American Samoa's governor Lolo Matalasi Moliga says it is impractical to ask the territory to reduce the number of government employees.
The local government is American Samoa's largest employer and it has proposed boosting its 6500 strong workforce by about 200 people.
But Lolo says a letter to lawmakers from the US government seems to direct the territorial government to reduce its size.
There have also been calls from businesses to reduce the number of public servants, instead of raising taxes or proposing new ones.
Lolo said it was not an unreasonable demand but an impractical one, as the territory needed more workers to maintain other federal policies such as stringent coast guard regulations.