Diluted Guam Cost-Cutting Bill Passes Into Law

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Possible initial savings of $72 million cut to under $1 million

By Brett Kelman

HAGÅTÑA, Guam (Pacific Daily News, Jan. 1, 2013) – A watered-down version of Adelup's spending cuts bill has been allowed to lapse into law, but Guam Gov. Eddie Calvo said the government is still approaching its own fiscal cliff.

The new law slashes the salaries of government of Guam unclassified and elected employees, but it doesn't make the deeper cuts originally proposed by the governor. GovGuam's unbalanced financials need severe treatment, and this law falls far short, Calvo said.

"While Public Law 31-279 significantly impacts the livelihood of many employees, its complete impact measured against what is needed to be done is wholly insignificant," Calvo wrote in a letter to the Legislature. "If I may, it is like Neosporin for the gangrene."

Calvo did not sign the bill but he didn't veto it either. Instead, after about two weeks sitting idle, the bill automatically became law.

'Gutted'

The original version of the spending cuts bill would have saved up to $72.7 million -- mostly through an early retirement program -- according to the administration. Earlier this month, senators chipped away at the proposed cuts, leaving little of the original bill.

Calvo said his bill was "gutted," and that senators reduced his proposed cuts to less than $1 million.

The revised legislation replaced the proposed early retirement program with a mandate to analyze retirement reform options. Other proposed cuts were replaced with a requirement to form a cost-cutting commission. One such commission was created in 2007 but never empaneled.

Rejection

Calvo wrote that the solutions proposed in his original bill were "all standing in the way" of an "involuntary reduction of force" -- or government layoffs.

"Your rejection of the bottom line in cuts needed has left me with no choice on the matter unless the new Legislature very quickly reconsiders the essence of Bill 507 in the first quarter of its session," Calvo said.

Salary cut

In addition to diluting the spending cuts, the Legislature also added the salary slashing provision, which has drawn criticism from both other branches of government.

On Dec. 14, lawmakers added a 10 percent cut to the base salaries of elected or unclassified employee who make more than $50,000. The amendment was proposed by Sen. Aline Yamashita, according to Pacific Daily News files.

The cuts start today and last two years, saving an estimated $100,000, Yamashita said. Most GovGuam employees are classified, and therefore immune to the cuts, but lawmakers, the governor and cabinet members will be affected.

The money saved will go to Guam Memorial Hospital.

Judiciary concerns

Yesterday, Supreme Court of Guam Chief Justice F. Philip Carbullido sent a letter to the governor's office opposing the spending cuts bill because of this amendment.

Carbullido wrote that the judiciary already is coping with a $1.7 million shortfall, and a cost-cutting plan -- which already was approved by the judicial counsel -- includes salary cuts. The judiciary is prepared to switch to a 36-hour workweek in May.

"If enacted into law, the judiciary staff impacted by Bill 507 will actually receive a 20 percent reduction in salary," Carbullido wrote. "These include career employees who left classified jobs to compete for and assume leadership positions ..."

Although he allowed this pay cut to take affect, the governor also was critical of the amendment.

Unfair

In his letter to the Legislature, Calvo noted that Sen. Chris Duenas introduced a bill earlier this year that would have cut lawmakers' salaries to pay for school buses. Instead, the Legislature adopted an "across-the-board mentality," Calvo said.

"Rather than acting on this 10 percent pay cut for senators, the Legislature instead decided to apply an across-the-board 10 percent pay cut for all unclassified employees earning more than a base salary of $50,000. ... Such an action does save money. Is it fair? No. Will it affect operations ? Probably. My main point is the irony in how this provision came to be."

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