Gov. Lolo M. Moliga’s mitigation plan to address automatic federal budget cuts across the board is to call for a 10% budget reduction for all Government Agencies and Departments for the remainder of Fiscal Year 2013.

The Federal cuts, also known as sequestration, have resulted in the Department of Interior implementing a 5% reduction in remaining funds to the American Samoa Government. According to a memorandum issued by the governor on Monday, directors of each department and agency have up to March 22, 2013 to submit their revised budget plan showing a 10% reduction.

Governor Lolo said in the memo that “in anticipation of the deteriorating condition of  government finances, even before the results of the financial assessment were revealed, cost containment measures were put in place reflecting the attempt to mitigate — to the maximum extent possible — its adverse impact on the quality of services rendered to our people.

“The preliminary financial assessment projected our deficit exposure of $44.5 million at the end of fiscal year 2013; inclusive of the projected $5.7 million deficit for the current operating year. The federally imposed sequestration to reduce government spending prompted the Department of Interior to implement a 5% reduction in remains due to our government.”

The memo states that “all federal agencies with grant programs extended to our territory will experience similar cuts”; and that “the legislature of American Samoa reduced the total fiscal year budget by $6.8million thus exacerbating the impact of shrinking federal financial resources.”  

The memo notes that the “bleak financial scenario left the government with very limited options, given the constricted revenue and economic base. Consequently, difficult decisions must be made including this call for a 10%reduction across the board to be applied to the remaining 3rd and 4th quarter budget allocations.”

The governor does not specifically indicate where cuts should be made, but instead leaves it to the discretion of “all of you to determine how you will achieve this mandate.”

Governor Lolo asked the departments and agencies to submit their plan to the Office of Program Planning and Budget for the preparation of the revised budget to guide the spending for the last two quarters of the current fiscal year.

According to the memo, the 10% mandated reduction is for the fiscal year 2013 approved budget.