APPENDIX I Mr. Frank C. 11/11/84 APPENDIX I Conahan ee ccm ec ee me re re re ee cre me ee me cee eer ee er ec ee ee ee ee ee ee that in general American Samoa received in excess of 90% of its revenue support from federal sources. The result is derived by categorizing local excise and income taxes as "federal". This is misleading to the reader in several ways. First, it presupposes that if these taxes were collected and retained by the federal government, we would not impose alternative territorial taxes, such as sales taxes, gross receipts or other income taxes, or tangible property taxes. Secondly, the figures used do not take into account American Samoa's revenue from the various enterprise activities operated by the territorial government. When the total generated revenue is presented with the inclusion of the enterprise activities the degree of average federal participation drops from over 90% to 70% {see Appendix A). If the use of the questionable tax revenue sources are removed from the analysis, not added to the American Samoa tally, but simply eliminated from the comparison, the federal rate drops still further to 61%. A reasonable case can be made that in the absence of the listed tax sources, American Samoa would generate a revenue amount at least equal to half the lost federal yields. In this case the actual federal fiscal participation in American Samoa would be only 53%. This figure is not significantly out of line with present levels of federal participation with some states. This near parity would be achieved without programs such as revenue sharing and others for which American Samoa is not eligible. Last, I would offer comments and suggestions on several specific areas 1. Federal organization. The history of the insular territories especially since 1950, demonstrates rather emphatically, in my view, that any federal agency administering U.S. policy on those territories does not function effectively within a major department or other large agency of the U.S. Government. This statement is not intended to be critical of any Secretary of the Interior, present or past, or the head or staff of any territorial organization within the Department of the Interior. Most, if not all, Secretaries have responded postively to their territorial responsibilities. Their territorial organization staffs have been sensitive generally to territorial concerns and have included many dedicated persons. The present staff deserves specialnote in this regard. The program is simply too small to warrant prolonged attention of higher authority in this setting. , Accordingly, it is my strong opinion that U.S. territorial policy requires and deserves administration either by a special organizaton within the Office of the President or by a newly established separate agency, serving in both cases, no other purpose. 9000260 53 Equally required,