GUAM MAKES ANOTHER RUN AT BALANCED BUDGET

Editorial

Marianas Business Journal

Marianas HAGATNA Guam (Jan. 31, 2011) – In Guam, it's almost always predictable. A new administration comes in, inherits a huge deficit and, naturally, blames the previous administration. Such is the case of the Calvo administration, which projects the government deficit to reach US$61 million this year.

It seems like an endless cycle and it makes us wonder if nothing is learned from past mistakes of every previous administration.

In fairness, we have to acknowledge the complexities that contributed to the shortfalls incurred by the Camacho administration. These include financial obligations mandated by the courts such as fines associated with the solid waste consent decree, the settlement of the earned income tax credit class action, the payment of cost of living allowance owed to government retirees, and the requirements under the permanent injunction imposed on the Department of Mental Health and Substance Abuse.

Now the legislature is tackling Bill 3, which proposes the creation of the Guam Fiscal Responsibility Reform Commission, whose task is to identify the loopholes in government's cash management and to establish a policy that would provide medium-term and long-term fiscal sustainability.

But haven't we gone through this entire process of identifying the problems and proposing solutions? Yes, we have repeatedly, in fact. We have long established the need for the government to observe meaningful spending cuts, restrict official travels, and deflate the bureaucracy by consolidating redundant agencies and abolishing useless offices.

But the government seems to have a problem with following through.

In 2006, for example, the 28th Legislature under then Speaker Mark Forbes launched the Leadership Summit, which engaged every government agency, business leaders and community representatives in a grand plan to close the deficit and maintain a balanced budget. The fervor to achieve this goal fizzled out, and so did the proposed solutions.

In 2008, the 29th Legislature created the Legislative Tax Review Commission tasked with detecting the tax loopholes and finding ways to enable the government to raise more tax revenues. Like the Leadership Summit, the tax commission died a natural death.

This time, Gov. Edward B. Calvo has endorsed the proposed creation of the fiscal reform commission, saying it "will be a step in the right direction."

We agree. But rhetoric is useless unless supported by a strong political will and a credible, solid plan for how things should be run.

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