Senator questions how ASG can project a surplus in proposed 2026 budget in joint session

Pago Pago, AMERICAN SAMOA — During FY 2026 joint budget hearing last week Senator Togiola Tulafono said the proposed fiscal year 2026 is a “deficit budget,” which is concerning. 

He stated that it is clear the budget has not been thoroughly reviewed, as there are discrepancies present. He added that earmarks are approved by law to be used directly for their designated purposes, as approved by the law, but that is not the case here.

Senator Togiola asked the Treasurer about the government's strategy to exclude an entire month from the final quarter's budget, anticipating a surplus. 

The Senator drew attention to the approved expenditure budget for fiscal year 2025, which totals $165 million and is designed to be allocated evenly across four quarters, amounting to $41 million per quarter. However, a comprehensive review of the financial report submitted to the Fono revealed a significant over-expenditure in the second quarter, wherein the government spent $66 million. This figure exceeds the established budget by over $25 million, resulting in a concerning deficit of more than $20 million.

The third quarter, which concluded in June, revealed in the financial report that the government spent $90 million during this period, far exceeding the allocated budget of $41 million. This situation represents a troubling over-expenditure of more than $55 million for the third quarter alone. When combined with the expenditures from both the second and third quarters, the total deficit surpasses an alarming $70 million plus, raising serious concerns about fiscal management practices.

He further questioned the Treasurer on how the government could project a $3 million surplus while simultaneously operating at a deficit. He expressed concerns regarding this problematic financial outlook. This inquiry highlights the growing concern about the government's fiscal responsibility, particularly in light of the substantial overspending recorded in both the second and third quarters of the year.

Senator Togiola emphasized, “The government’s numbers do not align.”

Additionally, Togiola noted that, based on the presented figures, the government had collected a total of $112 million since July and estimated the shortfall to be approximately $5 million. He observed that from July to September, the government typically experiences low revenue generation, thus raising doubts about its ability to achieve the revenue collection target of $165 million for the current fiscal year. 

The Senator again asked how the government can project a surplus. 

“Looking at FY 2026, we are already in the red before we start [the new fiscal year], because you made a mistake by including the earmarks as part of the total revenue for appropriation. Those earmarks are already appropriated,” said Togiola. 

The Treasurer interjected and said no, but Togiola fired back, “That’s what you say, the law says you must spend it, you cannot change it unless you come back, and for you to say no, that’s irresponsible.

“An earmark is an earmark, by law,” the senator said. 

Treasurer Don Kruse refuted his summary, asserting that the senator’s comments regarding the government’s use of earnings for funding and the classification of these earnings within corporate and individual taxes were, in fact, inaccurate. 

He stated that local earmarks for bonds are another vital expense that cannot be overlooked. Additionally, there are the enterprise funds, and with corporate and individual taxes projected for 2026, the figures are as follows: $49 million for 2024, $42 million for 2023, and $29 million for the previous year. This increase is attributed to a $1.5 billion infusion into the economy in 2022 and 2023. He mentioned that government finances are in good standing due to the receipt of these federal funds, whereas the stimulus during COVID was $500 million. 

Togiola addressed the Treasurer, highlighting a significant concern: the government is relying on past revenue collections to shape the new fiscal year. If this is the financial approach the Senate is considering, it is evident that the outlook is not favorable.

Senator Togiola is confused about how the government claims it can collect $145 million in revenue while its spending does not align with the current fiscal year's indicators.

In the second quarter, spending was $66 million, ending in March, while in the third quarter, it was $96 million, ending in June. Yet there is a huge reduction proposed for the new fiscal year.

“From where do you propose this horrendous reduction when your spending behavior continues to grow, between the two quarters of your administration, $196 million you spent,” said Togiola. 

The Treasurer stated that Togiola's interpretation is inaccurate. However, Togiola stood firm, asserting that his comments are based on the information outlined in the report. 

He pointed out that the Treasurer's statements suggest they have the wrong report, which implies that lawmakers have been misled since what the Treasurer is saying does not align with the report's contents.

The Treasurer explained that the $66 million in the second quarter represents cumulative spending from both quarters. 

Deputy Speaker of the House, Fetu Fetui Jr., proposed a motion allowing the government to review and amend its financial report before proceeding further. This motion received a second.