GUAM GOVERNMENT MAY BORROW US$ 40 MILLION

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By Steve Limtiaco

HAGÅTÑA, Guam (April 27, 2002 – Pacific Daily News)---The government of Guam could borrow as much as $40 million from banks to pay for tax refunds, welfare programs and public education.

Administration officials have said the General Fund is expected to fall $71.3 million short of cash by the end of this fiscal year, which would cause some bills to go unpaid.

The governor already has the authority to borrow as much as $6 million, and senators plan to add another $34 million in borrowing power to help make up the cash shortfall.

The legislative Committee on Ways and Means held a public hearing yesterday morning on Bill 305, which would allow the government to borrow $24 million to pay tax refunds, and Bill 311, which would allow the government to borrow $10 million for welfare programs and the Department of Education.

The bills were debated on the session floor yesterday afternoon and placed into the Legislature's voting file.

Bill 305 would use uncollected delinquent taxes as collateral for the $24 million loan. As past-due taxes are collected, the money would be deposited in a special account to repay the loan.

According to the bill, the money that is borrowed would be used to pay tax refunds, with the priority going to refunds for the 2000 tax year and earlier.

Sen. Vicente Pangelinan, D-Barrigada, the bill's author, said the government has an obligation to pay refunds to taxpayers.

He said as much as $44 million can be collected from those who acknowledge they owe money, but who have not paid what they owe.

Sen. Mark Forbes, R-Sinajana, said that by not paying tax refunds, the government has been borrowing money from those who can least afford to lend it.

He said the $24 million loan to pay tax refunds would free up money in the General Fund so the government can pay its other bills.

Bureau of Budget Director Paul Leon Guerrero yesterday testified in support of both bills.

"It does address most of the problems and concerns we have with the current fiscal year," he said, noting that it still will not allow the government to pay all of its bills this fiscal year.

He said the goal is to make it until the beginning of next fiscal year, when millions of dollars in federal Section 30 money will be paid to GovGuam.

The annual windfall is from federal taxes collected from military personnel who claim Guam as their home.

Leon Guerrero said he hopes the governor and lawmakers will find a solution to budget problems by next fiscal year.

"Hopefully, in 2003, I'm looking at further efforts from both branches (of government) to looking at a long-term solution as far as targets for budgets and also for financing," he said.

Leon Guerrero said it is not known whether the administration will borrow the entire amount, if approved, but he said the General Fund's existing obligations -- including its debt to the autonomous agencies -- could use up the entire $40 million immediately.

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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