Guam Governor Raises Concerns Over Fiscal 2017 Budget

Annual spending bill which cut spending and lowered revenue projections by about $55 million has 'failed to adequately appropriate funds to necessary services'

WELLINGTON, New Zealand (Radio New Zealand International, September 1, 2016) – Displeased with the fiscal 2017 budget act lawmakers passed earlier this week, Gov. Eddie Calvo said the Legislature failed to adequately appropriate funds to necessary services, such as government of Guam retirees' health insurance premiums.

In a 14-1 decision, the legislative body on Monday passed the annual spending bill, which cut spending and lowered revenue projections by about $55 million. Calvo said such savings come at a cost to GovGuam retirees and the Guam Behavioral Health and Wellness Center.

“We all want to save money, but we also have a responsibility to fulfill,” Calvo said in a press release. “And this budget bill falls short of providing for those services. That’s just the beginning of what my team has found so far.”

Sen. Mike San Nicolas, D-Dededo, opposed the bill, saying it did not do enough to ensure the speedy payment of tax refunds.

Vice Speaker Benjamin Cruz, D-Piti, whose finance committee worked on the bill, reduced spending levels to create a balanced and conservative budget without adding to the local government’s $120 million deficit, according to lawmakers. Anticipated revenue levels were also lowered because the governor’s fiscal team had overprojected certain revenue collections, according to lawmakers.

Adelup noted the government’s current shortfall of about $13.8 million for this fiscal year’s Retiree Medical, Dental and Life Insurance plan. The administration criticized the Legislature in the press release, stating the governor’s office brought the shortfall to lawmakers’ attention months ago, “but nothing has been done.”

The current fiscal year budget appropriated a total of $24.2 million for such costs.

When the governor submitted his budget request to the Legislature earlier this year, he had set the retirees’ health care appropriation at $34.86 million, but that appropriation level was reduced in the Legislature’s final version of the fiscal 2017 budget bill to $24.86 million.

Oyaol Ngirairikl, Adelup’s communications director, said the issue is that the retiree health insurance plan is a contractual obligation that needs to get paid, regardless of whether the Legislature adequately funds it or not.

“When you have the shortfall, then the governor has to use his transfer authority to pay for this,” she said.

Another example the governor’s office noted was the appropriation to the Department of Administration for the residential treatment fund. The treatment fund pays for the residential care of individuals under the Superior Court’s jurisdiction who have physical, mental or emotional disabilities.

The treatment fund is set to receive an appropriation of $1.6 million, however, Health and Wellness directors told lawmakers that there are more clients to take care of and is expected to cost $3.2 million.

The current budget bill increased funding to several agencies, including the public safety entities like the Guam Police Department and Guam Fire Department.

When asked if the governor would be on board with lawmakers re-appropriating funding from other GovGuam agencies like GPD and GFD to pay for the retirees’ health insurance plan, Troy Torres, Adelup’s policy advisor, said the Legislature would be well within their right to do so as it comes down to priority spending.

Torres, however, continued to state that the administration’s response to such an action would questions Cruz’s decision “to arbitrarily reduce revenue projections.”

For the last two budgets, Cruz has lowered the revenue projections Calvo and his financial team have submitted to the Legislature in the annual executive budget request. Cruz has stated that Calvo’s financial team has overprojected revenue in areas such as business privilege taxes.

For the current fiscal year, Calvo’s budget request had General Fund revenue projected at $848.6 million, but Cruz lowered it to $825 million. The administration’s latest budget report for July states General Fund revenue is tracking at $827.5 million — $21.1 million short of what the Calvo administration projected.

The government first ended fiscal 2014 with a $60 million deficit, and it was announced earlier this summer that that deficit doubled at the end of fiscal 2015. DOA Director Christine Baleto told lawmakers that the deficit was the result expenditures the government is obligated to pay for as well as a $10 million shortage in revenue.

Public Auditor Doris Flores Brooks further explained that the government’s spending has been outpacing its revenue.

The governor blamed the Legislature for the $120 million deficit GovGuam is currently in, stating that lawmakers have shortchanged government agencies their necessary budgets to operate.

“In these last few months, the vice speaker has criticized the administration for having a deficit,” Calvo said in the release. “Yet, it is precisely this type of legislative financial wizardry that got us into a deficit; they are once again making false and empty promises because they didn’t appropriate from viable fund sources.”

When lawmakers passed the fiscal 2014 budget act, Calvo chastised the Legislature by calling the spending bill “the worst exercise of political gamesmanship over the pst two years.”

“It is so painfully obvious some senators had just one thought in mind: ‘Where can the Legislature appropriated all this money for the greatest number of votes?’”

However, upon signing the fiscal 2015 budget, Calvo stated “for the fourth year in a row, GovGuam has passed a budget that reflects the priorities of our community,” going on to note that they had increased funding to public schools, health care services and public safety. He also said that “for the most part” the Legislature used the administration’s revenue projections.”

Ngirairikl said that although the governor supported the fiscal 2015 bill at the time, what Calvo is stating now is that the Legislature then and now have failed to appropriate for certain services that need an adequate appropriation level.

Radio New Zealand International
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