Proposed FY 2020 budget is 4% less than last year’s approved budget

Pago Pago, AMERICAN SAMOA — The American Samoa Government's final budget proposal for fiscal year 2020 is 4% lower than that of FY 2019’s approved budget, said Gov. Lolo Matalasi Moliga in his cover letter to Fono leaders.

Lolo explained that the FY 2020 budget threshold has been set at the FY 2019 budget level.  And this decision “reflects our new budget ideology limiting spending to actual revenues and not on the approved budget,” the governor wrote.

While basic operations is set at the FY 2019 threshold, the governor said that “due to special activities or events planned for fiscal year 2020, the final budget amount will be slightly higher than that of the FY 2019 budget.”

The governor didn’t specify in the cover letter the “special activities or events planned” but lawmakers are expected to raise this issue with ASG officials, once the Fono starts holding budget hearings — which are yet to be scheduled.

Total FY 2020 budget stands at more than $421.48 million, a decrease of over $18.10 million — or 4% lower — than FY 2019’s approved budget of over $439.58 million.

Sources of funding for FY 2020 budget:

•     Local revenues $100.38 million, an increase of 2% or $1.68 million;

•     Federal grants of over $127.95 million — an increase of 6% or $7.40 million;

•     Enterprise Funds, which includes ASG semi autonomous agencies, at $183.41 million — a decrease of 13% or $27.06 million

•     Capital Improvement Projects at $9.73 million — a 1% decrease or $126,000.

According to the governor, the financial plan for FY 2020 seeks to finance government activities for the new fiscal year, which begins Oct. 1, 2019, with the economic development strategy, aimed to bolster the local economy.

In essence, he said, the financial plan will “foster the injection of needed capital to stimulate economic activities thereby generating jobs.” Furthermore, the financial plan continues to place emphasis on expanding the territory’s economy and “maintaining our service priorities while moving up towards attaining our goal of a balanced budget.”

Lolo reminded the Fono that since the last deficit — incurred in FY 2014 — ASG spending and budget have been transformed, in which spending is based on the actual collection of revenues, not the approved budget.

He said executive branch directors are aware of this policy and are doing whatever is necessary to ensure compliance. “This policy calls for sacrifices by the entire government, including the employees,” Lolo said.

FY 2020 BUDGET ENVIRONMENT

According to the governor, the adverse economic impact, resulting from the closure of Samoa Tuna Processors Inc. cannery about two years ago continues “to trigger shrinkage in our revenues” for FY 2020.

He points out that forecast revenues for FY 2020 is predicated on the continued maintenance of StarKist’s current production and employment levels. “If any of these two elements change downward, projected revenues will plummet reciprocally,” Lolo explained.

He said there are still revenue bills - submitted to the Fono in the last fiscal year - that need consideration; and requested lawmakers to look into these measures as soon as possible.

“We have major projects including the [new] Fono building which require funding support; hence, finalizing the revenue measures now before the Legislature is critical,” he said. “We are exploring all potential revenue generating options to ensure that we secure additional revenues to finance our outstanding projects.”

BUDGETS FOR AUTHORITIES

For FY 2020, Lolo said semi-autonomous agencies will continue — as they did last year — to submit the details of their respective budgets directly to the Fono, separate from the budgets of the general government.

He said the authorities will present the details of their FY 2020 budgets to the Fono and are asked to send a copy of their budget submission to the ASG Budget Office. “This process will highlight the budgets of each authority instead of being buried in the main budget document,” he said.

The Administration provided to the Fono a summary of the Enterprise Funds — which includes the authorities. Total FY 2020 Enterprise Fund budget reflects a decrease of more than $27 million.

The decrease “is mostly due to the drop” in the American Samoa Power Authority electricity cost of fuel and the reduction in the American Samoa TeleCommunication Authority’s proposed budget mostly due to the restructuring of Hawaiki cable obligations to the ASG Employees’ Retirement Fund, the governor explained.

“Although the decrease reflects the changes in the marketplace; overall, there are proposed planned activities within the pipeline for the upcoming year that will provide a boost to our economy,” Lolo explained.

It’s unclear at this time when the semi- autonomous agencies — ASPA, ASTCA, LBJ Hospital, ASCC, ASG Shipyard Authority — will transmit to the Fono their individual budgets, which lawmakers want to see, including profit and loss statements.

The Administration has sent to the Fono proposed legislation which will earmark and allocate revenues from bandwidth sale of the American Samoa branch of the Hawaiki Submarine cable that is overseen by ASTCA (See Samoa News Aug. 22nd edition for details).

Samoa News will report later this week on the many issues in the governor’s cover letter transmitted to the Fono, in the form of a small-booklet. The general government budget was submitted per usual — a large budget book.