All government agencies and departments have been ordered to maintain budget ceilings under the fiscal year 2013 budget law — including the FY 2013 supplemental — for the new fiscal year 2014, with budget submissions due at the close of business today.

This is according to the FY 2014 Budget Call letter dated June 3 from Catherine D. Aigamaua-Saelua, director of the Office of Program Planning and Budget. The three-page letter is approved by Gov. Lolo Matalasi Moliga.

Approved by the Fono and signed into law last October, the FY 2013 final budget stood at $454.85 million while the FY 2013 supplement of $5 million was signed into law in April this year.

The budget for FY 2014, which begins Oct. 1, 2013, will be a priority issue when lawmakers return next month for the 2nd regular session. The Fono is hoping that the final budget will be submitted by August this year, so that lawmakers will have enough time to review it. In years past, the budget has arrived the last week of August or the first week of September, which has not given lawmakers enough time for a thorough analysis and review.

ECONOMIC OUTLOOK

“While economists are cautiously optimistic about a sustainable recovery on the horizon, the across the board automatic cuts, through the [federal] sequestration, continues to impact our local economy, as it struggles to gain footing,” Aigamaua-Saelua wrote.

“Thus, as our local economy continues to weaken, our local revenue sources shrink,” she said. “In light of these realities and uncertainties, the governor has urged all departments and agencies to withhold 10% of their 3rd and 4th quarter budget allocations to insure financial solvency to end the current fiscal year.”

Despite the forecast of a sluggish economic recovery, she says there are ongoing economic activities that give some hope and sense of confidence that the future might not be as gloomy.

Two main examples of economic activities cited by Aigamaua-Saelua are that StarKist Samoa is exploring the expansion of its local production capacity, while Tri Marine International is working to complete its fresh fish export operations (which are expected to be completed before the end of the year). Cannery plant construction for Tri-Marine is due to begin next year now that the U.S. Army Corps of Engineers has given the green light for construction of the seawall and wharf next to the cannery plant site.

In the short-term, said Aigamaua-Saelua, some jobs will be created, but the full effect of these expansion initiatives will not be realized for 15 to 18 months. She projects that the year 2014 will continue to experience the same lethargic economic trends prevalent today.

Additionally, the ongoing commitment of ASG to support the government owned Satala shipyard operation, with fully upgraded equipment and increased facility capabilities will provide another source of jobs for local residents.

As ASG works towards “prioritizing our most critical needs” each agency and department plays a vital role in the budget process, she said.

“In these times of financial austerity, I strongly urge each department and agency to be prudent in the expanding of our limited pool of financial resources to insure that maximum benefits are derived,” she said, adding that each director "is expected to do more with less, which means that operations must be justifiably economized and efficient.”

LOCAL FUNDS

Aigamaua-Saelua informed agencies and departments that budgetary thresholds to guide the FY 2014 final budget are provided in the FY 2013 budget signed into law, as well as the FY 2013 supplemental.

“...please adhere to these budget ceilings as earmarked” in the FY 2013 final budget, she said and also informed directors to prepare their budget submissions according to their current approved organizational set up and functional statements.

“All vacant positions need to be omitted from your budget request for FY 2014,” she said. “In addition, all annual step increments should be pro-rated despite the current freeze.”

Furthermore, fringe benefits on FICA are 7.65% and Workmen’s Compensation at 1.05% for both career and contract employees, with an additional 8% identified for retirement of career employees, bringing the overall total to 16.70% for career service and 8.7% for contract employees.

Directors were also informed to estimate utilities and communication costs, which “must” be accounted for and included in the budget submission. “Unlike normal practice in the past, you will be held responsible for these unbudgeted costs and therefore need to appropriate accordingly,” she wrote.

(Among the many issues raised by lawmakers during Fono budget hearings over the years, is whether utilities costs are included. The issue became louder in the last two years when ASG continued to accumulate unpaid debts).

“To meet any other requests above the mandated ceiling allotment, you are encouraged to identify available funding within your submitted budget by reshuffling your cost structures to cover your most critical needs,” she wrote.

FEDERAL GRANTS

Departments and agencies funded with federal grants have been requested to prepare their budget according to the most recent approved federal grant award, and grant submissions are not to exceed the authorized amounts of the current grant budget proposal along with budget submission.

All new grant awards must be submitted in detail and all operating grants are to be included in the budget proposal.

ENTERPRISE FUND

ASG offices and semi autonomous agencies whose budgets are considered “Enterprise Funds” are asked to prepare their budget requests based on “generated revenues” from the current fiscal year.

They are also required to submit a profit and loss statement for the enterprise account and the “anticipated generated revenues must be sufficient to support your operational costs.” according to the budget call letter.

ASG entities considered Enterprise Funds include the American Samoa Power Authority, American Samoa TeleCommunications Authority, LBJ Medical Center, Airport Division, Shipyard Services Authority, and the Fagatogo Market Place.