Stimulus funds and collections cited as major sources of revenue increase
Pago Pago, AMERICAN SAMOA — The 7% increase in local revenue proposed under the government’s fiscal year 2021 budget, is the result of improved collections and the “huge influx” of federal coronavirus stimulus funds, according Gov. Lolo Matalasi Moliga in his cover letter to Fono leaders.
The governor this week submitted to the Fono, the ASG proposed FY 2021 budget totaling $465.95 million — of which $110.16 million is financed by local revenue. And the projected FY 2021 local revenues is 7% higher — $7.06 million — than the current fiscal year.
“This increase is helped by improved collections due to enforcement of revenue measures and the huge influx of COVID-19 stimulus funds which helped propel business activities thus impacting profitability margins and subsequent increased tax payments to the American Samoa Government,” Lolo explained in his letter to Fono leaders.
“Maximum production deployed by StarKist for the period of six months increased purchasing power which also fueled business activities,” he points out.
Of the total estimated local revenues for FY 2021, about 66% ($72.55 million) is allocated for personnel; 20% ($21.88 million) for contractual services; 10% ($11.02 million) to “Others”; 2% ($2.63 million) for materials and supplies; and the remaining to travel and equipment.
“Considering that there are local revenue collections earmarked towards defraying our debt service needs, nevertheless; the increase in collection is attributed mostly due to the expected surge in activities amid the COVID-19 vaccine approval next year, whereby the borders will be opened, and economic activities will pick up,” said Lolo in another sector of his cover-letter, which is actually a small-booklet.
“Attaining a solid local revenue base is consistently desired, thereby, allowing us to finance community projects for the betterment of our territory,” he said noting that ASG is “responsible for the financing of approximately 69% of its planned expenditures for FY 2021 to maintain the quality of services rendered to our people.”
ASG is projecting to collect $71 million in taxes — compared to over $65.94 million in FY 2020 — with individual income taxes being the highest at $27 million, followed by general excise tax at $23 million; corporate tax at $16 million; soda tax at more than $3 million; and military cover-over tax at $2 million, according to data included in the governor’s letter.
Lolo explained that the revenue measures that are already in effect help to create substantial revenue streams to fund public services and critical projects in FY 2021 and beyond. Increased individual incomes contributed materially to the forecasted increase in tax revenues as well.
He also said that recovery funding from Tropical Storm Gita together with the “unprecedented inflow of COVID-19 aid boosted business activities and thereby shoring-up our local revenue collection in the form of excise tax, corporate, and individual tax payments.”
Lolo explained that despite uncertainties in market conditions, corporate tax revenue is expected to be higher than FY 2020, which has corporate tax revenue at $13 million.
The governor claims that tax agents continue to perform their duties to ensure proper corporate taxes are filed and paid. “Excise tax collections have stabilized, and collection is expected to improve as shipments continue to bring more container goods to meet growing demand,” since the revenue measures went into effect, he said.
LICENSES AND PERMITS
ASG is projecting to collect $1.5 million from licenses and permits in FY 2021. And this is the same amount for FY 2020 and FY 2019.
Revenue collections are expected to be trending at last year’s levels, partly due to businesses obtaining licenses and permits, for the most part, to move their projects forward, according to the governor.
FEES AND FINES
Revenues collected in fees and fines are projected at $5 million — a slight increase from $4.8 million in FY 2020.
This revenue source “is projected to steadily improve as immigration revenues sustain steady collection on the number of individuals being processed despite disruptions amid the COVID-19,” the governor explained.
“Given that a COVID-19 vaccine will be approved and made available by next year, air traffic will open up and collection activity is expected to improve,” he added.
CHARGES FOR SERVICES
ASG is projecting to collect $7.1 million from charges for services — compared to $6.3 million in FY 2020. This revenue source includes charges imposed at the Port of Pago Pago; ASG rents and leases; revenues from the Sports Complex (which includes Veterans Memorial Stadium and the Golf Course); and “others”.
According to the governor, potential port activities will remain steady, given the relaxation of fishery regulations restricting the movement of vessels within our waters and beyond.
OTHER REVENUE SOURCES
The three remaining revenue source categories are “Miscellaneous” — includes interest income as well as judgments and settlements; “Indirect Cost”; and “Transfers-In” — includes special federal grants, local school repair fund, Interior Department grants-in-aid.
According to the governor distribution of forecasted revenues to planned expenditures was compelled by the top priorities of this administration: economic development — job creation, education; health, youth capacity building; senior citizens quality of life improvement; public safety; environment, and social services.