 of $733,683,167 is just not feasible and argued that the projected amount of $165,907,000 for Local Revenue was not justified considering the actual collected revenue amount for the last 9 months.

He said the Fono's projected amount of $139,728,596 was more feasible and if there was a need for a bigger amount, they could increase the projection to maybe $140,000,000.

Malemo responded by first referring to the issue of the late tax refund payments saying that taxpayers scheduled to receive their refunds at a certain time was according to the time they filed, but they were being pushed back because of the many requests he has been receiving from people who visit him at his office saying they really need the money for faalavelaves.

Magalei reminded him that the policy he followed when he was treasurer was "first come first served" according to the time they filed their taxes.

Malemo however argued that he has approved these requests out of compassion because he truly cares for the people.

Magalei shot back by asking him if would approve every request if everyone came to him saying they had funerals of relatives.

Malemo replied, "Yes I would because I care for our people," he declared. "Your time was your time, my time is my time!"

Committee co-chair Senator Utu moved a motion that they postpone deliberations on the budget until they have met with the witnesses to work out a more feasible budget.

There was strong opposition from Speaker Savali Talavou Ale and other faipule who argued that they should proceed with deliberations and negotiate later to discuss the matter in question.

However Utu was adamant saying that the matter must be cleared because the budget must not be based on uncertain projections.

In the end, the issue was put to a vote and more members voted for the matter to be postponed.

The issue will be discussed again today.