ASG submits 2 proposed budgets at the same time

Basic budget and Supplemental Budget
fili@samoanews.com

The American Samoa Government’s proposed fiscal year 2018 budget of more than $395 million is now with the Legislature, and the Lolo Administration has also submitted a FY 2018 Supplemental budget request that is to be funded with revenues collected from the Administration’s five revenue measures sent to the Fono last month. However, if the revenue measures do not pass, the governor says the supplemental budget is ‘invalidated’.

FY 2018 BUDGET ENVIRONMENT

In his 11-page cover letter, which includes the two budget proposals, Gov. Lolo Matalasi Moliga explained that last December’s closure of Tri Marine International’s Samoa Tuna Processors Inc., cannery “triggered shrinkage in our revenues for fiscal year 2017 with expected overflow into the early months of FY 2018.”

Lolo said it’s “important to remember and to take note” that the forecast revenues for FY 2018 “are predicted on the continued maintenance of StarKist’s current production and employment level.”

“If any of these two elements change downward, projected revenues will plummet reciprocally,” he said, adding that the same holds true of the Administration's five proposed revenue measures sent to the Fono last month for consideration and adoption.

As reported by Samoa News on Aug. 17th, StarKist Samoa production is closed this week due to fish supply shortages and resumption of production depends on when the cannery receives additional fish supply.

FY 2018 BUDGET THRESHOLD

Lolo informed the Fono that FY 2017’s actual revenue collection fell by 10% and that the “main contributor” in the decline was the closure of Samoa Tuna Processors cannery.

Accordingly, he said, the FY 2018 budget threshold for all ASG departments and offices was set at 90% of FY 2017’s approved budget. (The governor told a cabinet meeting last month that the 90% threshold is for local revenues — in which $108.16 million was approved in FY 2017.)

BUDGET FORMAT

Lolo explained that, traditionally, the annual ASG budget is prepared and sent to the Fono for its review and action; and if during the fiscal year the revenue capacity of ASG changes upward or downward, a supplemental financial plan is prepared and submitted to the Fono for consideration.

For FY 2018, Lolo said it's been determined that revenue collections will be at 90% of FY 2017 levels and these projected revenues will be sufficient to finance only 90% of FY 2018 planned expenditures. Therefore, a directive was issued for agencies to prepare budgets at the 90% level.

“Since many of the agencies could not fully cover the cost of their respective operations, the second directive was issued calling for the preparation of supplemental budgets and for a majority of the agencies, the supplemental budget threshold was set at 10% of the FY 2017 budget,” Lolo explained.

For FY 2018, two separate budgets have been submitted — the Basic Budget, which is 90% of the approved FY 2017 budget, and the Supplemental, which is 10% of FY 2017, said Lolo — adding that the two budget proposals are submitted concurrently to facilitate for simultaneous consideration and approval by the Fono.

He also said that approval of the Supplemental Budget is dependent on passage of the five revenue measures now before the Fono. However, if the measures are not approved, the supplemental is thereby invalidated.

FINAL BUDGET

Total FY 2018 budget is $395.26 million, reflecting an increase of $14.77 million or 4% higher, than the approved FY 2017 budget of $380.48 million.

Of the total FY 2018 budget:

•     $96.81 million or 25% comes from local revenues — a decrease of 10% of the approved $108.16 million in FY 2017;

•     $112.34 million, or 28%, in federal grants — a 7% increase from the FY 2017 approved $104.72 million;

•     $175.78 million, or 44%, under Enterprise Funds — an increase of 11% from FY 2017 approved $157.99 million (Enterprise Funds includes all authorities, such as ASCC and ASPA); and

•     $10.32 million, or 3%, from Capital Improvement Projects — a 7% increase compared to $9.61 million in FY 2017.

According to the governor, in FY 2018, the ASG is responsible for financing approximately 69% of its planned expenditures for services to meet the needs of the people.

In the distribution of local revenues:

•     $62.54 million (compared to $69.48 million in FY 2017) is for the Executive Branch; $6.91 million (same allocation in FY 2017) for the Fono; $2.88 million (same allocation in FY 2017) for the Judicial Branch; and $24.47 million (compared to $28.87 million in FY 2017) under Special Programs — which is overseen by the Governor’s Office.

The FY 2018 budget bill — for the Basic Budget — is to be introduced this week in both the Senate and House. It’s unclear at this point if the Supplemental budget proposal will also be introduced at the same time.

BUDGET IDEOLOGY

Lolo said the ASG financial plan seeks to finance activities in FY 2018 with the economic development strategy, aimed to bolster the local economy.

“In essence, it will foster the injection of needed capital to stimulate economic activity with expected subsequent generation of jobs,” he explained. “Overall, the financial plan continues to place emphasis on expanding the economy of American Samoa and maintaining our service priorities while moving us towards attaining our goal of a balanced budget.”

The governor pointed out that distribution of forecasted revenues to planned expenditures was compelled by the top priorities of his administration: economic development (job creation), education, health, youth capacity building, senior citizens quality of life improvement, public safety, environment, and social services.

Samoa News will report on other details from the governor’s cover letter, including the economic outlook, and budget proposal, in later editions.

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