Executive officials defend proposed takeover of Guam education agency's fiscal management

Senators weigh changes in revised GovGuam budget bill

By Jayvee Vallejera

Administration officials defended the governor’s proposal to place the Guam Department of Education under the accounting purview of the Department of Administration, assuring senators that the education agency supports the transfer of fiscal control.

Edward Birn, administration director, said the proposed arrangement is doable but may require staff realignment by moving some education employees to the administration department to handle the additional workload.

Edward Birn

Birn pointed out that while most of GDOE’s funds come from the general fund, its internal financial systems are always being challenged due to an outdated financial system and a lack of personnel to report financial figures on time.

“And because they're a major part of the general fund, their numbers have to be included and considered” in government-wide audits, Birn told senators at the legislature’s committee of the whole session on Wednesday.

“The purpose is not to remove financial decisions from GDOE. It is simply to provide better information with which to make those decisions,” Birn added.

Senators have returned to the floor to discuss the governor’s revised budget, Bill 1 (S-10), after vetoing Bill 266-38.

Bill 1 (S-10) raises revenue projections by $18 million and adds 11 new sections, including the fiscal takeover of the Guam Department of Education.

Those changes are now being subjected to a fine-toothed comb at the legislature, with senators grilling officials of the Bureau of Budget and Management Research, Department of Administration, Office of Finance and Budget, Department of Revenue and Taxation and Guam Economic Development Authority.

The proposed transfer of GDOE’s fiscal management to DOA raised the question as to who would have budgetary authority over the department.

Responding to Speaker Frank Blas Jr.'s question, Birn said the proposed bill was silent on this and that the legislature has this opportunity to determine where to draw the line.

With regard to the revenue levels, Budget Director Carlson Lester said the governor’s revised budget only increased the revenue forecast for corporate income tax by $18 million and allocated that amount to seven areas.

“Everything else in your revenues, every other appropriation, has not changed. Only corporate is going up by $18 million,” he told the senators. 

“So all the hard work that you put in for the passing of all the revenue levels for the general fund, the special revenue fund, all that stuff has been maintained," he added.

Abigail Oficiar, supervisor at the budget bureau, said that as of June tracking, the government has already collected $130 million in corporate income tax and expects to collect a total of $161 million by the end of the current fiscal year.

“There's confidence that for the remaining three months, we will continue to collect that level,” she said, adding that the government expects to earn that same revenue in fiscal 2027.

Oficiar said the $88.6 million in additional revenue would be allocated to Guam Memorial Hospital, the Department of Corrections, Guam Police Department, Guam Fire Department, Department of Public Health and Human Services, Department of Integrated Services for Individuals with Disabilities and Division of Youth Affairs.

A side-by-side comparison prepared by the legislature between the vetoed bill and the governor’s revised spending plan shows that special fund revenues ($215,369,309), federal matching grants-in-aid ($213,485,405), the tax refund provision ($25,359,760), debt service continuing appropriations and the 15 percent gubernatorial transfer cap are identical.

Chris Barnett

For Sen. Chris Barnett, the biggest difference is the governor’s new position on business privilege tax.

“It appears the governor has thrown in the towel on the battle” over reducing the business privilege tax from 5 to 4 percent, he said.

Barnett noted that Leon Guerrero initially opposed lowering the BPT, saying it would impact critical services that serve Guam’s most vulnerable populations.

“With the BPT reduction, I'm just not sure if there are any funds left on the table not just to maintain the status quo, but also to fund improvements," he said.

The BPT is scheduled to drop to 4 percent by Oct. 1, 2026.

ADVERTISEMENT

Sen. William Parkinson maintained his objection to BPT reduction. “Any budget that cuts to 4 percent I am opposed to, and I ask my colleagues to oppose as well,” he added.

Pointing out that the Big Beautiful Bill cut several federal funding programs for Guam, Parkinson said he was concerned about the damage it would inflict on the territory.

Carlson agreed that GovGuam needs to figure out a way to mitigate the damage from these cuts.

Parkinson reminded that the BPT was increased to 5 percent in 2018 in the first place due to massive federal tax cuts that affected Guam.

“That was so severe that we had the previous governor parking hearses outside the legislature to staunch the bleeding from that loss of revenue,” he said.

Parkinson said the same provisions that caused the federal tax cuts have now been made permanent. 

“The original wound that caused us to raise revenues in the first place is still there, still plugging a hole in our revenues,” he added. 

With Guam receiving $22 million for childcare subsidy instead of the full $29 million needed to run the Bureau of Child Care Services, Parkinson suggested that the island should "make the case to the federal agencies that there is a shortfall" instead of relying on the local government to bridge the $7.6 million gap.

Oficiar replied that the $7.6 million in the budget plan was designed to ensure that there would be enough funding for the program.

Sen. Chris Duenas said the legislature would not scrutinize the bill chapter by chapter, as this has already been done under Bill 266, which had been vetoed by the governor. 

He said the differences between the two bills have already been enumerated through the Governor's Office and the Office of Finance and Budget. 

Subscribe to

our digital

monthly issue