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Fono Joint Budget Committee hearings got underway yesterday

Treasurer Ueligitone Tonumaipe’a
Projected local revenues are 7% higher for 2021
fili@samoanews.com

Pago Pago, AMERICAN SAMOA — Projected local revenue collections for the new fiscal year 2021, compared to the last two fiscal years was the focus of yesterday’s Fono Joint Budget Committee hearings with ASG witnesses Treasurer Ueligitone Tonumaipe’a and ASG Office of Budget and Planning director Catherine A. Saelua.

ASG’s top-two money people are always the first to testify in budget hearings and yesterday was the first day of the joint hearings, which is co-chaired by Senate Budget and Appropriations Committee chairman Sen. Magalei Logovi’i and House Budget and Appropriations Committee chairman Rep. Vailiuama Steve Leasiolagi.

ASG’s proposed FY 2021 budget totals $465.95 million — of which $110.16 million is financed by local revenue. And the projected FY 2021 local revenue is 7% higher — $7.06 million — than the current fiscal year.

Senate President Gaoteote Palaie Tofau noted the large increases in local revenues forecast in the last three years and again FY 2021. He said he couldn’t recall an actual ASG report submission to the Fono where the government actually met such projections.

Tonumaipe’a responded that the forecast revenue is based on local economic conditions heading into the new year. And he cited similar reasons for increases as the governor mentioned in his cover-letter to the Fono for the hike in projected revenues.

For example, said Tonumaipea, the increase in production at StarKist Samoa, operating in three full shifts, benefitting local businesses and individuals, thereby increasing corporate tax and individual income tax revenue.

He also referred to the $175 million in federal COVID-19 funding that will benefit many sectors of the economy and community.

Gaoteote said the response didn’t answer his question and he is still concerned with the huge hike in projected local revenues.

Following-up on Gaoteote’s question over concerns with high revenue projections, Rep. Larry Sanitoa pointed out that ASG’s FY 2019 audit shows ASG collected $87 million in revenue while expenditures were around $96 million — causing a deficit.

Tonumaipe’a explained that ASG gets $12 million from the Interior Department, but audits put this amount under “Transfer-In” funds under the Revenue Section of the budget, although this money is for government operations. He said ASG had argued with auditors on this issue in the past.

Tonumaipe’a said if the $12 million is included, that puts ASG in a surplus for FY 2019 — as cited in the current audit report as well as in previous fiscal years.

House Speaker Savali Talavou Ale also shared his concerns on the local revenue projections and raised an issue that was discussed in last year’s budget hearings. And that is Debt Service of $14 million put under Enterprise Fund, when Debt Service — which sets-aside funds to repay the ASG bonds — is a concern, since Debt Service is paid by local funds.

The concern was also echoed by other lawmakers, who were also worried about ASG meeting projected revenues versus spending in FY 2021.

Responding to other committee questions, Tonumaipe’a said that revenues in the budget are forecasts, and spending by government is based on actual revenues collected, not by what’s budgeted for expenditures.  He said there were similar reactions to this at last year’s budget hearings.

In his cover letter to Fono leaders, along with the FY 2021 budget, the governor reminded the Fono that since the last deficit — incurred in FY 2014 — ASG spending and budgeting has been transformed, with spending based on the actual collection of revenues, not the approved budget. He said executive branch directors are aware of this policy and are doing whatever is necessary to ensure compliance.

At yesterday’s budget hearing, Sen. Nuanuaolefeagaiga Saoluaga T. Nua noted that all local revenues are forecast to increase in FY 2021, but there is no solid evidence or report from the government to support such hikes.

Also appearing yesterday were three offices that come under the purview of the Governor’s Office. These did not include the Medicaid Office; and the Department of Legal Affairs, including the Attorney General’s Office.

These three entities were spared any questions and the witnesses were dismissed.

As of today, there are 14-session days left in the current Legislative Session and that is also the number of days the Fono has left to review and approve the FY 2021 budget before submission to the governor for his review and approval before the start of FY 2021 on Oct. 1st.