Expert Tells Guam To Face Reality Of Fiscal Problems

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Former U.S Comptroller General: GovGuam worse than 50 states

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, Aug. 5, 2015) – A former comptroller general of the federal government offered this advice to local elected leaders: Face the reality of Guam's more than $2 billion public debt and other liabilities head-on.

Acknowledging the problem is the first step to finding solutions for it, said David M. Walker, a senior strategic adviser in the public sector practice with internationally known accounting firm PwC.

Walker has served in several high-level leadership roles, including as the seventh comptroller general of the United States and as former head of the U.S. Government Accountability Office.

He was the guest speaker yesterday at the Rotary Club of Northern Guam meeting in the Hyatt Regency Guam.

An obligation exceeding $2 billion "will put you in the water big-time," Walker said.

"So the fact is you have to recognize reality; we have got to do whatever we can to try to grow the economy, ... and to grow the economy faster than the budget."

Borrowing not an answer

And borrowing money to achieve a "surplus" won't solve the problem in the long run, an issue familiar to Guam, he said to his audience. Walker made reference to GovGuam's long-term obligations, including for the pension and health benefits of current and future local government retirees.

While GovGuam did reform the island government's pension system in the 1990s, GovGuam needs to seriously consider reforming health-care benefits to retirees, he said. That reform can include changing what was promised to retirees during better financial times, he suggested.

"You desperately need to do retiree health care reform," he said.

Rotarians on Guam and in the country have a responsibility to call for their governments and elected leaders to be fiscally responsible, Walker said. The federal government will eventually restructure, which means less federal money for local governments such as Guam, he said.

He described GovGuam's financial picture as better than financially distressed Puerto Rico, but worse than all 50 states.

A Guam Office of Public Accountability performance audit on public debt, released last year, jibes with that assessment.

As of 2012, GovGuam's public debt can be broken down to $8,810 for every island resident, according to the Guam public auditor's report on public debt. In 2010, Connecticut had the highest debt per person among the states at $5,236; and Puerto Rico was the highest among the territories at $10,474.

Some of GovGuam's big-ticket debts and long-term obligations include a $1.2 billion net pension liability for local government retirees.

GovGuam's public debt had grown to $1.5 billion in fiscal 2013, even though its debt limit was capped at $1.1 billion, according to the local public auditor's office.

The local government continued borrowing beyond the debt limit by issuing "certificates of participation," notes payables, and other loan vehicles. Although these debts were not subject to debt-ceiling limits, these still needed to be repaid.

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