Half Of Guam Highway Funds Subsidizing Other Government Operation

Revelation made as legislature considers $50 million bond issue to fix roads

By John I Borja

HAGÅTÑA, Guam (Pacific Daily News, Feb. 26, 2017) – As lawmakers debate the idea of floating $50 million in bonds to fix Guam's roads, about half of the money in the local government's Territorial Highway Fund each year isn't being used for its intended purpose.

Much of it is spent to subsidize the operations of several government agencies — payroll instead of potholes.

The Highway Fund's fiscal 2016 revenues and spending are still being audited, but a look into the previous year's report shows not all of its money is used on highways.

A Fiscal Year 2015 report from the Office of Public Accountability shows that almost half of the fund, meant for transportation-related projects, was used for non-highway projects. The Highway Fund gets its money from the liquid fuel tax consumers pay at the pump.

When lawmakers and government officials met at the beginning of the month to discuss draft legislation to borrow money from the bond market to pay for village road repairs, Public Auditor Doris Flores Brooks said money was being pulled out of the Highway Fund for other purposes, for several years.

An audit found the Guam Highway Fund, also called the Territorial Highway Fund, ended Fiscal 2015 “with revenues of $19 million and total expenditures of $22.1 million.” The report stated the deficit was funded from the prior year’s surplus.

Out of the total $22.1 million in Guam Highway Fund expenditures in Fiscal 2015, $10.2 million, or 46 percent, was spent by several government agencies on non-highway projects, according to the public auditor’s office.

The fund’s fiscal 2015 audit report, released last April, showed that:

$4.8 million went to the Department of Education, for personnel costs, supplies and communications;
$2.5 million went to the Mayors’ Council of Guam, for personnel costs, travel, rent and communications;
$1.3 million went to the Department of Administration, for utilities and contractual services;
$904,000 went to the Department of Revenue and Taxation through the Better Public Service Fund;
$500,000 went to the University of Guam's Capital Improvement Fund; and
$100,000 went to Guam Community College's Capital Improvement Fund.

For highway-related projects, $11.9 million, or 54 percent of the funds went to the Department of Public Works' highway maintenance and transportation divisions, the Guam Regional Transit Authority and capital projects.

The report is the latest fiscal year audit of the Guam Highway Fund’s expenditures.

In response, Speaker Benjamin Cruz said while the $10.2 million was not used for highway-related projects, it was used on projects related to transportation services and streetlights.

“A closer look at these appropriations reveals that they were focused on GRTA, the operation of streetlights, and bus operations for the Department of Education — appropriations which both the Legislature and the Executive Branch believe relieve traffic, while making our roads safer for Guam families.”

The current fiscal year also has money being appropriated from the Guam Highway Fund for general operations in various agencies, according to the budget law.

About $2.07 million of the Mayors’ Council’s $10.9 million budget comes from the Highway Fund for general operations. Almost $780,000 is appropriated to UOG and GCC for capital improvements.

Speaker Cruz emphasized that a majority of Guam Highway Fund appropriations for fiscal year 2017 are to Public Works, Guam Regional Transit Authority and the maintenance and operation of streetlights.

The Guam Highway Fund gets its money from the Liquid Fuel Tax and vehicle license and registration fees. Based on recent fiscal year reports, the fund generates some $20 million each year.

With the money the Guam Highway Fund generates each year, Cruz said it can be used to ease the estimated $3.5 million in annual debt service for his draft legislation.

Guam law states the Guam Highway Fund is to be used for “public highway purposes and highway safety related plans, programs and projects.”

However, Cruz said the fund could be tapped under “challenging circumstances.”

“For example, in 2017, the Legislature reduced the governor’s proposed General Fund spending level by approximately $55 million,” Cruz said. “To do that, Special Fund sources must sometimes be used to meet the needs of our community.”

Pacific Daily News
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