GOVERNOR TAUESE CALLS FOR HIGHER TAXES TO BALANCE AMERICAN SAMOA GOVERNMENT’S

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By Lewis Wolman

PAGO PAGO, American Samoa (January 11, 2000 – Samoa News)---"The truth is—your Governor is no magician."

With these words, Governor Tauese Sunia set the tone for the portion of his State of the Territory address dealing with ASG's continuing financial problems.

After discussing the increased cost of running the government and the decreasing revenues available to meet those costs, the Governor summed up, "The message is clear—none of us has magic, but if want to clean up American Samoa's financial woes right now, then we must grind our teeth, hold expenses and institute some means of taxation or an increase in fees and revenues."

According to Tauese, the problems we have now are the result of a 20-year build-up. And the problem cannot be undone "without an infusion of additional taxes or revenues."

No mention was made in his speech about reducing the size of government, except to say that he is "trying to avoid disastrous financial problems such as reduction of working hours, or a lay-off of government employees."

He did note that the Fono had cut $800,000 worth of vacant positions from the Executive Branch (equal to about 60 positions) and Tauese does not intend to fill these positions.

On the other hand, he wants the Fono to restore funding for the American Samoa Disaster Recovery Office (which lost $1 million, much of which was for personnel) and he wants the $200,000 Centennial celebration budget increased ("you know from your own recent 50th anniversary that these things are costly," Tauese said.)

REVENUES ARE WAY DOWN

According to Tauese, ASG is down $3.6 million in revenue collections for the first three months of fiscal year 2000, as compared to the first three months of fiscal year 1999.

If that trend continues, ASG will collect $14.4 million less this year than it collected last year.

And last year was terrible!

ASG collected $6.6 million less than the $53.3 million it had predicted it would collect. In other words, the Budget Office had projected local revenues of $53.3 million, but the Treasury only collected $46.7 million.

This year, the Budget Office is again projecting local revenues of $53-$54 million, but if the rest of the year is similar to the first three months, ASG will collect only about $32 million, a shortfall of $21 million (40% of the local budget).

"Everyone wants to know why, why, why?" the governor noted. The main culprit, he said, was a huge reduction in tax collections.

To address historic problems with the Tax Office, ASG purchased an expensive computer system (with federal dollars) and hired an expensive tax manager (with federal dollars). All that happened was tax collections fell.

One reason for the decrease, Tauese said, was federal tax legislation that extended new credits for children, Medicare and social security to local taxpayers. He said these credits were costing ASG $3 million a year (25% of the projected total of individual income tax revenues), and he asked the Fono to either repeal the credits or find an additional $3 million in revenues (i.e., new taxes).

Tauese announced that he has asked the Treasurer to "aggressively pursue a program which will offer settlements to delinquent taxpayers," which he said we have a lot of.

These deadbeat taxpayers would be allowed to pay less than what they owe (and no penalties or interest) if they agreed to pay right away. "We hope this program will clean up a lot of these old tax receivables, encourage delinquent taxpayers to come in to settle their accounts and result in increased collections."

ASG DEFICIT GREW IN 1999

Last year, ASG collected much less money than predicted, as detailed above, but it also spent less money than it had budgeted.

The approved budget called for $53.3 million in collections and $53.3 million in expenditures. ASG actually collected only $46.7 million (as mentioned above), but it spent $48.8 million, thus adding to $2.1 million to ASG's deficit.

According to the governor's figures (which Samoa News does not believe reflect the true severity of the situation), ASG owes about $16.8 million to local and off-island vendors. He says when he took office, the comparable figure was $18 million.

Of the $16.8 million owed, ASPA is owed the most. ASG owes its own government-owned, enterprise fund utility $6.5 million. An ASPA official told Samoa News that ASPA, in turn, owes its vendors more than $4 million.

Tauese said that with the Fono's cooperation, he could pay off the monies owed to others with the proceeds from the $18.6 million tobacco settlement loan, which he wants to get from the Department of Interior.

