GUAM OKS BILL FOR $10 MILLION CREDIT

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By Gene Park

HAGATNA, Guam (Pacific Daily News, April 9) –

A bill to authorize the governor to establish a line of credit of up to $10 million was passed by lawmakers yesterday morning.

However, even if the governor should sign Bill 74 into law, the attorney general yesterday said he won't be signing any loan-borrowing measures until the government's credit line issue is resolved.

The 28th Guam Legislature passed 14 bills yesterday, including Bill 74, which would authorize Gov. Felix Camacho to borrow or establish a line of credit of up to $10 million with a local financial institution using more than $11 million in stocks from the Rural Telephone Bank as collateral.

The $10 million would pay for various public health, public safety and education programs the government is obligated to offer, in addition to funding measures necessary to close Ordot Dump in compliance with a federal consent decree.

Bill 74 met opposition from Attorney General Douglas Moylan, who said at a public hearing last month that according to the Organic Act of Guam, securing a loan or line of credit in that amount would bust the government's borrowing limit.

However, the bill was unanimously passed yesterday, although Sen. Lou Leon Guerrero, a board member at the Bank of Guam, recused herself from voting on the bill.

Andy Jordanou, the governor's chief financial officer and banking and insurance commissioner, has said the $11.8 million in stock would be freed up by the sale of the Guam Telephone Authority.

Jordanou has said if the government is able to get at least a 6 percent return on its investments from the transfer of the stock to GovGuam, the interest accrued would offset the interest owed on the $10 million credit, Pacific Daily News files state.

The Rural Telephone Bank stock valued at $11.8 million has been held as security for a Guam Telephone Authority debt, but now that the utility has been sold, and because part of the proceeds of the sale will pay the loan, the stock eventually will be transferred to the local government's ownership.

Bill 74 was introduced by request of the governor, but even if the bill becomes law, Moylan yesterday said his office won't be signing off on any loan borrowing measures.

"At this point, it's a well-known fact that our office will not sign off on any further borrowing until the elected leaders follow the law and perform an appraisal so that taxpayers are not illegally charged taxes and have to bear the burden of ruinous borrowing," Moylan said.

In 2003, the attorney general and the Camacho administration went head to head all the way to the federal court system to decide whether the government is able to borrow money on the bond market.

The Legislature's authorization of the governor to borrow up to $418 million on the bond market in 2003 was taken to the Supreme Court of Guam last year by Moylan. Moylan argued that the government would bust the debt ceiling set by the Organic Act, according to Pacific Daily News files.

But there's been a major dispute about whether the debt ceiling should be set based on the full value of the island's real property or on its taxable value, which is only 35 percent of its full value. The Organic Act is not specific on that issue. It sets the limit at 10 percent of the "aggregate tax valuation," but does not define that term.

A decision as to the real meaning of the statement has yet to be reached by the federal court in Honolulu, files state.

"I will not be signing any loan borrowing measures until the appraisal is done, and then the question of how you value the property is answered by the federal courts," Moylan said. "If the governor is going to borrow any money, the attorney general's signature is required."

Pacific Sunday News reporter Natalie J. Quinata contributed to this report.

April 11, 2005

Pacific Daily News: www.guampdn.com

 

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