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By Steve Limtiaco

HAGÅTÑA, Guam (April 4, 2002 – Pacific Daily News)---Acting Gov. Madeleine Bordallo yesterday said a federally funded recovery plan for the island's government might be the only way to get local officials to agree upon a solution.

The U.S. Department of the Interior plans to pay financial managers to prepare a recovery plan for the government of Guam, which has been struggling to operate because of a declining economy and shrinking revenues.

GovGuam asked for money to pay for the plan, at the suggestion of the Interior Department, according to the Guam Economic Development Authority.

Guam Delegate Robert Underwood said GovGuam can adopt or reject any of the recommendations.

"It's like any other technical assistance plan," Underwood said. "Usually, consultants come out, they take a look and make recommendations. Then you decide whether to follow them or not. This is not like a financial control board."

The U.S. Virgin Islands used a grant from the Interior Department to pay for a similar recovery plan in 1999, and the territory implemented many of the plan's recommendations.

The Virgin Islands signed a memorandum of understanding with the Interior Department, which contains 13 fiscal accountability and financial performance standards.

According to a March 2002 report by the Interior Department, eight of those 13 standards had been achieved as of last October.

In his 2001 state of the territory address, Virgin Islands' Gov. Charles Turnbull said the territory reorganized government, froze government hiring and placed new restrictions on government overtime pay.

Underwood noted that some of the recommendations made in the recovery plan were impossible for the Virgin Islands to implement, such as a recommendation to seek financial assistance from the International Monetary Fund.

Underwood said U.S. territories are ineligible for such assistance.

Gov. Carl Gutierrez and lawmakers have disagreed about the size of GovGuam's problem, as well as the way it should be solved.

Gutierrez is in China as part of a 52-member Guam delegation that hopes to bring Chinese tourists and investments to the island.

"I'm very encouraged that we're getting outside help. It just seems that the bottom line here on Guam is we can't get the different players together and we're not able to get them to work together," Bordallo said.

"Right now, we're in the middle of a political season, and our timing is not good. Everybody is trying to posture and trying to make the most out of this toward their election, and that's sad."

Bordallo said the local government definitely needs help as new crises continue to surface.

"We need help. There's no question about it," Bordallo said.

"I think an outside voice and outside ideas would be more acceptable than trying to work together. ... By bringing in an outside team of people to work with us, perhaps this may be the solution."

Guam senators yesterday said any recovery plan prepared by the financial managers would be subject to review and possible changes by local lawmakers.

Sen. Lou Leon Guerrero, D-Tamuning, said she believes local officials have the political will to implement a federal recovery plan -- depending on what the plan says.

"We're going to have to look at whether we have the resources to follow it, and what will the federal government be able to provide for us to follow it," she said.

"I think probably everything is open to discussion. I do feel that some (alternatives) will be less acceptable than others. I have to say an increase in taxes is one of them."

The Legislature last month rejected the governor's proposal to increase the island's Gross Receipts Tax by 50 percent, from 4 to 6 percent, and approved its own recovery plan, which calls for a hiring freeze and which requires aggressive collection of federal aid and delinquent taxes.

Leon Guerrero said she doubts the recovery plan for Guam will recommend a tax increase, considering the island's economic fragility.

Sen. Tom Ada, D-Tamuning, said the island has few alternatives, and said he welcomes any recommendations.

However, he said any proposal could be subject to change by local lawmakers.

When asked whether he would consider government pay cuts if the plan recommends them, Ada said he opposes the idea of across-the-board cuts, but said scaled salary cuts remain an option.

For additional reports from the Pacific Daily News, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/Pacific Daily News (Guam).

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