GOVERNOR SEEKS FONO HELP

The governor complained several times about "unfunded mandates", by which he means requirements that we pay out more money for specific purposes (e.g., salary increases for the Police force) without matching new revenue sources.

Although the governor wants to reclassify the entire ASG workforce, he says the two options presently under review would both increase the cost of ASG's payroll.

He thus wants a joint Executive/Legislative budget commission to be created because "the Executive should not have the sole responsibility of determining a source of revenue."

 

GOVERNOR'S LONG SPEECH COVERS LOTS OF GROUND

By Lewis Wolman

PAGO PAGO, American Samoa (January 11, 2000 – Samoa News)---In a 105-minute address to the Fono yesterday morning, Governor Tauese Sunia presented his State of the Territory message.

The address was delivered in Samoan, which the governor said was more "proper and appropriate."

A 20-page written English text was distributed to legislators and other government officials.

Besides a lengthy discussion on ASG's finances, the governor discussed:

Gambling was never mentioned in any way.

The new laws Tauese intends to submit address the following areas:

Samoa News will be reviewing the specifics of many of the above items in future issues.

SPEAKER RESPONDS

Following the address, Speaker Aina Saouluaga Nua thanked Governor Tauese and listed two points he wanted to make in response.

First, he said there was a need to know about the situation of the employees' payroll deductions (Tauese never mentioned this topic, nor did he discuss unpaid tax refunds from 1999). Second, he asked for copies of audited annual financial reports for ASG.

He said the Fono has not received any such reports since 1995.

 

WHY TAUESE BELIEVES LOCAL ECONOMY HAS BRIGHT SPOTS

By Lewis Wolman

PAGO PAGO, American Samoa (January 12, 2000 – Samoa News)---"1999 was a year of unprecedented government activity, a sign of increased growth. I know it is difficult to accept that statement, in light of the frequent public suggestions that we were on the verge of bankruptcy," Governor Tauese Sunia told the Fono during his State of the Territory address Monday.

The governor found good tidings for the economy in several areas, including both government achievements and community realities.

"The positive economic growth that we have indeed enjoyed in 1999" can be perceived, the governor said, in several facts.

NEW BUILDINGS

For example, he stated, "I have been told by the Department of Public Works that an average of five (5) proposals are being reviewed each week for licenses to build private homes, private schools, and churches. This is again a reflection of economic growth. The ability of our people to construct."

No comparable figures were given for previous years. But according to the 1996 ASG Statistical Digest (the last one to be published), DPW approved 158 "new structures" in 1995, or about three per week.

In addition to "new structures", over 560 other building permits were issued, for repairs and "other projects."

HEAVY TRAVEL

Another positive indicator for the economy was the "exceptionally heavy travel" in and out of the territory last year. "As you know, our one major airline had to increase its flights both during the summer and around Christmas time."

But Hawaiian Air has added flights in summer and December for several years. The governor offered no numbers to back up his assertion that air traffic has been exceptionally heavy. In 1994 (the last year for which ASG has released statistics) 6,803 flights arrived at the Pago Pago International Airport, carrying 76,638 passengers.

MORE CARS

"Another sign of sound economic growth is reflected in the amount of cars being imported and the types of vehicles that our people are buying," Tauese said. "The increase in car sales is indeed higher than any prior year."

The Office of Motor Vehicles has been unwilling to release car registration statistics to Samoa News, but anecdotal information received from a variety of sources (like my own two eyes!) is consistent with the governor's comments.

In addition, the Department of Public Works last year reported that "traffic counts over the past five years reflect annual traffic increases of approximately 100%."

In other words, there is twice as much traffic on the road this year as compared to last year, and that statement has been true year after year in the latter half of the 1990's.

Government statistics show that there were 4,700 vehicles on island in 1989, before the first hurricane hit. By 1992, after hurricanes Ofa and Val, the number had jumped to 5,500 (the equivalent of annual increases of almost 6%). By 1996 (the last year for which records are publicly available), the number had grown to 6,200, which showed the pace of annual vehicle increases had dropped to 3%.

