AMERICAN SAMOA GOVERNMENT BEHIND IN PAYROLL DEDUCTIONS

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By Tootoo Aleki

PAGO PAGO, American Samoa (January15, 2000 – Samoa News)---The American Samoa Government (ASG) is $5.5 million behind in properly forwarding government employee payroll deductions.

The government simply does not collect enough money at present to cover paychecks and payroll deductions, it was revealed at a hearing yesterday of the House of Representative's Government Operations Committee.

Treasurer Ale Tifi Ale was the main witness, but there were others testifying from the local banks, ASPA and ASTCA.

The issues discussed during the hearing included:

Over projection

Rep. S. E. Sala asked Treasurer Ale why the government has constantly over projected how much money it will collect, thus leading to overspending and deficits.

Ale said predicting revenue was not easy and even the most astute forecaster would make a mistake.

When asked why budget ceilings are not revised and reduced as better information about lower revenue collections becomes available, Ale answered that this was done in the current budget.

Notwithstanding Ale's comment, ASG is collecting revenues at a pace about $15 million lower than projections (30%), but the administration has no plans at present to lower its budgeted spending levels or institute a reduction in hours or employees.

Last Audit

The last audit of government finances, according to Ale, was done for 1996, while a rough indication of year 1997's audit report has been prepared in draft form.

Sala asked, "Is it fair to say we don't know the actual fiscal situation of government for the years 1997 and 1998?"

"I know you are right," was the treasurer's reply.

Payroll Deductions

The Treasurer was asked if government could afford to honor payroll checks and make payroll deductions.

He said it could not. He noted that the gross local payroll is $2.3 million, but ASG must honor only about $1.3 million worth of paychecks because it withholds almost a million dollars for payroll deductions, which it has fallen behind on paying.

He told Samoa News that ASG is $2.5 million behind on the local payroll deductions and another $3 million behind on federal payroll deductions (to FICA).

Thus, ASG is $5.5 million behind on payroll deductions.

Ale said ASG only was collecting enough money to make good on the paychecks but did not have enough left over to pass along the payroll deductions (let alone vendor payments and other obligations).

"If the government cannot afford the payroll deductions, why haven't you tried anything to solve the problem? Things have become critical with their loans and financial credits. Why not lay off workers? Are you afraid?" Sala asked.

Ale answered that government was working to raise and increase revenues through several sources as was presented in Governor Tauese Sunia's State of the Territory's speech this week.

That speech called for tax increases, among other measures. It did not, however, mention any reduction in payroll, even though the governor said in December that it might be necessary to institute a short workweek for government workers in January.

Ale told the House that no one could solve the problem single-handedly, and he asked for cooperation from the Fono to help solve the problem.

He then issued an apology to the people who have been hurt in their credit ratings because of the inability of government to pay their payroll deductions.

The Treasurer acknowledged that any employee can ask the Treasury to stop deducting from their pay (except for taxes and FICA).

Sala asked what the Fono could do to help. Ale said the Fono could ask the Retirement Fund Board to loan the government $3 million.

The Treasurer also told Samoa News that he hopes the Fono will endorse the $18.6 million tobacco settlement loan that Governor Tauese Sunia is negotiating with the U.S. Department of Interior.

Uncollected taxpayers' debts

Local taxpayers owe more than $5 million for back taxes, Ale said. The debts go back ten years he stated.

He reminded the House that Governor Tauese has authorized him to forgive interest and penalties in order to get taxpayers to come in and pay off their old debts.

He mentioned a taxpayer who he said had an old debt of $700 that has grown to more than $10,000 due to interest and penalties.

Ale said the real reason Mrs. Joyce Stewart resigned her post as Tax Manager was because of a difference of opinion over the collection issue. He said her emphasis was on training Tax Office staff for the future, while his focus was on collection of government taxes now.

The Treasurer told the House there was $200,000 to $300,000 still remaining to be paid out from 1998 tax returns.

He told the Samoa News later in the day there was only $100,000 remaining to be paid out from 1998 and it would be released today.

He also told Samoa News that ASG separately owes local taxpayers $1 million due to the Child Tax Credit but he had no plans to process those refunds and prepare checks.

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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