Gov. Lolo Matalasi Moliga believes the Trump Administration’s initiatives, such as the reconsideration of ocean monument expansions will benefit American Samoa.

He said US President Donald Trump is committed to reducing the size of the federal government, and the same is being suggested for the American Samoa Government. The local business community echoes the same sentiment - reduce the size of ASG. 

These are some of the governor’s observations noted in his cover letter to the Fono leadership, accompanying the submission of the fiscal year 2018 budget proposal, expected to be introduced this week in both the Senate and House.

ECONOMIC & FINANCIAL OVERVIEW

With the Executive and Legislative branches working together,  Lolo said the government was able to make improvements to American Samoa since Jan. 3, 2013 - when the Lolo Administration took office - defying the status quo by taking “unconventional and unprecedented bold steps to advance our social, economic, and political goals”.

For example, the government floated bonds, issued by the American Samoa Economic Development Authority, to supplement limited capital improvement projects funds from the US Department of interior “to build our social and economic infrastructure.”

“We went against conventional wisdom by establishing a second only government owned bank,” he said, referring to the ASG owned Territorial Bank of American Samoa, which was officially launched last October but still working on securing a routing number from federal regulators.

Additionally, “We aggressively capitalized on harvesting and harnessing God’s gift of the sun to power our Territory and reflecting our share to global efforts to revert the disastrous effects of climate change along with reducing our carbon footprint.”

Other developments cited by the governor, through working together with the Fono, include:

• resolving ocean transportation problems which had plagued Manu’a residents since 1904 -(referring to the multi-million-dollar MV Manu’atele);

• create jobs by transferring traditionally performed government services to the private sector; and

• territory’s dilapidated public highway is close to being fully repaired.

“More importantly, we made great strides in making sure we tie our expenses to actual revenue,” the governor pointed out.

However, he added, in spite of these success, “we have reached our revenue capacity threshold relative to our ability to continue to do what is necessary to ensure that we grow our economy, improve the lives of our people, and secure a prosperous future for generations to come.”

“This is so because existing federal policies continue to tie our hands from building our economy though job creation,” he said, adding that the government has “sacrificed sources of revenues because of our commitment to preserve the financial integrity and competitive advantage of StarKist and Samoa Tuna Processors, although the latter terminated its tuna fish canning operation due to federally imposed costs.”

Regarding the annual financial assistance from the federal government, Lolo said American Samoa is “very grateful and thankful” for it.

“Unfortunately, the bulk of federal funds inflow to sustain social programs has short-term impact on building of our economy,” the governor said, and noted that proposed cuts in other federal grant programs will further reduce federal funds to American Samoa “thus jeopardizing the quality and sufficiency of services to our people.”

The governor shared with the Fono that the “message from the federal government seems to direct us to reduce the size of our government” and the “same sentiments is harbored and often raised by our business community.”

“This is not an unreasonable expectation,” Lolo said. “However, this demand is very impractical for American Samoa because existing federal policies have effectively hamstrung and have preempted our ability to grow our economy.”

ASG is the largest employer on island, with close to 6,000 workers, costing an estimated total locally funded payroll of $62.2 million, said Lolo, who noted that ASG depends on the federal government for 31% of its total operating budget.

He said DOI currently provides $21.5 million - which has remained fixed since 1986 - to support the government’s operating needs. The territory receives an average of $9.5 million a year for capital improvement projects, and the rest of ASG’s federal financial assistance comes in the form of discretionary formula and competitive grants.

ECONOMIC OUTLOOK

“The future global economic forecast is still guarded even though signs of economic recovery are being experienced and noted,” said Lolo, but didn’t elaborate further.

On the federal level, the Trump Administration’s commitment to “Making America Great Again” is beginning to take hold with the Stock Market reaching record levels, coal jobs being revitalized, and business impeding laws are being eliminated.

Additionally, the termination of the Pacific Partnership Trade Agreement (which involves the US and several countries), reconsideration of ocean monument expansions and Trump’s policy “Made in America, Buy America and Hire Americans”, will “benefit American Samoa as the competitive advantage of StarKist is enhanced, and our investment environment will be improved.”

“In spite of these positive economic signs, the Trump Administration is committed to reducing the size of the federal government thus signaling future reduction in federal funds,” he pointed out.

While the signs of economic recovery are promising, Lolo said, “American Samoa, unfortunately, is placed under the cloud of uncertainty” because:

• of the operating status of StarKist being threatened by the removal of federal 30(A) tax credit,

• looming 40 cent federal mandated minimum wage hike which goes into effect in 2018,

• continuing escalation of the cost of fish,

• increased prohibition placed on fishing grounds,

• financial onslaught in the enforcement of environmental regulations; and

• steady departure of fishing vessels from home porting in American Samoa because of the “frivolous and insensitive” enforcement of US Cost Guard rules and regulations,

“These operating impediments, which are all federally imposed, undermine the competitiveness of StarKist with low wage fish products processing countries around the globe,” he noted.

“We have done all we can to develop our economy. Our businesses and our people are being burdened with added tax liabilities and given our confined economies of scale, we have reached the saturation point and the point of diminishing returns,” he continued.

To add another tax above the five new measures the administration has already submitted to the Fono, “will only create a vicious cycle of financial and economic backwash,” the governor wrote.

Lolo is hopeful that the change in fiscal and economic policies by the Trump Administration “will reenergize our economic environment”.

He detailed what he believes American Samoa needs right now from the federal government: restore  federal tax incentives such as the 30(A) Tax Credit, repeal automatic hikes in federal minimum wage law, grant the territory a waiver under federal Cabotage law, reopen high seas fishing, reduce the size of ocean monuments, and establish more economically sensitive enforcement policies for the US Environmental Protection Agency and US Coast Guard rules and regulations.

According to the governor, ASG “will continue its aggressive efforts to establish labor intensive industries to provide needed employment opportunities for our people”.

“Exploration of other sources of venture and investment capital outside the federal realm is being pursued recognizing the financial constraints stymieing our efforts to grow our economy, improve the lives of our people, and secure a prosperous and sustainable economy for our future generations,” Lolo said.