Will GovGuam ever manage to balance its budget?

 

Which team has the best approach to achieve this goal?
 

 

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 Global Ratings said in its March 7, 2018 report that placed the government of Guam under credit watch, affecting about $10 million in general obligation bonds and $177 million in certificates of participation. This is annotation is pretty much a mainstay in credit rating agencies’ reports.

 

 For the continuation of our Q&A series, we asked each gubernatorial team what budget-balancing strategy they would implement if elected into office. Their responses are as follows:

 

Carl Gutierrez- Fred Bordallo (D)

 In order to balance Guam’s budget, the Gutierrez Bordallo team would first gather all facts to best understand our island’s financial position. We would enlist the assistance of professional accounting services to ascertain what the true annual budget really is. Our team would then create a conservative budget estimate based on the best anticipated revenues and not inflate the projections.

 

We would enter Adelup with a slim government, utilizing existing senior staffers to ensure qualified leadership and save thousands of dollars in high level salaries and benefits. The team would additionally work with any cash reserves to better fund our hospital, public safety, and education. We would look at existing rental agreements for exorbitant charges, and look to find ways to cut back, share or absorb redundant monthly fees by combining offices and efforts.

 

The Gutierrez Bordallo team understands that it is in our community’s best interest for the executive branch to assume control over government coffers. We would beef up DRT to collect uncollected taxes by hiring required auditors, collectors and investigators. With a constant and watchful eye over revenues and expenditures, we would be able to lessen the burgeoning debt facing generations of Guamanians.

 

 

Lou Leon Guerrero- Joshua Tenorio (D)

 Balancing the budget requires that we know the government's cash position at all times. The director of the Department of Administration will report to me daily on two specific matters: cash on hand and planned expenses over a daily, weekly, monthly, and quarterly basis. 

 

 Without a cash flow model we can trust, no one can make smart, responsible decisions with your money.

  We must also plug the leaks in our tax collection process. We will establish a Tax Recovery Unit (TRU), led by experienced professionals. TRU's mission: Collect more than $200 million in uncollected taxes owed to the people of Guam and maximize collections moving forward.

 

 The Department of Revenue and Taxation has said in the past that a single trained revenue agent collects about $1 million in unpaid taxes a year. Recently, dozens of revenue-capturing positions at DRT have gone unfilled, despite being funded by the legislature. This will not happen under our administration.

 

 We will collect what is owed and prioritize government spending where it is most needed— on health, education, and safety. When cash is scarce, these priorities will not take a back seat to anything.

 

Balancing the budget also requires reducing costs and creating efficiencies to improve how government serves our people. The first step to achieving this is admitting that government can’t and shouldn't do everything.  

 

We will examine our procurement processes to see how we can make them more efficient and reduce the number of protests that delay projects and cost the government even more money. We will develop pilot programs and private sector partnerships to increase government’s use of technology, streamline manual tasks, and promote efficiency. 

 

Rey Tenorio-Tony Ada (R)

Tony Ada and I will build on the foundation laid by the Calvo-Tenorio administration, with a focus on great achievements through improved governance and being fiscally-responsible with your tax dollars.

 

This administration’s effort to improve financial management, implement practical policies like staying within budget and growing our economy has placed Guam on a positive trajectory. As a result, unemployment is at a 25-year low, and we are on the cusp of great economic growth stemming from record tourism numbers and the military buildup. 

 

While our island’s economic position has improved substantially the past seven years, we decreased the deficit under our leadership: from $336 million in 2011 to $106 million in 2017. A budget surplus of approximately $13.4 million in FY2016 and an anticipated surplus in FY2017 didn’t happen in a vacuum.

   A balanced budget happened because our economy grew from countless efforts coming to fruition combined with good government, all without borrowing money for operations, nor stopping your refunds.

   The Bureau of Budget & Management Research projects realistic revenues using a Composite Revenue Tracking Model and applying statistical weights for each general fund revenue component, based on two prior fiscal years’ collections. We set aside 2 percent of gross revenues for deficit reduction and impose 15 percent allotment reserve on non-exempt general fund appropriations. We scrutinize personnel hiring, travel, and contracts, among other controls, all to control costs. Department of Revenue and Taxation is improving to systems and extended a tax amnesty initiative, and the Fiscal Strike Team is assessing where we can become more efficient and effective at ensuring everyone pays what’s expected. 

   We will continue our focus on fiscal responsibility and economic growth, while improving revenue collections through large investments in new systems coupled with technology.

 

Frank Aguon-Alicia Limitiaco (D)

“The recent CreditWatch report of the “structural imbalance” in the general fund is a result of a government operating beyond its means. We must take action through true leadership and reduce the costs of this government. Any reduction in government operational costs must start from the top down. For example, we have too many directors and deputy directors looking over the shoulders of experienced classified government workers who have carried this government from one administration to the next. I am confident that if you ask these men and women they will point you to the waste in this government, and we will seek their valued input on cost-reduction and cost-effective measures. 

 

We must take a hard look at streamlining government operations, consolidating duplicative functions, outsourcing, privatization, eliminating redundancy in our government, and prioritizing the core services of education, health, and public safety for the people.

 

Our community has expressed their concern with the barrage of tax increases that have and will continue to affect the day to day lives and survival of our families. We must repeal the recent BPT and sales tax increases and concentrate our efforts on identifying internal efficiencies and refining processes through a greater use of technology. This would require a strong partnership by our government's public employees, as their active participation is critical to a modernized government that will be responsive and accountable to our people. 

 

We will work to stabilize government finances by scaling government spending to actual revenue receipts; invest in the recruitment and training of revenue and taxation personnel to improve collection efforts of past and current obligations; and increase government revenues by growing Guam's primary industry, tourism, and expanding other existing industries, while pursuing external investments in these and other areas.

 

We believe that fiscal responsibility translates into sustained economic growth for our island. We are committed to strengthening our economy by eliminating government waste and ensuring fiscal responsibility, increasing public-private partnerships, empowering Guam's small business sector, implementing robust social and workforce development programs, and pursuing participation in opportunity zone programs.”

  

Dennis Rodriguez-Dave Cruz (D) 

During my tenure as senator there is frustration between the revenue projections provided by the legislature versus the executive branch. Historically, the executive branch tends to be over optimistic. So, first I believe is a budget based on realistic expectations and not one while wearing rose colored glasses. Second is a budget based on good information and sound defensible financial practices.

 

Once you set these realistic ground rules, you then set your priorities that match the desires of the people. Of course, there are the mandates, those budget items that “must” be funded due to law. 

 

 At the end of the financial exercise the picture will emerge on actions needed.  We will either have to reduce government or increase revenues. Reduction in government does not necessarily mean reduction in staff. It does however mean creating a more efficient government that still delivers the services to our people in a cost-effective manner. Increasing revenues by expanding opportunities go hand in hand with a more efficient government. Case in point, improving the operation and turnaround times for permits and licenses at the “One Stop” Center, stimulating growth not only in our private sector but also our non-profit sector.

 

 By looking at all government operations for the opportunity to enter into a public private partnership. Therefore, the true answer in achieving a balanced budget is in providing a “better” government, by reallocating spending in ways designed to improve performance.

 

 A better government also takes prudent steps in self-sustainability and shift our reliance on outside influences that have direct budgetary impacts. I would also take a long-term budgetary perspective by preparing a multi-year budget that projects financial sustainability even though the law requires this annually. 

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