Pago Pago, AMERICAN SAMOA — At the opening of the Fourth Regular Session of the 38th Legislature, Governor Lemanu P.S.  Mauga submitted an FY2025 budget request for $733,683,167. Of that amount, the local budget of $165,907,000 represents 23% of the total. It also represents a 16% increase over the previous year. While large, this increase is not the largest during the Governor’s tenure.

Overall, the FY2025 budget represents a 51% increase over the budget the Governor inherited at his inauguration. After retaining the FY2021 budget for FY2022, the FY2023 budget was 6% more than the FY2022 budget. The FY2024 budget followed this substantial increase with a hefty 22% jump over its predecessor.

Typically, governments try to keep their budget increases in line with inflation. However, ASG’s pace of budget increases has outpaced inflation.

While the 2025 inflation rate cannot yet be determined, a comparison between the inflation rate and the local budget’s growth between 2021 and 2024 can be made.

For this period, the budget increased by 30% while the US inflation rate was 15%, according to the Bureau of Labor Statistics. The BLS projects that the inflation rate between 2024 and 2025 will be around 3%, much less than the 16% increase being proposed for the local budget.

Interestingly, the FY2025 local budget is a little more than what ASG’s audit reported as revenue for FY2023. For FY2023, ASG collected $164,253,222.

Said differently, the Governor is assuming the economy in FY2025 will be the same as it was in FY2023. It should be noted that FY2023 marked the height of COVID-19 funding for the Territory.

As a reasonableness check, Senate Pro Temp Magalei Logovii is asking for an updated report from the Treasury on ASG’s actual collections versus expenditures. According to ASG’s second-quarter 2024 financial report, ASG appears to be $4,220,315 behind on collections and running a deficit of $11,883,015.

Updated third-quarter figures would provide the Fono with some insight as to whether FY2023 collections can be reached, and also in the upcoming fiscal year.

Unfortunately, ASG’s quarterly financial reports have been less than accurate.

In FY2023, the fourth-quarter financial report claimed total revenue of $188,407,047. However, the FY2023 audit report showed revenue of $164,253,222, or 13% less than the financial report. Likewise, the same financial report overstated actual income collections by 11% and overstated actual excise tax collections by 20%.

The ability to fund the local budget depends completely on ASG’s ability to collect what they project. The two largest revenue components are income taxes and excise taxes.

For FY2025, the Governor is projecting to collect $87.8 million in income taxes and $34.1 million in excise taxes. These projections reflect a 20% increase from the previous year’s income and excise budgets and a 104% increase in income taxes and 31% in excise taxes budgets since the Governor came into office.

On the upside, ASG’s ability to project income and excise taxes has consistently resulted in underestimates. In FY2021, FY2022, and FY2023, actual income tax collections exceeded the budget by 15%, 78%, and 116% respectively.

On the other hand, actual excise taxes for the same years exceeded the budget by 9%, 13%, and 12% respectively.

Of interest, is that for FY2025, the Governor is asking for $36,230,000 for special programs.

This request represents a 34% increase over FY2024. Of note, the budget for ceremonial activities increased from $1 million to $2 million.

To provide some context, this special programs budget is equivalent to the budgets of the Departments of Agriculture, Marine and Wildlife, Parks & Recreation, Port Administration, Public Safety, and Homeland Security, the Environmental Protection Agency, and the Tafuna Correctional Facility combined.