The American Samoa Government’s cash flow has dropped more than 50% due to many factors, says Governor Lolo Matalasi Moliga, which may lead to a reduction of hours for ASG employees — but not until the administration explores all the options they have.

Responding to Samoa News queries at his office yesterday, the governor stated that ASG’s cash flow has decreased tremendously and it’s affecting the government’s operation.

“Reduction of hours is the last resort we have,” Governor Lolo said, adding that “there’s been a task force put together and they are currently working on a plan in case it does come to this… this task force is led by the Treasurer who’s working with the Human Resources Director and Budget Director.”

Lolo explained that at the beginning of the second quarter for FY 15, the cash flow predicament began, due especially to a drop in payment of corporate taxes. He further explained that other huge impacts were due to politics in Washington DC and the West Coast shipping delays. (He did not elaborate about exactly what in Washington politics has affected the territory’s cash flow.)

The governor also pointed to some $5million in federal funds that have not been drawn down, and that is money owed to the General fund. (See story in yesterday’s Samoa News for details.)

He said departments have been asked to get their reimbursements, or they will face consequences (the governor did not go into detail as to what those consequences would be.)

 “The government’s cash flow is very weak, and the reimbursements and the corporate taxes are coming in little by little,” he said, further noting that the task force he put together is supposed to come up with a plan so that the government does not end up laying off ASG employees — as that’s the last thing he wants.

If the government does proceed with the reduction of hours, the governor says it will reduce “just one hour per day.”

(Samoa News notes that would be 10 hours per pay period, on a 10 day, 2-week payroll. The governor did not say which employees would be affected, or how many.)

Lolo said the government’s biggest burden is its payroll. “But we want to avoid that, and as I said earlier that is the last resort. I’m waiting on the task force, to see what their plan is in tackling the government’s current financial predicament.”

TAX RETURNS

The governor also wants the public to know that there is a waiting time for the processing of income taxes with child tax credits. Filings are being sent off island to the Internal Revenue Service to be processed for approval. He stated that the government is not holding off the people’s tax refund checks “because there is no money.”

Lolo said they are not holding off on anything — the public just needs to know that they have to wait. In the meantime ASG has issued $1.7million in child tax and local tax refunds starting last Friday and continuing yesterday.

BACKGROUND

Reduction in hours is not new to the American Samoa government, when it tries to solve its shortfall in revenues.

In Feb. 2011, Gov. Togiola Tulafono announced a reduction in pay due to the government’s lack of money. At that time, the governor said the territory expected to save $3.27 million a year by reducing work hours.

"We have to take these drastic measures due to the financial shortfall in local revenues," Tulafono said. He also said that he and is cabinet members would join other government workers who would be taking pay cuts.

The amount of pay cut depended on how much each employee earned. For example, employees paid up to $20,800 a year would earn four hours less every two-week pay period; while employees who earned more than $62,400 each year would have their hours and pay reduced by 12 hours.

During the pay cuts, some employees were exempt, and this included classroom teachers, school bus drivers, and those paid by federal grants.

At the time, Togiola also told his cabinet he would look to reduce the territory's work force in June if tax revenues did not grow.

The work force reduction did not happen, while the hour reduction measure was lifted on May 29, 2011, after only 3 months. When it was lifted, Togiola said a positive cash flow had been made possible through its cost saving measures, as well as by the local Department of Education once again receiving its federal funds that had been frozen by USDOE.