Governor balances old budget problems with new solutions
Gov. Lolo Matalasi Moliga has told cabinet directors that the 10% across the board reduction in local revenue for all government entities made earlier this year will help “balance the books” for ASG at the end of fiscal year 2013, and the government is looking now at a $6 million overrun.
The Lolo Administration imposed the 10% reduction just weeks after Lolo became the new governor on Jan. 3, when it was learned that ASG was facing some serious financial woes. This was coupled with the reduction of 5% in federal grants due to the federal sequestration.
However, it remains unclear how much of a savings will be realized for ASG from the 10% reduction, which was for the executive branch only, but not enforced for the other two branches of government.
During last Friday’s cabinet meeting, Lolo said some directors have questioned “why we withheld 10% [of your budget] when we first started.”
“Now we’re facing an overrun of almost $6 million but that 10% comes in handy at the close of the fiscal year,” he said but didn’t elaborate further on the projected overrun. “And that’s why, when the Budget director, and the Treasurer imposed controls — especially from the beginning — all of us should know why.”
“Because at the end of the fiscal year, that will come in handy when balancing the books, and also give you leverage to operate at the close of the fiscal year,” he said.
It is unknown at this time if Lolo is referring to a projected $6Mil over run, after the 10% reduction is applied.
Treasury had forecast, at the end of the first quarter which ended Dec. 31, 2012 — that the total general fund deficit would be $8.86 million. With all other funds in the Treasury cash pool added, ASG projected a deficit of more than $9.8 million by the close of FY 2013.
However, in the second quarter performance report (ending Mar. 30, 2013), Treasury said ASG was looking at a deficit of $1.25 million for the general fund. If other funds in the Treasurer’s Cash Pool are added, ASG was forecasting a deficit of $3.01 million for FY 2013.
Samoa News should point out that the Treasury Department's third quarter performance report — covering the period of Apr. 1-Jun. 30, 2013 — does not provide the usual expenditures and revenues for the end of that quarter, making it difficult for some lawmakers to determine where the government stands financially.
Lawmakers should be able to get some answers on ASG’s financial status on Wednesday, which is the start of the FY 2014 budget hearings, where the Budget Office director and the Treasurer will be the first to testify.
CLOSING FY 2013
During the cabinet meeting, Lolo told directors they have until the end of August to “submit any important and urgent” expenses to be reviewed and considered for payment. He says the government must give enough time to the Budget Office director and the Treasurer to process the closing out of FY 2013.
“After August 30th, nothing else will be reviewed. We have to follow the law in terms that… no expenditures from the last fiscal year will be paid in the next fiscal year,” he said. “We have to make sure that we follow that, so that we don’t run into the problems that we’ve been running into in the past.”
Lolo recommended directors work with their finance people to review all the numbers in their budget, because this is “critical” when it comes to closing out the fiscal year.
“I know some of you overran your budget by big numbers,” he said but didn’t elaborate further. “You have to understand those numbers. Don’t let the budget [director] and the treasurer fix your budget — you fix it. You put the budget in, it’s your responsibility to fix it.”
“I know we have a hard time with the current budget because we didn’t start the budget. But I’m hoping, come 2014, the budget that we submit to the Fono will be the budget that we have to live with,” Lolo said, adding he has made a commitment, in accordance with the law, that any new revenue earned during the fiscal year will first go through the Fono for appropriation and to make sure the Fono understands that revenue.
The governor also told directors the $1.1 million supplemental is now before the Fono, whose leadership has been told that “it’s either they approve the supplemental or they will not be paid, because they overran their budget with some big numbers.” (This is the second supplemental for FY 2013 and it covers only Fono expenditures)
Lolo hopes the Fono approves the supplemental because that is the only way to make their operations legal for the rest of the current fiscal year, as far as paying expenses. He said this is the same problem faced by the Fono in past years: an overrun budget.
The governor told directors they, too, must abide with the budget approved for their respective departments, agencies and offices. “It’s very important that once we book the numbers into the [financial] system no one can change it. We follow the law and... we live within the budget.”
“So let’s work’s together with the finance people and let’s make sure you understand every penny that is spent by your office,” he said.
Lolo told directors they must look at staff development in their departments and offices. “That’s one thing that we have to keep in mind. Your job and my job is to develop the future leaders of this government,” he said.
The governor pointed out that some directors are traveling off island under federal grants but “if you have a chance, send somebody else” because this can be very useful in the future for the government.
“We’re only here for a certain amount of time. I don’t want us to take what ever we learn. I’d rather see that we invest in our people. When we leave, we leave a lot of that experience and training with the staff,” he said.
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