MORE TUNA

Expansions at the cannery mean that "we have now become the tuna capital of the world. More tuna is canned in American Samoa than anywhere else on the globe. Quite a large percentage of the American market for tuna now depends on the exports from American Samoa."

Tauese noted that "many long-line fishing boats and purse seiners are being tied up because of the oversupply of fish (i.e., low prices). We are saddened by this dilemma for the fishing boats, but are nonetheless thankful for the phenomenal increase in the tuna now available in the Western Pacific Ocean."

Looking closer to home, Tauese stated that "our own Alias (roughly 60 of them), are finding a good strong market for albacore in our local canneries."

UNEMPLOYMENT

After years of claiming that American Samoa's unemployment rate was very high, ASG abandoned that position a few years ago and now states that unemployment is well below 10%.

Tauese stated, "We do not really suffer an unemployment of our people like that which is suffered by countries without any jobs to offer their people. What we have is selective unemployment where many of our people would prefer government employment at $2.50 an hour over the canneries with the starting wages of $3.15 an hour. The canneries are advertising almost daily for workers. Consequently, the result is that over 70% of the workforce in our private sector consists of imported workers from outside American Samoa. That is a definite sign of economic well being, to be able to discern between types of jobs."

Actually, there are not many government jobs available at $2.50 an hour, due to the government's financial problems. But it is true that the canneries are generally in a hiring mode all year 'round.

CONSTRUCTION INDUSTRY

"The construction industry is the fastest growing industry locally, according to the Department of Commerce," Tauese said. "This is evident in terms of the annual 76% increase in start-ups of new construction companies between FY '97 and FY '99. The overall impact to the community has resulted in a substantial increase in employment opportunities within the industry and a general increase in material purchases from our local vendors," Tauese said.

In 1996 (last year for which published statistics exist), there were 60 locally licensed construction companies.

Tauese said that 25 construction-related road projects, with a total value of $16.4 million, were completed or begun in 1999.

"I wish to point out that this administration has successfully implemented the policy of awarding a substantial part of our infrastructure development to local contractors. It used to be a dream and mostly talk. But we now can proudly point to this last year and say that we can keep much of the construction monies in local pockets.

"Local contractors were awarded 68% of the projects for a total value of $5.3 million (about 30% of the total dollar value). The average contract value for local contractors was $311,603.

"Off-island contractors were awarded 28% of the projects for a total value of $12 million (about 70% of the total dollar value). The average contract value for off-island contractors was $1,716,820.

"Two new rock crushing projects and much new heavy equipment were added to the improvement of our local capability in construction." Tauese noted.

The Department of Public Works has specifically designed road projects to be small enough "to encourage the local construction industry to participate fully in the construction program."

Tauese called attention to his Village Rural Road Program, which has completed roads in Olosega-Ofu, Fitiuta, Alao, and Manulele/Nu‘uuli. There are ongoing projects in Aua, Matu‘u, Leone, Poloa, and Papauta in Nu‘uuli. Soon to begin are the village roads to Lauli‘i Elementary School, Pava‘ia‘i Elementary School, Pago Pago Elementary School, and Faga‘itua High School, as well as Vaitele in Nu‘uuli, the Golf Course-Ili‘ili Road, Vaitogi, and the long stretch from Tafuna High School to Ili‘ili, including sidewalks.

These are the small-scale projects DPW has been able to award to local contractors

BANK NOT SO SANGUINE

Although there are no independent economic appraisals of American Samoa's economy, the annual message from Amerika Samoa Bank often addresses the local economy.

The most recent message was written in April and discussed 1998, not 1999. From the bank's point of view, the local economy was not so good in 1998 and many local merchants suffered a frustrating year of business setbacks.

"Certainly the economic climates prevalent here in American Samoa the past several years. . . were filled with negative indicators," the report stated.

Items from the SAMOA NEWS, American Samoa's daily newspaper, may not be republished without permission. To contact the publisher, send e-mail to

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