Headed to recovery, Guam is submerged in an unexpected tsunami of resources it has never seen in history
The Covid era is a perplexing period that is full of paradoxes. At the onset of the pandemic, doomsayers predicted an economic apocalypse, filled with carcasses of dead businesses, emaciated homeless people in tattered clothes and a shrunken government with depleted resources.
None of this doomsday scenario seems to be happening on Guam. The island is headed to recovery, submerged in an unanticipated tsunami of resources it has never seen in history. It's raining money.
New business openings outnumber business shutdowns. Construction is booming. Despite the mass layoffs, residents rushed to the restaurants and bars as soon they reopened and raided store shelves with their unemployment benefits and stimulus checks in hand. They purchased random items, gratifying themselves like there is no tomorrow.
Notwithstanding the tourism freeze that led to a 70 percent decline in the industry’s receipts, the Covid economy has accomplished something that has never been seen before — it shrank the Guam government’s deficit into a negligible figure. Adelup’s unaudited financial statements for the end of fiscal 2020 showed the government deficit dropping to $1.57 million from $47.8 million in the previous year.
Adelup's Fifth Popular Annual Financial Report showed a surplus of $46.28 million in the general fund. GovGuam ended fiscal 2020 with $1.82 billion in total revenues. Gov. Lou Leon Guerrero claimed credit for this feat and congratulated her administration, relegating the federal cash infusion into a mere footnote.
In total, the federal government has infused $2.5 billion — equivalent to 50 percent of the island’s gross domestic product — into the Guam economy through various forms of pandemic relief assistance distributed to individuals, businesses, nonprofit organizations and individual GovGuam agencies.
Guam is also receiving reimbursements for the earned income tax credit program, a previously unfunded federal mandate.
The federal largess put cold cash straight into the people’s pockets and put food on families’ tables so that no one gets hungry.
“Guam is in a golden age of resources the island has not seen since the early 1990s,” Guam Delegate Michael San Nicolas said in his June 28 congressional address before the 36th Guam Legislature.
We expect this incredible amount of revenue to stamp out the government’s hackneyed “lack of funds” excuse for dismal performance, mediocre public health service, poor tax collection, scarce instructional materials in classrooms, dilapidated schools, lack of teachers and public safety officers.
It would, of course, be delusional to think this stream of cash will flow ad infinitum. We can’t continue to spend like one-day millionaires, for we surely know the federal government’s Covid-period generosity ends in September. The Rainy Day Fund, which was suspended last year, should have been reinstated.
There is another big picture to think about though. Public Auditor Benjamin Cruz reminded the administration that despite the government’s improved net position, a cumulative $2.4 billion debt still exists and presents a long-term effect on the government’s fiscal position.
“We cannot get it wrong, we have to get it right,” San Nicolas said. “What we do with these resources, is going to define where we go generations from now. This is neither the time for political patronage nor is it the time to shortsightedly inflate the status quo.”
After all, this is a “one-time opportunity,” San Nicolas said. “If we screw this up, we screw it up permanently."