Pago Pago, AMERICAN SAMOA — The American Samoa Government's final budget proposal for fiscal year 2021 is 10% higher than the FY 2020 approved budget, said Gov. Lolo Matalasi Moliga in his cover letter to Fono leaders.

Lolo explained that the FY 2021 budget  — which was transmitted to the Fono two days ago — was set initially at the FY 2020 budget levels.

However due to, “new compensation policies to rectify inequities, properly aligned rewards with responsibilities and skills, accommodate cost of living increases, and the salary thresholds consistent with educational attainment, the budget ceiling was changed to reflect new financial demands to defray planned expenditures,” the governor wrote to Fono leaders.

He especially pointed out the starting salary thresholds for holders of a high school diploma, Associate Degree, Bachelor’s degree and Master’s degree that were set at $12,000, $16,000, $23,000 and $27,000 respectively, according to the governor.

The total FY 2021 budget proposal is capped at $465.95 million, an increase of more than $41 million - or 10% higher - than FY 2020’s approved budget of over $424.20 million.

Sources of funding for FY 2021 budget:

•    Local revenues $110.16 million, an increase of 7% or $7.06 million;

•    Federal grants of over $134.72 million — an increase of 5% or $6.77 million;

•    Enterprise Funds, which includes ASG semi autonomous agencies, at $210.79 million — an increase of 15% or $27.37 million

•    Capital Improvement Projects at $10.28 million — a 6% increase or $542,000.

According to the governor, the financial plan for FY 2021 seeks to finance government activities for the new fiscal year, which begins Oct. 1, 2020, with the economic development strategy, aimed to bolster the local economy.

In essence, he said, the financial plan will “foster the injection of needed capital to stimulate economic activities thereby generating jobs.” Overall, the financial plan continues to place emphasis on expanding the territory’s economy and “maintaining our service priorities while moving up towards attaining our goal of a balanced budget.”

Lolo reminded the Fono that since the last deficit — incurred in FY 2014 — ASG spending and budget have 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.

The governor also points out that if during the fiscal year the revenue capacity of ASG changes upward or downward, a supplemental plan shall be prepared and transmitted for Fono consideration.

FY 2021 BUDGET ENVIRONMENT

According to the governor, the adverse economic impact, resulting from the closure of Samoa Tuna Processors Inc. cannery about three years ago continues “to trigger shrinkage in our revenues.”

He points out that forecast revenue for FY 2021 is predicated on the continued maintenance of StarKist’s current production and employment levels. “There is confidence that StarKist’s future prognosis is stable based on additional investments towards relocation of production facilities from its closed California plant,” Lolo explained.

“Massive monetary injections into the economy consequential to the inordinate amount of aid from the federal government also impacted FY 2021 revenue forecasts,” he said, and noted that if any of these two economic pillars encounter a negative operating environment, projected revenues will be reciprocally affected.”

The governor also said that the impact of the COVID-19 pandemic relative to the “enormous infusion in federal aid significantly boosted our economy.” And although such aid will stop at the end of the year, Lolo said the “multiplier effect of the infused federal aid will trickle over to the following year.” (See separate story on pandemic money.)

According to the governor, current revenue collections remain steady “coupled with our aggressive stance on exploring all potential revenue options facilitating the generation of additional revenues to finance projects critical in the advancement of public services to our people.”

Samoa News will report in future editions many issues in the governor’s cover letter transmitted to the Fono in the form of a small-booklet. The general government budget was submitted per usual — a large budget book.