GUAM BOND PROPOSAL NO ANSWER TO GROWING DEBT

Editorial

Pacific Daily News

HAGÅTÑA, Guam (June 29) - Governor Felix Camacho has submitted a bill to borrow US$300 million on the bond market to pay down existing Government of Guam debts -- including US$80 million for an Earned Income Tax settlement, US$119.6 million for past-due tax refunds, and US$34.9 million owed to the Retirement Fund by the hospital and school system.

Getting the government into deeper debt to pay off current debt is like using your Visa to pay your MasterCard bill - it makes little sense. According to a bond-borrowing scenario the administration gave earlier this year, it would pay the US$300 million off over 30 years - about US$23.6 million a year, for a total of about US$708 million.

The borrowing measure is especially ill advised because the government has no plan to pay for recurring costs in the future. And the government is experiencing cash-flow problems with its day-to-day expenses, evidenced by budget money still owed to the Guam Public School System, the Judiciary and the University of Guam.

How is it going to pay for next year's tax refunds? How will it fund next year's EITC payments? There are no plans to cut expenses or for generating new government revenue.

It's true that the coming military buildup will result in a boom for Guam's economy, but the government isn't going to see the bulk of that money for many years to come. We can't count on that money for immediate needs and shortfalls.

What we need is for elected officials to operate this government under realistic and frugal measures, with a focus on the priority areas of education, public safety and public health. That means reducing the size of government, including personnel, as well as furthering privatization efforts, which will take some of the strain off of government coffers while simultaneously creating private-sector jobs and tax revenue.

We also need a concerted effort by local leadership, working together in nonpartisan manner with the Department of Interior and Congress to acquire the funding needed to build up Guam's infrastructure for pending military growth. What's required is a "plug-and-play" infrastructure in place, as soon as possible, that will match what is built by the military.

June 30, 2006

Pacific Daily News: www.guampdn.com

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