GovGuam Posts Surprise Surplus For Fiscal Year 2012

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$30.2 million surplus shows ‘markedly improved financial health’: Calvo

By Mar-Vic Cagurangan

HAGÅTÑA, Guam (Marianas Variety Guam, July 1, 2013) – The government of Guam posted a $30.2 million surplus in fiscal year 2012, which the independent auditor Deloitte & Touche attributed to $358.2 million in bond proceeds.

"At the end of fiscal year (2012), general fund has a balance of $30.2 million as compared with prior year ending fund deficit of $303.1 million, an increase in performance of $333.3 million," states the Deloitte & Touche audit report released yesterday by the Governor’s Office.

The Governor’s Office said the fund surplus calculated by the independent auditors was higher than the figure estimated by Gov. Eddie Calvo, who placed the amount between $10 million and $25 million.

"The surplus is a sign of markedly-improved financial health of the government, but should not be seen as an opportunity to spend it away. It should also be clarified that the surplus does not mean money just laying around waiting to be spent," the report states.

The Governor’s Office said most of the surplus funds are earmarked for liabilities due for payment this year.

Higher than projected

Deloitte also reported GovGuam collected $604.3 million in revenues, which was $9.3 million higher than the projected level of $595 million.

The 2012 revenue collections represented an increase of $45 million, or 7.4 percent, compared to the previous fiscal year, according to the audit.

The auditors attributed the revenue increase to the "higher than anticipated" business privilege tax and Section 30 collections.

Privilege tax revenue increased by $21.4 million, or 10.7 percent, from last year’s figure. Cash flow from Section 30 went up by $6.8 million, or 4.6 percent, from last year.

The audit said GovGuam’s long-term debt increased by $335.1 million, or 44 percent, during the fiscal year.

GovGuam has a total outstanding long-term bonded debt of $1.08 billion.

Based on the 10 percent of aggregate value of real estate, GovGuam’s debt is capped at $1.13 billion. "The legal debt margin as of Sept. 30, 2012 was $12.3 million," the audit report states.

Despite the remaining deficiency, the government’s net assets increased by about $80 million in value.

Total liabilities increased by about $74 million.

Deficit elimination

"Gov. Calvo’s promise to eliminate the deficit – doubted just last year during debate on the tax refund bond – came true," the Governor’s Office said in a press release.

Calvo thanked his fiscal team for executing the government’s fiscal policies "with courage and precision."

"They knew exactly what to do, and they navigated our government from near-collapse," Calvo said. "Government of Guam employees deserve praise for what they’ve been through the past two decades."

He said public employees are compelled to take pay cuts or face a pay hike moratorium each time a financial crisis hits the government.

"To this day they are waiting for their pay to be adjusted to market standards so they can be paid for what they are earning. For two decades they remained patient as government leaders told them they couldn’t help them much because of the deficit," Calvo said. "Well, now the deficit is gone. It’s time to reward our employees."

The Governor’s Office said the government "still must make good on years' worth of unfunded promises and liabilities to taxpayers, its employees, and the Retirement Fund. The surplus gives GovGuam the breathing room to pay these liabilities and pay for critically-needed operations such as more police officers, teachers, and nurses."

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