Report Reveals $46.9 Million Deficit For Guam General Fund

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Territory facing shortfall despite $552.4 million in revenue

By Louella Losinio

HAGÅTÑA, Guam (Marianas Variety Guam, July 4, 2012) – The Government of Guam General Fund had an operational deficit of $46.9 million in 2011 due "primarily to an overestimation of budget to actual revenues," according to a report released by the Office of Public Accountability (OPA).

The deficit occurred despite GovGuam posting the highest recorded revenue in 14 years – a revenue collection of $522.4 million, which is an increase of at least $56.2 million from figures posted in 2010.

According to the OPA report, General Fund expenditures in 2011 totaled $589.4 million, exceeding the revenues by $46.9 million. Increases in operational expenditures, as cited by OPA, were primarily "due to increases in debt service, unbudgeted items, and the recognition of the capital lease acquisition of the new John F. Kennedy High School."

In terms of cumulative deficit, the figure decreased from $323.3 million in 2010 to $303.1 million in 2011 due to the Guam Department of Education’s "operational surplus of $58.9 from unspent American Recovery and Reinvestment Act (ARRA) funds and $6.2 million surplus in other miscellaneous funds."

Increased tax collections also boosted General Fund revenues. According to the report, income taxes increased from $239.2 million in 2010 to $282.3 million in 2011 and collection of gross receipt taxes also increased by $11.4 million.

Increases in tax collections, as cited in the report, "may be attributed to numerous ARRA-funded projects, increased military activities, and a decrease in the unemployment rate. Additionally, public sector autonomous agencies as well as the mandated law enforcement 20 percent salary increase have substantially contributed to higher income taxes.

The General Fund is the fund into which all government revenues, not otherwise restricted by statute, are deposited and from which appropriations are made, according to information posted on the Bureau of Budget and Management Research. Sources of General Fund revenues include income taxes, business privilege taxes, and federal sources.

Debt service increased by $13.6 million from $43 million in Fiscal Year 2010 to $56.6 million in FY2011. The increase was due to the Layon Landfill General Obligation and Limited Obligation (Section 30) Bonds, 2009 Series A. Proceeds from the bonds were used for the construction of a new landfill.

In September 2010, GovGuam issued $65.7 million in Series 2010 Certificates of Participation to finance the new JFK High School. Annual lease payments of $6.7 million started in December 2010.

Another $4.5 million was paid in the form of tax credits for the Tiyan facility used to house JFK students in 2011. The $4.5 million lease payment was also unbudgeted. The Tiyan facility is currently being used by Untalan Middle School.

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