Gov to feds: “We need your help to empower us to help ourselves”
Calling it a “bold” suggestion, Gov. Lolo Matalasi Moliga has suggested $50 million annually for each US territory in federal Capital Improvement Project (CIP) funding, saying that the territories cannot hope to be “self-sufficient and self reliant” without federal help.
Lolo, who made the comment in his official written statement presented at last Friday’s federal Interagency Group on Insular Areas (IGIA) meeting in Washington D.C., also boasted about his administration raising more than $70 million in American Samoa Economic Development Authority issued bonds, despite American Samoa’s low bond ratings.
Two main issues at the IGIA meeting were health care (see yesterday’s Samoa News edition for details) and debt service priorities, about which the governor said, “We are fully mindful and totally committed to engage in prudent debt management practices to ensure that our risk exposure is minimized.”
“The guiding factors to achieve this monumental decision includes capital planning and funding, statutorily set debt limits, long term financial planning, sound fiscal management of financial affairs and public accountability,” the governor explained.
Lolo acknowledged the federal government’s concerns over the debt structure of the territories, but noted that options available to them to generate funds to finance critical economic development projects “are very limited.” And while the federal government provides CIP funding annually, such monies “are very restricted as well,” he said.
Lolo went on to explain how American Samoa is managing its debt service.
“Our credit strengths are reflected in the direct pledge of specific tax revenues that are transferred to our Trustee on a monthly basis and paid out semi-annually concurrent to our covenants,” he said, adding that review of financial performance measures are a priority.
“Compared to the other US territories, American Samoa has moderate debt and pension ratios,” the governor claimed and noted for example, “as of our 2015 financials, our long term debt stands at 60.4% per capita, which is relatively low as compared to other insular areas.”
The governor did acknowledged that, over the years, the net position of “our pension fund” — referring to the Retirement Fund — has declined to 63.5%, but he has instituted mitigating measures to ensure the security and integrity of the fund with new leadership.
“The overall debt to asset ratio is at 49.8% indicating satisfactory prudent debt issuances. No debts are issued without sufficient funding capabilities,” he said.
Regarding the development of the local economic, which has depended for many years on the canneries and ASG, Lolo said American Samoa is poised to expand its economy with the development of “our fledgling tourism industry”, processing and manufacturing industries and implementing technologically based businesses.
“The expansion of our economic pillars is a priority in supporting economic development,” he said, and noted that American Samoa is “well aware of our credit risks caused by our small and volatile economy.”
According to the governor, the administration is taking “bold actions to increase our” —
• low income levels;
• weak general fund position;
• financial management challenges including weakness in tax collection procedures and financial controls;
• risk associated with the changes in banking system including the loss of the only US-based retail bank — referring to the Bank of Hawaii — and attempt to fill this banking service gap with an ASG owned bank as the only option available.
“We have developed and issued our Debt Management Policy document to ensure that we adhered to the process, policies and procedures connected with credit financing,” the governor said.
In spite of the inherent risks, American Samoa was able to float bonds to finance critical improvement projects, he said. And while “our bond ratings were low,” the territory still managed to raise $79 million in bond revenues to finance these projects, he points out.
Bond revenues also helped the government establish the ASG owned Territorial Bank of American Samoa “to provide essential banking services for businesses and residents of American Samoa,” the governor pointed out.
Regarding CIP funding, Lolo said it’s clear that the amount provided for the territories on an annual basis “is insufficient to build our economic and social infrastructural systems to incentivize our economic development programs.”
Unless more funds are allocated to meet CIP needs of the territories, Lolo said “market financing” provides the only option to secure additional CIP funds.
“I may be bold to suggest that a minimum of $50 million in CIP funds be made available for each Territory,” he said. “It is just as clear that the Territories cannot hope to be self sufficient and self-reliant without the help of the federal government.
“We need your help to empower us to help ourselves,” was the governor’s plea to the feds.
Over the years, lawmakers have raised with ASG officials the possibility of requesting the US Interior Department Office of Insular Affairs to increase CIP funding for American Samoa that has remained on the same level for a long time, while the cost of living has gone up.
American Samoa’s CIP funding for the current fiscal year 2017 is $9.61 million — an increase of $108,000 from FY 2016 budget of $9.50 million, according to congressional budget documents.