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Lolo administration seeks to use MSA as possible funding source to cover shortfall

fili@samoanews.com

The Lolo Administration is seeking assistance from the U.S. Department of Interior for further details on the more than $6 million in “unassigned” proceeds from the Tobacco Master Settlement Agreement (MSA) believed due to the American Samoa Government.
 
ASG is looking to use this money as a possible source of funding for a FY 2013 supplemental appropriation.
 
The “unassigned interest” or “unpledged interest” of the MSA first surfaced in December 2011 in a letter from Senate President Gaoteote Tofau Palaie, who suggested to then Governor Togiola Tulafono to use the money to help with the shortfall in revenues for the LBJ Hospital.
 
Last month Gov. Lolo M. Moliga wrote to Eileen Sobeck, DOI acting deputy Assistant Secretary for Insular Areas about the money which could help with ASG’s current financial woes.
 
“I am sure you have kept abreast of the many issues and financial challenges currently facing my new administration, one of which is the anticipated shortfall in revenues for fiscal year 2013 due to poor revenue projections and unbudgeted expenditures,” Lolo wrote.
 
(ASG is now forecasting a shortfall of $5.02 million in local revenues with a projected deficit of $44.5 million, which includes just over $10 million in legal obligations.)
 
Faced with these financial difficulties, “my administration is seeking other sources of funding to make up this shortfall and cover its legal obligation,” Lolo added. He noted that one of the funding sources identified and included in the ASG annual financial statements prepared by the independent auditors is the “unassigned” MSA proceeds.
 
Lolo said the DOI Field Representative in Pago Pago has shared with his administration copies of emails between OIA staff and the former attorney general on this matter.
 
Based on the contents of the emails, Lolo said they are led to believe that payments pursuant to provision two of the MSA, “may have been erroneously deposited into the account to repay the Tobacco loan.”
 
Lolo has requested OIA to initiate an inquiry with the DOI Solicitor’s Office to determine whether this is correct. “If this is the case, the American Samoa Government is requesting that the proceeds be refunded to the American Samoa Government,” he said.
 
BACKGROUND
 
The total amount of the “unassigned interest” is $6.8 million, which was included in the FY 2013 budget as part of local revenues, but the Fono took it out last September due to conflicting testimonies from ASG officials at the time.
 
In exchange for its share of the MSA, which was worked out by the attorney generals of states and territories and the major U.S. tobacco companies, American Samoa opted for an $18.6 million loan from the federal government. The DOI oversees the loan, including repayment of the loan using proceeds from the tobacco settlement.
 
Former Attorney General Fepuleai A. Ripley Jr. told lawmakers during last year’s budget hearings that the $6.8 million is to repay the loan. The Senate’s legal team told senators that this money falls under the second interest provision of the MSA and this is the "unpledged" interest that is due to ASG.
 
Lolo told lawmakers last month that he plans to submit an FY 2013 supplemental budget, once a solid funding source is identified. The supplemental is to cover among other things, more than $2 million the Fono cut from the FY 2013 budget and pressing legal obligations.



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