Despite “guarded” local economy, projected revenue for 2020 sees slight increase of 2%

Pago Pago, AMERICAN SAMOA — The slight increase of 2% in revenues proposed under the government’s FY 2020 budget, is the result of passage of new revenue measures that were signed into law, according to Gov. Lolo Matalasi Moliga in his cover letter to Fono leaders, who were also informed that the local economy “is still guarded” due to uncertainty with the cannery.

Data in the governor’s cover letter shows projected local revenues for FY 2020 at over $100.37 million, compared to FY 2019’s $98.69 million — a 2% increase or over $1.68 million.

The increase, according to Lolo, “deemed to be conservative estimate in line with current revenue collection trend.” He noted that there are local revenue collections earmarked to the government’s debt service — which is $8 million proposed in FY 2020, under the Enterprise Fund.

“Attaining a solid local revenue base is consistently desired, thereby allowing” ASG to finance community projects such as the new Fono Building, youth centers, school gymnasiums, Malaloa dock and others, the governor said.

Of the total estimated local revenues for FY 2020, about 65% ($65.13 million) is allocated for personnel; 25% ($25.14 million) for contractual services; 6% ($6.20 million) to “Others; and the remaining 3% to supplies, travel, and equipment.

ECONOMIC OUTLOOK

The governor provided a briefing on “economic outlook”, saying the future global economic forecast is being revised downward, although unemployment continues to drop as more jobs are being created in the US.

“Economic forecast for our local economy is still guarded because of the uncertainty faced by StarKist,” the governor explained. “There is also concern that the current trade war between the United States and China might create some economic backlash.”

The governor reiterated several issues — made public several times in the past —  faced with StarKist regarding federal policies such as minimum wage, removal of federal tax credit, restrictions on fishing grounds, and environmental regulation restrictions.

Lolo hopes the change in “fiscal and economic policies by the Trump Administration will reenergize our economic environment.”

For the government’s investment in the Hawaiki submarine cable, Lolo said this will “create a diversification pillar to reduce our sole dependence on the fishing industry.” He shared with the Fono that local companies “are pursuing the establishment of [local] call centers, which will certainly provide mass employment for our people.” The governor didn’t provide the names of the companies.

ASG will continue its “aggressive efforts” to establish labor intensive industries to provide needed employment opportunities for local people, he added.

“Exploration of other sources of venture and investment capital outside the federal realm is being pursued, recognizing the financial constraints stymieing our efforts to grow our economy, improve the lives of our people, and secure a prosperous and sustainable economy for our future generation,” said Lolo who then shared data of projected revenue collections for FY 2020.

TAX REVENUES

ASG is projecting to collect more than $65.94 million in taxes — compared to over $64.59 million in FY 2019 — with individual income taxes being the highest at $25.50 million, followed by general excise tax at $22 million; corporate tax at $13 million; soda tax at more than $3.4 million; and military cover-over tax at $2 million.

Lolo explained that despite uncertainties in market conditions, corporate tax revenue is expected to be higher than FY 2019, which has corporate taxes revenue at $12 million.

The governor claims that tax agents continue to perform their duties as auditors to ensure proper corporate taxes are filed and paid, as businesses attempt to improve their bookkeeping while exploring available loopholes to legally pay less in taxes.

“Excise tax collections have stabilized, and collection is expected to improve since the revenue measures went into effect,” he said.

Regarding individual income tax, Lolo said the revenue collection trend is expected to be aligned with the previous year “more so as the potential of employment opportunities improve, given business demand created by the launching of Hawaiki cable.”

Lolo said the soda tax is projected to be slightly lower as more consumption is driven mostly by increase in preferential choice demands in the market place.

LICENSES AND PERMITS

ASG is projecting to collect $1.5 million from licenses and permits in FY 2020. And this is the same amount for FY 2019.

Revenue collections are expected to be trending at last year’s levels, partly due to businesses obtaining licenses and permits, for the most part, to move their projects forward, according to ASG.

The government anticipates that the actual revenue collections may exceed the normal levels due to numerous major economic activities implemented by the private and public sector.

FEES AND FINES

Revenues collected in fees and fines are projected at $4.8 million — a decrease of $1 million from FY 2019.

However, Lolo said revenue stream for fees and fines is “projected to trend higher as immigration revenues sustain good collection on the number of individuals being processed. It is expected that this trend will continue as stated policies continue to take hold, yet resolving long overdue challenges while diminishing backlogs.”

CHARGES FOR SERVICES

ASG is projecting to collect $6.3 million from charges for services — compared to $6.1 million in FY 2019. This revenue source includes charges imposed at the Port of Pago Pago; ASG rents and leases; revenues from the Sports Complex (which includes Veterans Memorial Stadium and the Golf Course); and “others”.

According to the governor, potential port activities will remain steady, given the restraints in fishery regulation restricting the frequenting of inbound/outbound vessels within territorial waters and beyond. Additionally, activities for cargo vessels are expected to steadily improve.

For rents and leases, the governor said better management must be continued through more efficient collection methods, together with continued commitment by ASG investments, to stimulate economic growth whereby businesses have the potential to expand.

“Steady revenue initiatives continue to provide better traction through sustaining revenue streams moving forward,” he said.

OTHER REVENUE SOURCES

The three remaining revenue source categories:

•    “Miscellaneous” — includes interest income as well as judgement and settlements — $2.06 million

• “Indirect Cost” — $5 million

• “Transfers-In” — includes $1 million in JROTC reimbursement in federal grants; $1.5 million for the school repair fund; and $12.27 million as grant-in-aid from the US Department of Interior.

PLANNED EXPENDITURES

“In keeping with the ideological tenet of the FY 2020 budget, distribution of forecasted revenues to planned expenditures was compelled by the top priorities of this administration,” said Lolo, who listed the priorities as follows: economic development — job creation, education; health, youth capacity building; senior citizens quality of life improvement; public safety; environment, and social services.