Senate introduces amendments to ASEDA law requiring prior Fono authorization for issuing and spending bond money
Pago Pago, AMERICAN SAMOA — A Senate bill, sponsored by Sen. Magalei Logovi’i, if enacted into law will address long standing complaints from several lawmakers in the past years, over the American Samoa Economic Development Authority issuing new bonds and spending these revenues without Fono approval.
A few years ago, the Lolo Administration submitted and the Fono approved several amendments to the ASEDA law. The goal was to modernize and update the law after developments in the way the US financial markets manage risk in the wake of the global financial crisis at the time.
Those changes gave ASEDA — among other things — the authority to issue bonds, including refunding bonds, with revenues collected to fund specific ASG projects. It also says that ASEDA may issue bonds hereunder from time to time “without prior” authorization from the Fono, subject to the procedures and restrictions in this chapter.
Complaints later surfaced from lawmakers, after ASEDA issued new bonds, including the $50 million 2018 bond series, as the Fono was not given the authority to review and approve the new bonds and allocation of funds to pay specific ASG projects.
But ASEDA stood firm pointing to current law, which doesn’t require Fono approval for future bonds and how revenues are spent. The previous administration agreed with ASEDA.
Then in September 2019 a lawsuit against ASEDA was brought by three House members, who argued that ASEDA must comply with the Budget Procedure Act and submit an Agency Program and Financial Plan for Fono approval before the funds from bond sales are expended.
The court, in a decision last year, dismissed the lawsuit, saying that the proper venue for the plaintiffs to address concerns regarding provisions of the ASEDA law is through the legislative process, not the court. (See Samoa News edition Jan. 10, 2020 for details.)
Under the new Senate bill, introduced last Friday, ASEDA may issue future bonds from time to time, with “prior” authorization from the Fono.
ASEDA “shall present its projects to be paid by the bond proceeds and its plan for repayment to the Legislature for approval prior to the issuance of new bonds,” according to proposed amendments to the law, in the Senate bill.
The bill’s preamble points out that ASG investment in the ASEDA bonds has provided financial leeway and flexibility in streamlining for government capital improvement projects and other government obligations.
It acknowledged provisions of the current law, which requires ASEDA to submit to the Fono and the governor, annual financial reports, showing annual activities and financial activities.
However, the “Legislature maintains its constitutional authority to appropriate and provide final approval in the majority of government spending obligations, which should also include execution” of ASEDA bonds, respectively for government financial stability, according to the preamble,
“In an effort to continue its duties and responsibilities to the Territory, the Legislature, hereby provides that the Authority [ASEDA] shall present its activities and projects to be paid for by bond proceeds and plans for repayment to the Legislature for approval prior to the issuance of new and future bonds,” the preamble states.
The bill was assigned to the Senate Budget and Appropriations Committee, which held a discussion yesterday morning without any witnesses. The legislation is expected to move forward this week on the Senate floor.