With fiscal year 2016 budget hearings set to end next Tuesday, Senate Budget and Appropriations Committee chairman Sen. Laolagi F.S. Vaeao has now scheduled a committee hearing next week Thursday with the American Samoa Economic Development Authority board to answer several questions that have been raised by senators in the past few days pertaining to the ASEDA bonds.

In the meantime, Gov. Lolo Matalasi Moliga has submitted proposed legislation amending tax laws on beer, alcoholic beverages and tobacco that would provide additional revenue to pay debt incurred by the ASEDA bonds.

SENATE BOND REVIEW

At last Wednesday’s Senate session, Laolagi announced the ASEDA board hearing, after Sen. Tuaolo Manaia Fruean again questioned the sale of the ASEDA bonds, for which $55 million has been received and deposited with a New York bank.

Tuaolo read out provisions of the law approved by the Fono last year dealing with ASG revenues that will be used to repay the bonds, and another provision, which gives the ASEDA board the authority to issue bonds. Tuaolo says his concern is that ASG revenues are pledged to these bonds.

To get answers from the ASEDA board on questions raised by Tuaolo and other senators in the last couple of days, Laolagi moved to schedule the hearing. He also requested — through the Senate President’s Office — financial reports on the bond. Specific reports needed are all the revenue sources to be used to pay the bond debt, details of the $55 million in the New York bank, and an updated list of projects to be funded with the $55 million.

Tuaolo also wanted additional details on the status of the two ASG loans from the ASG Employees Retirement Fund, that were to be paid by the ASEDA bond. (The $11 million bond purchase deal with the Retirement Fund was finalized more than a week ago.)

Sen. Galeai Tu’ufuli, who is the Senate’s member on the ASEDA board, says his priority responsibility is the Senate and therefore he cannot defend the board. He also said he is making an official announcement of his resignation from the board, and reiterated what he told senators two weeks ago— that he is still against members of the Fono sitting on executive boards appointed by the governor. He said this never happened during the Tauese Administration — with lawmakers sitting on executive boards.

“There is a big conflict of interest in having members of the Fono sit on executive boards and commissions,” he said. “Board decisions in which lawmakers are involved could be challenged by a member of the public based on the Separation of Powers — Executive and Legislature.”

Tuaolo responded that provisions of the ASEDA law enacted last year require one member each from the Senate and House to sit on this board, “unless we amend the law” removing Fono representation. He then asked Galeai to stay on the board so that senators will know what’s going on with the ASEDA board.

Sen. Soliai Tuipine Fuimaono joined Tuaolo in asking Galeai to stay on.

In response, Galeai decided to remain on the board for now and agreed that the law needs to be amended to remove Fono representation on the board.

NEW LEGISLATION

With the payoff of the two ASG loans from the Retirement Fund, the statutory earmarks satisfying the previous debt service have since lapsed, the governor told the Fono leaders in a Sept. 8 letter.

Lolo explained that the two loans were paid off from proceeds of ASEDA’s issuance of its Series 2015 bonds. Therefore, it’s appropriate to reinstate the earmarks and increase their respective amounts in order to service the newly incurred ASEDA bond debts.

A certain percentage of the alcoholic beverage, beer and cigarette taxes had been previously earmarked to pay one of the two Retirement Fund loans — the $20 million loan from 2007.

However, the $20 million loan and the $10 million for LBJ in 2006 are now paid off under ASEDA’s Series 2015 Bonds.

The proposed bill deletes allocation of these taxes to pay the $20 million. It has been replaced with a higher percentage of revenue collected to go towards ASEDA bond debt. According to the measure, 80% of revenue collected from beer tax goes to ASEDA; under alcoholic beverage its 25% of revenue collected and 50% of revenue collected from cigarette tax.

The governor’s proposal is now being put in bill format for introduction soon in both the Senate and House.