Gov describes financial environment for 2018 as "discouraging"

The 3rd session of the 35th Legislature opened this past Monday at the Fale Laumei and pursuant to prevailing statute, Governor Lolo Matalasi Moliga reported on the "successes and failures with respect to the implementation of programs in 2017 to move the territory forward," during his State of the Territory Address.

There are two documents of the address. There is one 5 pages long, and another 94 pages long. Both are in English, and both were made available to the faipule and senators.

The longer version is a comprehensive report on all of the administration’s accomplishments, struggles and shortfalls; and is to be sent to the US Congress.

The governor presented the shorter version orally in the Samoan language on Monday. It contained discussions and documentation of "the salient outcomes and constraints experienced during the 2017 operating year," according to Lolo.

Lolo said the prevailing social, economic, and political landscape influences actions that are taken.

For example, he said financial performance fell short of expectations because of corporate challenges, which interrupted and substantially delayed the importation of cigarettes, which in turn caused a shortfall of $6 million in excise tax revenues for FY 2017.

Furthermore, "The lingering negative financial effect of 700 instant job terminations by Samoa Tuna Processing at the close of 2016, along with residual job loss in the private sector, dampened consumption in 2017 and caused business sales’ retraction in corporate and individual taxes by $5.1 million."


According to Lolo, actual revenue collections fell short of revenue forecasts by $16,541,108 (FY 2017 revenue forecast was $108,162,500, but actual received was $91,621,392).

"Government spending of $91,593,689 was also below budget by $17,040,811 actual spending versus FY 2017 budget, thus generating a positive balance at the close of FY 2017 of $27,703," Lolo continued.

He said the majority of planned programs for FY 2017 was scaled down to not incur a deficit.

"We are fully aware of the economic and social consequences of our decision to scale back government activities, but it is more important for us to demonstrate that we have the will power and the fortitude to make tough decisions," he said.

Regarding bond payments, the governor said they are all up to date and funds are being accumulated in the Bond Payment Escrow Account to ensure that all bond payments are met in a timely manner.

Lolo did indicate plans to resubmit for Fono consideration, amendments to revenue measures to make them less invasive on the ability of businesses to remain profitable and to safeguard the loss of private sector jobs.

 (Lolo is expected to submit amendments to the 5% miscellaneous excise tax and the FY 2018 supplemental budget, which were both vetoed by him during the last Fono session. Additionally, he is also expected to ask the Fono to revisit the 7% sales tax, which was tabled in both Senate and House committees during the last session. The miscellaneous tax amendments and sales tax were among the new revenue measures proposed by the administration that would provide additional money for ASG as well as fund the more than $11 million supplemental budget).


"The financial environment for 2018 is discouraging, triggered in a large part by the challenges faced by StarKist, which resulted in operating disruptions because of federal compliance issues and the lack of movement on the revival of the 30(A) tax credit incentive," Lolo said, adding that the territory has and will continue to "struggle" to entice foreign investments in the areas of processing and manufacturing for employment generation. But, he added, "We have been exploring many inquiries of interest."

He didn't elaborate further.

He did say that with the elimination of federal incentives like the 30(A) tax credit and the pending imposition of the next minimum wage hike this year, the administration has, and will, continue to work collaboratively with StarKist, the DOI Office of Insular Affairs, Congresswoman Aumua Amata, and Utah's executive and congressional leadership "to restore the incentive and delay the effective date of the federal minimum wage."


According to the governor, full support is being lent to the long-term development plans proposed by ASTCA in the creation of a partnership with Hawaiki Cable, which he said would build a productive environment for new economic development opportunities.


Lolo said the local healthcare system continues to face major challenges, with limited financial resources being the "underpinning challenge."

He said the administration continues to invest to improve healthcare services, pointing to access now to healthcare services in New Zealand and the US.

The governor assured that the facilities at LBJ Medical Center are being "rehabilitated to enhance comfort, health safety, and enhance operating efficiencies."

With regards to the unnecessary crowding of LBJ's Emergency Room, Lolo said the Health Department and LBJ are collaborating to coordinate services to avoid duplication to get patients with minor medical conditions to visit the primary clinics.

 (Read tomorrow's edition for more highlights from the Governor's State of the Territory Address)

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