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  • Pacific Island Times Staff

Leon Guerrero transition report: finances need a lot of work

Faced with challenges, GovGuam's still got some cash in the bank

If you've been following the finances of the government of Guam, the bottomline of the just released Leon Guerrero-Tenorio administration transition report should be something of a relief.

"The estimated cash receipts for January 2019 [are] $86.1 million, leaving an estimated ending cash balance at the end of January 2019 of $4.8 million."

Of course the financial braintrust at Guam's Departments of Administration, Revenue and Taxation and the Division of Revenue and Taxation that produced that portion of the report wasn't about to leave out some qualifying words.

"Although a positive cash balance is estimated, further review and analysis is necessary to ensure that the cash releases that are anticipated to the autonomous agencies such as the Guam Memorial Hospital Authority, the Guam Department of Education, the University of Guam, and the Guam Community College will fulfill the appropriation level authorized by the budget act."

So, kind of out of the jungle for the moment, but the report doesn't at all minimize the financial sharks swimming around the island's finances.

And then there's the daunting matter of figuring how much money is available day to day. Among other things, the report cries out repeatedly for current financial tracking of expenditures and revenues.

"[The] financial condition of the GovGuam continues to face challenges as a result of the unforeseen negative revenue impacts of the [Trump tax cuts], the additional funding needed for the Guam Medicaid program, a further review of the adequacy of cash releases to the autonomous agencies, and the lack of adequate data to present a more accurate estimate of the projected General Fund revenues for FY 2019."

So it's clear that more money is needed and perhaps a good place to start would be a serious and well supported effort to collect the oft-stated estimated $200 million in uncollected taxes and to add qualified staff and replace antiquated financial software to ensure that everyone pays. Among the recommendations:

"Additionally, an improved and concerted effort in the enforcement of tax collection must be pursued through a Tax Recovery Unit dedicated to upholding the tax laws of Guam and collecting all taxes owed to ensure and achieve parity amongst all taxpayers."

Mom and pop taxpayers may also face a new requirement to file taxes online, even if it requires they be provided with computer access to do so.

"Approximately 30% of taxpayers are already filing online. Online tax return filing reduces DRT employee workload and minimizes errors and omissions. Computer access should be provided for those taxpayers that do not have access to computers."

The report also includes such familiar but appealing recommendations to create a "one stop shop" to speed and simplify issuance of business licenses and various government permits. Also, and related, reforms to government procurement.

"It appears that time and expense could be reduced without facing exceedingly high risk by increasing all the limits for obtaining quotes. The initial $500 threshold should be analyzed along with the $25,000 limit for advertising. Furthermore, it is recommended that GSA explore the use of the “Tenda” cards to reduce paperwork and increase efficiency in the central warehouse distribution process."

In another area, the not-so-generous federal government finally passed legislation to compensate Guam war survivors for the horrors suffered during the World War II Japanese occupation. Action by the feds in 1952 effectively let Japan off the hook for such claims. Unfortunately for the Guam Treasury in 2019, they chose to fund this largesse out of Section 30 money.

"The total amount necessary to exhaust the claims pursuant to the Guam World War II Loyalty Recognition Act is unclear and may continue to reduce the available local General Fund available to the GovGuam," the report says.


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