GUAM LAWMAKERS DODGE NEEDED BUDGET CUTS

Commentary

By Ben Pangelinan

SAIPAN, CNMI (Marianas Variety, May 8) – After eight weeks of arduous sessions, actually only one week if you take out the recesses, the Guam Legislature finally adjourned the mid-year session and passed Bill 74. The bill resets revenues at US$463,767,052 for the general fund and US$104,680,133 in special fund collections that are also appropriated to various agencies and programs of the government. The Legislature is spending every penny of it for current year operations.

When we started the process of revising the fiscal year 2007 budget, we had three objectives. The first was to adjust the revenues to reflect the current trends in real time collections versus the projected revenues adopted when the budget was originally passed sometime in September 2006. It seems the looming election could not be reconciled with the reality of the real collection back then. Recognition of the reality then would have required a cut in budget or an increase in taxes or fees and meant an agitated voter going into an election. I can truly say that no one knows the effects of dealing with such harsh realities better than I do.

Given such realities, the first thing that the Legislative majority did was reject the governor’s proposal of a 1 percent increase in the gross receipts tax, now called the business privilege tax. Read their lips, no new taxes. See their hands rise for countless new fees, instead.

Faced with making real cuts to spending if the Legislative majority accepted the administration’s new revenues of US$434 million for the general fund, we spent weeks trying to justify higher numbers. We spent a whole week demonstrating that collections in the first five months for fiscal year 2007 were exceeding the actual collections of the same months for fiscal year 2006. Of course they were, because we only collected US$419 million for fiscal year 2006. The problem then as it is now is that the revenues were estimated at US$447 million.

The second objective was to cure the structural imbalance of the budget. The new fangled term was really the old fashioned practice of "we are spending more money than we are collecting." We had to bring in line our revenues to resolve our structural budgetary deficit. In other words, if we do not raise more money, we must reduce costs. Hence, the move to increase fees; whether it made sense or not.

Consider one entity, whose budget is a little over US$300,000 per year. The fees it charges and collects from persons requiring the services of this entity is about US$10,000 more than its budget. Yet, the new fees passed in Bill 74 doubles the fees so that they now collect over US$620,000 per year. This is cost recovery and then some. It now seems that when the Legislature rejected the Governor’s request for authority to borrow from the banks, instead we will borrow from the people by charging them double the fees for services that in reality is fully paid for with the current fee cost. Moreover, unlike the bank loan, we do not have to pay it back. Just one example of how Bill 74 is replete with fee increases that are out of line with the cost of providing the service.

Our final objective was to make structural changes to the cost of running the government. In this, Bill 74 failed miserably. No permanent changes to the cost of operating our government are to be found in this bill.

Nor were there hard and tough decisions.

Stay tuned. We have a second bite at the apple in the fiscal year2008 budget.

[Ben Pangelinan is a senator in the 29th Guam Legislature and a former speaker now serving in his seventh term in the Guam Legislature.]

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