By Mar-Vic Cagurangan
Gov. Lou Leon Guerrero defended her record at a critical juncture of her second term in Adelup, declaring Guam’s recovery in a bid to counter her critics’ “enduring pessimism” and denouncing “meanness in politics.” “Tonight, I am pleased to report that Guam is building a new era of prosperity,” Leon Guerrero said in her state of the island address delivered Wednesday night before the 37th Guam Legislature. While the Democratic governor’s first four-year term was challenged by the Covid pandemic that put the island’s economy on pause, her administration received an unprecedented stream of federal dollars over the past three years, on top of the Department of Defense’s investments in the military buildup on Guam. “Despite the enduring pessimism of some public officials, our economy is recovering, tourism is rebounding, our government finances are strong, and those who predicted Guam’s demise are finding out-- that just isn’t so,” Leon Guerrero said. “After nearly two generations of a government in deficit, my administration has delivered revenues that exceed expenditures every year that we have been in office,” she added, attributing the financial stability to her administration’s fiscal policy.
Local economists estimated that a total of $4.5 billion— consisting of $1.9 billion in rescue and stimulus grants under two sets of coronavirus relief programs combined with a barrage of federal spending not related to the pandemic—streamed into the Guam economy in 2021 alone.
“We flatlined our debt, increased our credit rating, vendor payables are on time, and cash allotments to our public schools, the Guam Community College, and the University of Guam are paid in full,” the governor said.
Leon Guerrero also pledged to support Sen. Joe San Agustin’s bill proposing to renew the Local Employer Assistance Program with an additional $20 million for local businesses.
At the same time, the governor appealed to the legislature to keep the business privilege tax at 5 percent.
There have been recurring proposals from the legislature and repeated appeals from the business sector to roll back the BPT, which was raised from 4 percent in 2018 as part of the Calvo administration's strategy to make up for the revenue loss resulting from President Trump's Tax Cuts and Jobs Act that dramatically cut taxes and eliminates certain tax breaks.
“But, historically, about 85 percent of all Guam businesses pay a BPT of less than 5 percent,” Leon Guerrero said. “Lowering the BPT for the top 15 percent of business earners would mean removing more than $65 million in general fund revenues annually."
These revenues, the governor said, are paid by federal contractors and other businesses “benefitting from the military buildup, which are among the wealthiest entities licensed to do business in Guam.”
The governor did not address the Office of Public Accountability’s report that millions in revenue taxes have fallen through the cracks due to lapses in the Department of Revenue and Taxation's monitoring of the federal contractors undertaking military projects.
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“What makes Guam a better place to live and do business? Safer schools and safer streets, or yet another tax cut for some of the nation’s largest defense contractors?” the governor said. She told senators that keeping the BPT at its current rate would allow Guam to have better schools, protect the community against crime and mitigate the drug crisis on island. The governor also asked the legislature to “protect the existing appropriations” to the Department of Education, Guam Police Department and Guam Behavioral Health and Wellness Center. She also urged the senators to tap into the revenue surpluses for the repair of schools and reinforcement of the fight against drugs. “Taking these three steps now that we have eliminated the deficit will secure realistic funding that will repair classrooms, we can be proud of, and provide the law enforcement officers and counselors we need to truly combat crime,” the governor said. ADVERTISEMENT
While Guam’s economy has been dependent on tourism and the military, the governor said new industries have been created. “Together we have planted the seeds of a new and diversified economy, laying the initial groundwork for additive manufacturing and transshipment, telecom, and modern sustainable aquaculture,” she said. “Now, a passion project born at a kitchen table can become the business that generates income for your family. Jewelry and fashion designers, candle makers, home bakers, and other Guam-branded goods are being made right here at home,” Leon Guerrero said, referring to the Guam Unique Merchandise & Art or GUAM program, which builds a stronger community of local entrepreneurs. “Last year alone, we licensed 90 home-based businesses. And we awarded hundreds of thousands of dollars in grants and micro-credits,” she said. "Bottom line: If you have the dream and the drive, we will invest in you."
The governor also voted to greenlight increases in government employees' pay.
"I don’t care whose name you put on it. Send me a clean bill that appropriates for increases in the General Pay Plan before April and I will sign it.
Click here to read the full text of the governor's address.
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