By Mar-Vic Cagurangan
Federal dollars will continue streaming into the local treasury while the military buildup will accelerate in the coming years, clinching steady revenues to cover the proposed pay raises for the government of Guam, an administration official said.
Edward Birn, director of the Department of Administration, said Guam is guaranteed to receive $120 million every year from earned income tax credit and child tax credit alone.
With 5,000 Marines coming to Guam, Birn roughly estimated that the $70 million in Section 30 tax remittances to the local treasury could double.
Defending the administration’s proposed $23 million appropriation to support the 22 percent increase in the general pay plan, Birn told the legislature that Guam’s economic activity has been robust in the past three years.
Boosted by federal stimulus, Birn said the government’s collections from business privilege tax and withholding taxes have allowed the government to stabilize its finances and pay tax refunds.
“Withholding taxes are collected by employers, so that is a fairly good indicator of wages in the private sector,” Birn said during a committee of the whole special session on Tuesday night.
“There are also public wages. We have been able the pay those,” he added.
Birn said he does not expect Guam’s economic activity and federal spending “in the foreseeable future to suddenly decline.”
“Certainly not enough to justify not paying these employees who have been working for the last 10 years,” Birn added.
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Senators scrutinized government resources during a special session called by Gov. Lou Leon Guerrero to tackle her pet legislation, Bill 24-37, which was sponsored by Sen. Joe San Agustin.
“If I listen to you, the world is wonderful and I think that would be a nice place to be,” Sen. Joanne Brown told Birn.
However, Brown grilled the DOA director for assurance that the revenue increase can be sustained in the coming years and that the pay increases, if implemented, will not compromise government finances later.
Brown asked Birn to provide a spreadsheet from the past 10 years showing GovGuam’s revenue versus expenditure trend.
“Up until three years ago with this pandemic, we had to address the juggling act to cover the increased cost of government,” Brown said. “I certainly do not want to see in any way that we put this pay plan in place and end up in a situation where, two to three years from now, we can’t pay it."
She noted pending bills in the legislature proposing to cut the BPT, which, if enacted into law, could take away a huge chunk from the government’s coffer.
Birn assured senators that the now recurring EITC and child tax credit remittances from the federal government have alleviated the previously perennial drain on GovGuam resources.
Besides the existing federal allotments for Guam and the potential windfall from the military buildup, Birn said the territory also stands to receive funds from the Biden administration’s infrastructure bill.
Birn, however, was unable to provide a figure for the actual amount of cash that will find its way into the government.
“We haven’t even seen the impact of infrastructure funding,” Brown said.
And while acknowledging that it was not unreasonable to expect community benefits from the military buildup, Brown said it would be difficult for the legislature to make decisions based on hypothetical revenue.
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Sen. Sabina Perez raised concerns about the potential impact of the proposed pay raises on federally-funded programs, given that federally-funded employees working at GovGuam agencies are also covered by Bill 24-37.
Perez, for example, cited a public law passed by the 36th Guam Legislature allowing the Guam Environmental Protection Agency to build headquarters in Dededo.
“The concern was that it might detract the funding to go toward pay raises,” Perez said. “We want to ensure that they know that they are able to build their capacity.”
Brin said the federal government itself is inclined to raise the salaries of federal employees.
“Each agency will go back to their grantor to make sure that the federally funded employees are fully funded and that there’s no impact on their other programs,” Birn said.
Brown, however, suggested that GovGuam cannot use a federal reference for its own policy decisions.
“We continue to compare the federal government but we’re not the federal government,” she said. “We have nowhere near the resources of the federal government. And in some cases, we’re probably going to continue to lose certain positions to the federal government because they have the resources that we don’t have.”
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