Governor frowns on budget law; senators say it's more realistic than Adelup's proposal
Gov. Lou Leon Guerrero said the 2021 budget law approved by the Guam Legislature “represents a clear and present danger” that would force her to cut some services, but senators maintained it was more realistic than what Adelup had proposed for the coronavirus-stricken fiscal year.
During an emergency session Tuesday, senators voted 12-2 to override the governor’s veto of Bill 282-32, which pegs the election year budget at $945.3 million. The legislature thumbed down the governor’s substitute bill, which sought an additional $7 million.
In a statement following the vote, Leon Guerrero said the legislature-approved budget would jeopardize some of the most basic services at the Department of Public Health and Social Services.
“It will force us to cut services for our elderly, our foster kids, vulnerable adults, and our Covid surveillance and contact tracing unit. And it will likely mean the reduction of hours at the Judiciary of Guam,” Leon Guerrero said.
“Our job is to manage these consequences as best we can. We fought for a better budget, now we will seek amendments that make this budget worthy of our people and the healthcare heroes that serve them,” she added.
Sen. Joe San Agustin, chair of the appropriations committee, stood pat on the legislature’s action, saying the override “is a clear message from the body that our government must take austerity measures.”
The government, he added, must adjust its finances and operations in the wake of uncertainties posed by the Covid-19 pandemic that sent Guam’s economy to a standstill.
“We need to cut government costs, support our private sector, and live within our means. That is exactly what Bill 282-35 does,” he said.
San Agustin said Bill 282 is within the most conservative projection of revenues anticipated for 2021.
“Cutting $64 million was not easy to do, but collectively, we had to do just that, especially now with all the unknowns that this pandemic has brought on our people and island,” San Agustin said.
Nevertheless, he said Bill 282-35 guarantees all government employees, programs and services and provides flexibility by allowing many departments and agencies to use lapse funding from FY20.
“I have shared that this budget was by no means easy. The Office of Finance and Budget along with my staff worked tirelessly to ensure we made the best projections for revenues,” the Democratic senator said.
“Should the revenues be above our projections, I am committed to supporting our agencies who need help by introducing legislation to amend their appropriation levels. Until that time, I am optimistic that we will be able to keep our government operating,” he added.
Although not completely comfortable with Bill 282-35, Republican senators said it was a relatively more acceptable bargain than what Adelup had in mind.
Bill 282-35 was the “lesser of the evils,” Sen. James Moylan said. “While I continue to contend that because of our economic conditions, projections outlined in the legislation are well above what is anticipated in fiscal year 2021, I also addressed the realities of what may have occurred if the override was to have failed.”
Had the override failed, Moylan said, the government would have either faced a shutdown or the Democratic-led legislature would have come up with a more unrealistic budget.
“If given the opportunity to serve in the next legislature, and considering a possible shift in its composition of the body, additional measures may be enacted to assure that if collections don’t meet projections by a certain threshold, that a realignment plan can be established,” Moylan said. “In the meantime, all lawmakers need to take a routine analysis of our fiscal state throughout FY21.”
Minority Leader Telo Taitague said Bill 282 may not be as a conservative as she wanted but it was a compromise budget.
“Unfortunately, the governor wanted this legislature to write an even bigger check despite the realities facing our people, as more than 30,000 Guamanians are out of a job or have less hours to earn money to support their families,” Taitague said. “Our tourism industry is closed for the foreseeable future, small businesses are struggling to survive, and other sections of our limited economy are on lockdown indefinitely.”
While Adelup and the legislature agree on the need to go after more Medicaid funding amid the Covis-19 crisis, Taitague said legislature’s Office of Finance and Budget was unable to justify revenue projections.
“Accessing additional Medicaid resources can still be done as Bill 282 grants the governor transfer authority to reprioritize funds as she deems appropriate,” she said.
Sen. Wil Castro, said relying on federal aid is not an economic development strategy.
"FPUC is great. It is desperately needed but we all know that this program is temporary. Until such time we revive Guam’s private sector we will continue to see declines in our tax base," said Castro, congressional candidate.
Castro noted that the fragility of the economy is worsened because of a protracted lockdown and strict PCOR1 protocols.
"Not to mention there appears to be no economic development strategy and there is definitely no fiscal realignment plan," he said. "During yesterday’s second round of discussions for the governor’s budget bill, I offered up the opportunity for the administration to consider coming back to the body to request for a supplemental budget assuming all of BBMR’s projections were met and there is more money to be appropriated. I didn’t get a clear reading based on the panelist’ response if this was a desirable alternative or not."
Castro warned against the danger of over-projecting revenues. "It may lead to a cash shortfall for payroll or compromise payments to vendors. As we have seen in past administrations, over projecting revenues in a declining economy has a direct negative effect on cash allotments to agencies and other entities that have banked on more money to support its operations and other initiatives," he said. "Worst, a cash shortfall will directly impact tax refunds."
Speaker Tina Muna Barnes explained her vote against the override.
“It was brought to my attention that eighty individuals from the Department of Public Health and Social Services will be furloughed – in the middle of a public health emergency,” Muna Barnes said.
She said Bill 282 does not have adequate allotment for Medicaid in the middle of a public health emergency.
“While many are out of jobs, having lost their income and their health insurance, we cannot take away an individual’s fundamental right to live – we need to do better and at least give them a fighting chance,” the speaker said.
“Times are tough, and while I respect the wish of this body – I still look forward to working with each and every one of my colleagues, as well as this Administration, to ensure that we meet the mandates of the Organic Act of Guam to provide for the health, safety and education for our People of Guam. We will overcome this – but we really need to do this together.”