On a scale of 1 to 10 , GovGuam’s fiscal health and performance scores 2.19
Guam taxpayers paid the government of Guam a total of $746.3 million, or $4,368 per capita, as of Sept. 30, 2017. During the same period, GovGuam’s long-term debt has reached $2.7 billion, which leaves every Guam citizen in debt of $15,802.
The Department of Interior’s recently released Performeter indicates that GovGuam, compared to other insular governments, imposes “a relatively high tax burden” and “high debt burden” on its citizens.
The financial analysis does not even include the fiscal 2018 period, when GovGuam raised liquefied fuel tax to 4 cents beginning January 2018, and imposed a temporary increase in business privilege tax from 4 percent to 5 percent.
“The percentage dispersion of revenue by source indicates how dependent the Government of Guam is on certain types of revenue,” states the Performeter, which rates GovGuam’s financial health and performance 2.19 on a scale of one to 10 — with one being the least favorable and 10 being the most favorable.
“The more dependent the government of Guam is on revenue sources beyond its direct control, such as taxes tied to the IRS codes and revenues from other governments such as grants, the less favorable the dispersion,” the report said.
In January last year, GovGuam scrambled to find revenue sources to make up for the tax revenue losses created by President Trump’s federal tax cuts. Officials of the Calvo administration claimed the federal tax cuts incurred $70 million in lost taxes for Guam. Hence the temporary business privilege tax increase and the proposed 2-percent sales tax, which Guam senators eventually repealed.
Fiscal analysts found that GovGuam had direct control over 35.2 percent of its revenues, including charges for services and some local taxes.
“Taxes, which make up 63.1 percent of all GovGuam revenue, consist of $354.7 million of income taxes, which are not considered within government control and $435.6 of other local taxes, which are considered within the control of the government,” the report said.
Overall, the report said, the ratio indicates that GovGuam has exposure to financial difficulties “due to a reliance (64.8 percent) on non-controlled revenues.”
As for public assets, the report noted that 158 percent of GovGuam’s $1.86 billion of total assets were funded with debt or other obligations.
“This is an unfavorable financial indicator and indicates that for each dollar of assets the government of Guam owns, it owes $1.58 of that dollar to others,” the report said. “This also represents a slight decline in the ratio when compared to the ratio of the prior year.”
At any rate, the Performeter report noted that GovGuam lived within its means during the audited period.
GovGuam funded 102.2 percent percent of its current year expenses with current year revenues, “which is considered an excellent ratio, and represents an increase when compared to the ratio of the prior year,” the report said.
The 2.19 rating for GovGuam in 2017 was actually indication of improvement compared to the reading of the previous year, the report said.
“The primary reasons for improvement were the positive change in total net position of $51.7 million and the improvement in intergenerational equity (now at 102.2 percent),” the report said. “However, the overall poor financial position and poor financial capability of the government continues to drag down its overall score.”
The results of the most recent Performeter® and Audit Findings, Timeliness, and Exception Resolution analysis were presented at the Island Government Finance Officers’ Association in December 2018.
“[T]he Performeter® is a useful tool to gauge GovGuam’s overall financial health and performance. The independent evaluators, Crawford & Associates, LLC, through US Department of Interior, take GovGuam’s audited figures and analyze them to come out with the rating. The numbers speak for themselves,” Public Auditor Benjamin J.F. Cruz said.