Gov. Lolo Matalasi Moliga has reiterated to the Legislature the need to adopt the financial mindset that the government must operate within its means in order to keep a balanced budget at the end of the fiscal year.

Lolo’s message was included in the budget summary of his cover letter sent along with the fiscal year 2016 Budget to the Fono, whose leaders have informed the Administration that the actual budget details must be re-submitted via print form — the budget books — and not in electronic form (CDs) as they are now.

According to the governor, the budget plan for FY 2016 — which begins Oct. 1, 2015 — continues to “place emphasis on the advancement of our service priorities” along with the requisite justification for funding to address vital government program services, and to adequately fund and address “our most critical needs, thereby enhancing our people’s quality of lives.”

Lolo claimed that the first half of the current fiscal year 2015 “was riddled with significant challenges testing the resiliency of our small island economy, and reconfirms our major dependence and our economic sensitivity to global market forces.”

The most recent challenge identified by the governor was the longshoremen’s contract dispute which affected ports on the US West Coast that resulted in shipment delays and backlogs for the Territory.

Lolo said this event “highlighted our economy’s significant vulnerability to these adverse economic events prompting “an unanticipated 5% decline” in local revenue collection. However, he said, ASG was able to respond swiftly by implementing mitigation strategies to avert any negative financial impact on the government workforce consequential to revenue shortfall.

“Cost containment measures were aggressively enforced, and the alignment of spending to actual cash flow,” he said, adding that U.S. Assistant Secretary of Insular Areas, Esther Kia’aina had immediately responded to ASG’s request to advance the 2nd half of FY 2015 DOI funding allocation, which provided needed cash relief while aggressive efforts were being deployed to weather the government’s weak cash flow position.

“As we recover through striving to improve our finances, along with the attempt to live within our means, bold and difficult steps have been taken to ensure that we have a balanced budget by year end,” he said.

Further, given the current global financial situation faced by debt-ridden governments of the U.S territory of Puerto Rico and the country of Greece and the accompanying consequences, Lolo said it’s “imperative to adopt the financial mindset and the resolve to operate within a balanced budget.”

During the process of seeking bond financing, it was recommended by financial advisors  for our government “to operate within a balanced budget, primarily to help strengthen our government’s financial position” in order to attain a favorable bond rating, he said. (This information was first revealed in the ASG FY 2016 budget call letter to government entities.)

In an effort to move ASG forward Lolo said, “we must address the fragile state of our revenue base”.  He then commended the Fono for their quick and positive response in approving early this year new revenue measures. He said the Fono’s approval of the bills show the commitment of the two branches of government to do everything possible and necessary “to improve the quality of lives of our people.”

(Over major objections from the private sector, the Fono approved and the governor signed into law the bill to hike the cigarette excise tax; increase fees for business licenses; and establish a new 5% hotel room tax.)

“The needs of our people are many … (and) the government’s financial coffer is seriously wanting and restrictive, but it’s a very narrow economic and revenue base,” he said. And the governor hopes that the Fono “will champion” introduction of new revenue measures to generate additional funds “to allow us to jointly improve government services dedicated to improving our people’s lives”.

The major piece of revenue measure initiated by the Fono is the 7% sales tax introduced by House Speaker Savali Talavou Ale but no committee hearings are scheduled yet as the Fono’s priority now is to review, debate and approve the FY 2016 budget.

Lolo revealed that he has tasked the Revenue Task Force to review current revenue source structure and collection practices and make recommendations for a plan to expand the ASG revenue base and improve collection.

The governor also said that it’s critical to secure a credit financial facility with capacity to adequately meet ongoing financial needs for residents of the territory.

And through the work of the American Samoa Economic Development Authority (ASEDA) board and upon receiving bond ratings recently, “we are currently in the process of obtaining financing to establish a local charter bank thus facilitating banking transactions that are currently lacking at this time.”

(The law is already in place to establish the Territorial Bank of American Samoa, a government owned entity, but it has not moved forward as ASG is waiting for the ASEDA bond issuance to fund the project.)

The ASEDA bond will also help secure funding for the long awaited purchase of a vessel for transportation to and from Manu’a, which is critical in the development of the island group.

Additionally, bond financing will finally liquidate debt judgements as ordered by the court, which have been pending for a long time. (In addition to the court judgements, the bond will also be used to pay off ASG’s other long term debts, including the $20 million loan from the Retirement Fund.)

According to the governor, the FY 2016 budget plan — of just over $417 million — fosters the injection of needed capital to stimulate economic activity with expected subsequent generation of jobs. “The overall thrust of this financial plan is to expand the economy of American Samoa and maintain our service priorities while moving us towards attaining our goal of producing a balanced budget,” he added.