It was quite amusing if not woeful to watch. Gov. Eddie Calvo tried all sorts of scare contrivances to convince the skeptical senators that the sky was falling.
First, the Guam Memorial Hospital’s accreditation was supposedly at stake — a claim that Speaker Benjamin Cruz and Sen. Dennis Rodriguez briskly whacked. The Joint Commission report “is not an issue of funding” and had “nothing to do with any infrastructure plan that they want to implement,” the speaker said. “If you want our help, tell us the truth,” Sen. Rodriguez said.
Then, there was S&P placing GovGuam under credit watch, affecting about $10 million in general obligation bonds and $177 million in certificates of participation. While the rating agency noted the $67 million revenue hole created by the federal tax cuts, it didn’t fail to cut and paste the mainstay footnotes from its previous credit reports. “Guam has a history of structural imbalance in its general fund, including recurring deficits, a very large negative general fund balance, and massive long-term liabilities,” S&P said. Which explains why GovGuam is susceptible to self-sabotage. Even if there was no federal tax cuts to point to as the culprit, GovGuam is prone to financial meltdowns.
How the administration managed to switch — in the Orwellian fashion — the figure for federal tax cuts-related revenue shortfall was a puzzle to Public Auditor Doris Flores-Brooks. Speaking as a panelist at the recent Guam Women Chamber of Commerce’s tax forum, Brooks recalled that the Office of Public Accountability’s estimated shortfall for the remainder of the fiscal year was pegged at $47 million – not distant from the $48 million projected by Budget Director Lester Carlson before it curiously bloated to $67 million in a matter of weeks.
Then came the other monsters: furloughs, 32-hour work week, police precincts and fire stations shutdown, all accompanied by hollow-ringing governmentwide cost-cutting measures.
To wit: Freeze hiring for vacant positions. If these positions have been vacant for a while, that means there is no current cost attached to them, ergo, there is nothing to cut. If an agency has been surviving without filling these vacant positions, then perhaps, then can be done away with after all.
Elimination of nonessential positions. Why is the government appropriating funds for nonessential positions to begin with?
Implementation of the Energy Conservation Plan “beginning April 1.” If there was such as plan, why has it not been implemented before?
Travel restrictions—except when necessary. Who defines “necessary” and what are the parameters?
Some of these cost-cutting strategies, ironically, only reveal how GovGuam becomes a financial blackhole.
The governor’s initial proposal to raise the business privilege tax from 4 percent to 6 percent was greeted with legislative resistance, bringing about the usual political histrionics — a made-for-voters show in this election year. Senators had stalled action for as long as they could before finally passing a compromise measure to raise BPT to 5 percent and impose a $2 sales tax on all goods and services.
Despite its passage, the new tax law remains a work in progress. Sen. Regine Biscoe-Lee has filed an amendment bill to exempt certain commodities. Sen. Michael San Nicolas is the new law’s repeal before it rolls into effect. Thank democracy.
The saga will continue. As S&P said, financial crisis in GovGuam is a recurring theme. It is Guam’s national anthem.
For the first in our Q&A series toward the November elections, we asked each of the gubernatorial candidates how they would manage a fiscal each if they were governor. Frank Aguon would overhaul the government and prioritize spending. Carl Gutierrez would eliminate nonessential political hires. Dennis Rodriguez would institutionalize public-private partnerships. Ray Tenorio would outsource certain government tasks that the private sector can do better. Lou Leon Guerrero did not respond. (Read full story here)
Mar-Vic Cagurangan is the publisher of Pacific Island Times