Guam legislature passes revised budget, but nixes governor's policy changes

By Jayvee Vallejera

The bill that sets the Guam government’s budget at $1.4 billion for the next fiscal year sailed through the legislature today by a vote of 13-2, with senators soundly rejecting Gov. Lou Leon Guerrero’s proposal to place the Guam Department of Education’s fiscal management under the Department of Administration.

Two Democrats, Sens. Chris Barnett and William Parkinson, voted against Bill 1 (S-10).

The legislature also rejected a proposal in Leon Guerrero’s bill to clip the attorney general’s powers over the procurement process by raising the contract threshold for review from $500,000 to $5 million.

Senators thumbed down Adelup’s attempt to circumvent mandatory attorney general review without seeking the Office of the Attorney General’s input on the proposal.

Gov. Lou Leon Guerrero’s proposed Bill 1 (S-10), the revised spending measure, also struck out a proposal to eliminate penalties imposed on department heads for missing reporting deadlines.

Senators later defeated this proposal, saying the penalties are intended to provide teeth to reporting requirements, compelling agencies to submit the reports on time.

In his remarks after the vote, Sen. Shawn Gumataotao appealed to Leon Guerrero to sign the bill into law, but warned that the 5 percent business privilege tax on military projects may be challenged in court in the weeks ahead.

Guam’s BPT, currently at 4.5 percent, will drop to 4 percent by Oct. 1 for local businesses.

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Leon Guerrero’s budget plan had proposed retaining the BPT at 5 percent for military contracts.

Parkinson urged Leon Guerrero to veto the bill and to stick to her guns against a lower BPT, a position she maintained over the last seven years until this month.  

“You were right before on the path to getting some long-term health and longevity to our budget, and you were right when you said that we need to maintain it at four and a half percent,” he said.

Both Parkinson and Barnett expressed surprise at the vote tally.

The initial budget legislation, Bill 266-38, passed by the legislature and

subsequently vetoed by the governor, divided the chamber. It passed by an 8-7 vote.

“Perhaps the governor is right. There is no political will in this body. Now I don't know what happened after the election that's greatly changed the vote count, but I'm truly surprised by some of the votes I saw today,” he said. 

Sen. Sabrina Salas Matanane called on the Guam Department of Education and its maintenance and repair contractor to resolve their issues at the Tiyan High School and Simon Sanchez High School. Both campuses were recently closed after failing public health inspections. 

Among the bill’s important investments, said Sen. Telo Taitague, is $8.2 million for the Department of Integrated Services for Individuals with Disabilities and $7.63 million for child care subsidies. 

Taitague is proud the legislature held its ground on the 5 percent BPT for military construction projects.

The building boom associated with the military buildup is projected to generate some $33 million under a 5 percent BPT rate.

Taitague said this tax will be paid by the U.S. Department of War.

Barnett claims the 4 percent BPT rollback is a gift to 680 millionaires in Guam—a claim that Sen. Chris Duenas disputes.

Quoting the remarks of Sen. Shelly Calvo, Duenas said it is not the businesses who pay the BPT, but the people.

“People pay BPT. When they go to the store, when they take a service, whatever they do, they pay the BPT at 5 percent. This is not a tax break for the millionaires,” he said.

He pointed out that Guam Chamber of Commerce members don’t drive around in Bentleys, Rolls-Royces or Ferraris. Rather, those attending chamber lunches are “real estate people, retail folks, people hustling every day for a buck, working hard, sitting in there on those chamber meetings. Those are our families, our friends who are trying to keep their businesses alive,” he said. 

Sen. Therese Terlaje said the new budget may not give Guam Memorial Hospital what it needed, “but it gives them $21 million in the first excess funds that come in. I'm hoping that we give them this money up front in advance.”

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