FY 2018 budget is signed, after Lolo line item vetoes Fono amendments

Revised budget process necessary to comply with Bond governance covenants
fili@samoanews.com

After he line-item vetoed amendments made by the Fono, Gov. Lolo Matalasi Moliga signed into law last Saturday, the American Samoa Government’s more than $394 million budget for fiscal year 2018, which commenced on Oct. 1, 2017.

The original total FY 2018 Basic Budget submitted was $395.26 million but with the line-item veto of $500,0000 the final budget bill — or the FY 2018 budget law — now stands at $394.76 million, according to the budget document, signed into law by the governor on Sept. 30th.

In a Sept. 30th cover letter which contained the signed FY 2018 financial plan for the government, Lolo informed Fono leaders that although he has signed into law the FY 2018 budget, he used his authority granted under the Constitution to line-item veto amendments made by the Fono.

The Fono had cut $500,000 from three projects under the Special Programs and reallocated the amount to the Legislature, which then increased the Fono’s budget to $7.41 million. (See last Thursday's Samoa News edition for details.)

Lolo informed Fono leaders that the $500,000 that was reallocated and added to the Fono’s “All Others” budget class, is line-item vetoed, reducing this budget class down to $211,000.

“We have given considerable thought to this line-item veto which returns the Legislature to the original proposed FY 2018 budget of $6,916,500 consistent with your FY 2017 budget and reflects the amount in your original proposed budget submission,” Lolo wrote.

“It would be fiscally unwise to continue the past budget practice of proposing expenditures without requisite revenues to pay them,” the governor explained. “This is why the budget was presented to you in the format which it was this year.”

According to the governor, the Basic Operating Budget reflects ASG’s experience in FY 2017 — through the first 10 months annualized — with respect to revenue collections. The administration then proposed a Supplemental Budget that reflects what “we believe to be the true costs of fully meeting the needs of our people; however, there are insufficient revenues at present to support these costs,” he explained.

In order to make up the shortfall, he said the Administration has proposed several revenue measures which, if adopted, will provide the government with additional revenues necessary to fund the Supplemental Budget.

“This revised budget process was also necessary to comply with our Bond governance covenants,” Lolo said, referring to the American Samoa Economic Development Authority bonds. “These call for realistic development of budgets equating expenditures to actual revenues. Submitting new revenue measures to allow us to meet this requirement is necessary before we consider expenditures connected with the provision of all services.”

(See last Friday’s edition, for the latest ASEDA bonds summary report.)

Lolo noted that the FY 2018 Basic Budget and the FY 2018 Supplemental Budget were submitted together, and it was contemplated that there would be “simultaneous consideration” of the two budget plans and the revenue measures to allow ASG agencies to appropriately scale the implementation of programs to meet the quality of service expected by the people.

Samoa News notes that when the FY 2018 budget call went out in June, and even during cabinet meetings, the governor informed all directors that their budget ceiling is 90% of the approved FY 2017 budget while the 10% is submitted as a supplemental.

However, the governor revealed in a letter to Fono leaders that for the FY 2018 Basic Operation budget, executive branch agency budgets “underwent cuts ranging from 8% to 20% to ensure that planned expenditures will not exceed actual revenue collections, absent the new revenue measures and a Supplemental budget.”

The Legislature and Judiciary branches were not subjected to these cuts, “based on our commitment to honoring the ‘separation of powers’ principle,” said Lolo who pointed out again that the Fono’s original budget submission for basic operation was $6.91 million.

The fact that the Fono has chosen to increase that amount by $500,000 “is contrary to our efforts to create a sustainable budget until new revenues can be achieved,” he said.

As for the three projects whose budgets were reduced by the Fono, Lolo said the decision to reduce them “was disconcerting”, adding that these projects “are critical to the public safety of our territory, development of our youth, and keeping our highways well-maintained and safe.”

The $500,000 that was lined-item vetoed from the Fono’s budget will, according to Lolo, remain un-appropriated pending further action by the Fono.

(Samoa News notes that the total revenues for FY 2018 is $395.26 million, according to the approved budget, and the total expenditures amount to $394.76 million — because of the $500K that was line-item vetoed by Lolo.

Basically, this means revenues remain the same, while the expenditures have dropped by $500,000).

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