Guam legislature OKs $1.36B budget; spending bill includes $39M in tax cuts

By Mar-Vic Cagurangan

Capping off the grueling two weeks of debates and compromises, the Republican-led 38th Guam Legislature today passed the government of Guam’s $1.36 billion budget for fiscal 2026, with $39 million in tax cuts as its centerpiece.

A two-tier rollback of the business privilege tax is one of the most salient features of S-Bill 44, the substitute version of Gov. Lou Leon Guerrero’s budget proposal.

From the current 5 percent, the BPT rate would drop to 4.5 percent effective Oct. 1, and again down to 4 percent by Oct. 1, 2026, to reflect the pre-2018 level.

The substitute budget measure pegs the BPT revenue at $351 million, which is $39 million short of the $390 million projected in the original bill submitted by the executive branch.

The spending measure passed the legislature by a vote of 11-4, with four Democrats—Sens. Chris Barnett, Sabina Perez, Therese Terlaje and William Parkinson—giving it the thumbs down.

The bill is now headed to the governor's desk, where it has not been well-received at this point.

The governor lambasted the substitute budget as “a scam, built on phantom money and false promises.”

“The Republican-led legislature chose lining the pockets of select millionaires over our kids’ classrooms, our hospital beds, and families just trying to get by,” reads a statement from the governor’s office.

The governor has been opposed to BPT rollback, maintaining that 90 percent of Guam businesses already pay less than the 5 percent.

“Republicans rejected nearly every compromise amendment that would have simply required millionaire corporations to pay their fair share,” the governor said.

The two-phased BPT reduction, proposed by Sen. Chris Duenas as an amendment, was a compromise to Sen. Shawn Gumataotao’s initial 4 percent proposal.

Duenas’ amendment marked the first successful attempt to roll back BPT—a recurring Republican proposal—since it was raised in 2018, supposedly as a temporary measure to fill the gap created by Donald Trump’s massive tax cuts implemented during his first term in 2017.

“The passage of this budget is a win for the people of Guam and I am especially encouraged by the bipartisan support it received,” Speaker Frank Blas Jr. said.

However, he said the budget deliberation established that GovGuam cannot continue to rely heavily on temporary federal funds or the military buildup.

“We must actively identify and develop new, sustainable revenue streams that will support our healthcare system, strengthen our schools, and ensure public safety for future generations,” he said.

Duenas said S-Bill 44 “is not just a collection of numbers; it's a statement of values and through collaboration and compromise we have delivered a plan that reflects priorities for our people.”

Gumataotao said the legislature took one step forward to earn the public’s trust in government by restoring the 4 percent BPT.

“It took seven long years for a majority of senators to finally repeal the Democrat-led 34th  Guam legislature’s decision in 2018 to increase the BPT from 4 percent to 5 percent permanently,” he added.

Sen. Shelly Calvo said the bill was “shaped with care.”

“There's no perfect budget. No single document can meet every need to resolve every tension,” Calvo said. "But I recognize that this is a good compromise. It reflects a sincere effort to balance fiscal responsibility with moral clarity.”

The Democrats who voted against the bill viewed it from a different window.

“They don't want you to focus on what this bill doesn't do. So they lie to you about what it does,” Sen. Chris Barnett said. “Let me tell you what it doesn't do. It doesn't provide enough money for your tax refunds. The administration was very clear: we are going to run out of money to pay your tax refunds. This bill does nothing for Guam Memorial Hospital.”

He said the $35 million appropriation for GMH would come from “imaginary funds—fake money for the real problems.”

Sen. Therese Terlaje agreed that the tax revenue, which the government stands to lose, could otherwise help GMH and the Guam Department of Education.

“The reduction of the BPT for the largest of our businesses forces the FY2026 budget to rely on about $49 million in excess revenues just to maintain, not improve, basic services and to subsidize Guam Visitors Bureau,” she added.

Describing the approved budget bill as a MAGA-driven agenda, Sen. William Parkinson said the BPT cut would “only cost the people of Guam $120 million in lost services to the people who need it most. Does anyone believe that we are going to be able to solve more problems in the coming years with less money?"

Subscribe to

our digital

monthly edition