GOVGUAM DEEPER IN THE HOLE THAN ESTIMATED

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Governor questions previous administrations spending

By Oyaol Ngirairikl HAGATNA, Guam (Pacific Daily News, Jan. 12, 2011) – The government of Guam is looking at a cash shortfall of about US$116 million higher than an estimate announced last month of approximately US$96.5 million, according to Gov. Eddie Calvo's office.

The shortfall is about US$71 million more than the estimate of approximately US$45 million by former Gov. Felix Camacho's administration.

The shortfall is a result of a host of expenses that weren't budgeted and that have adversely affected the government's cash flow, such as the federal court mandate to pay about US$15.9 million for improvements to mental health services, which started last year and is expected to be paid by May.

Benita Manglona, acting director of the Bureau of Budget and Management Research, said the government has to cut its spending.

"We're living well beyond our means," she said.

In an effort to address the cash crisis, Calvo told his cabinet, via an executive order issued Monday, to find ways to cut costs.

Troy Torres, the governor's spokesman, said all directors are required to submit cost-cutting and revenue-generating recommendations to the governor by the end of the month.

As a result, Guam's Department of Labor won't be getting a deputy director or another deputy director, who had oversight of Labor's Agency for Human Resources and Development. The two positions will save the agency about US$125,000 a year, according to the department.

Leah Beth Naholowaa, acting director of Department of Labor, said she has also set up her office with a computer, desk, chairs and other equipment scavenged from other offices in her department.

"I even brought in my own printer so I could print documents I needed, she said. It's all part of our cost containment."

She said she told the governor she could probably do without a deputy director.

"I have a lot of personnel to help me out and I think they're more than capable of handling the office, she said. I looked at the personnel and my staffing pattern, and I figured I could use that deputy director's salary to hire people in other areas that I know are critical because, for example, the (military) buildup is coming and I have to have enough people to enforce the law."

She said she'll be reviewing the other positions in her agency.

"We need to take a second look at them and see if we can consolidate some of the work, see if they align with our needs locally and federal requirements, and determine what's absolutely needed and what we can do without," she said.

Naholowaa confirmed she, like other agency directors, has put a hold on filling locally funded positions.

"All the announcements that went through before I came here, and all the (new jobs) that were anticipated, will be on hold until we get to a position where we know for sure that we can afford to hire people," she said.

GovGuam started the new fiscal year floating US$2 million in checks because of a negative cash balance at the end of fiscal 2010, which ended Sept. 30, 2010.

Since then, officials said the financial situation has grown bleaker the government now is looking at a possible US$126 million in liabilities, or unbudgeted expenses.

"We can't afford it. If these were mandated to be paid today, we wouldn't have the cash for it, said Gener Deliquina, Department of Administration director. The list of options is getting shorter, and I know the governor does not want to see payless paydays or a shutdown."

According to the new administration, which took office on Jan. 3, the financial information is based on data provided by the administration of former Gov. Felix Camacho.

Members of Calvo's fiscal team met with the governor yesterday to report on their progress in confirming the island's cash situation. According to the financial team, the Camacho administration, which was supposed to withhold 3 percent from the top of agencies’ budgets, didn’t do that.

"To exacerbate the fiscal situation, the previous administration released whole allotments for the first quarter of this fiscal year, Oct. 1 to Dec. 31, 2010," a news release from the governor's office stated. This means, despite the recognized fiscal situation since last summer and the knowledge of the impending shortfall, the government was spending at its full rate," the release added.

In the past several years, as part of cost-saving measures, the Camacho administration had cut a percentage from budgets and had placed the money in reserve, which forced agency heads to cut costs.

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