Guam Stuck In A Financial Quagmire Due To Borrowing

Commentary

By Frank Ishizaki

HAGÅTÑA, Guam (Pacific Daily News, July 5, 2017) – Will raising Gross Receipts Tax from 4.0 percent to 4.75 percent fix Guam Memorial Hospital? It will allow Gov. Eddie Calvo to borrow $125 million to make capital improvements to GMH. Does he really believe that more borrowing will solve the hospital’s problems?

Is Calvo mired down by such a deep financial morass that he is willing to borrow in order to keep GovGuam solvent for another 17 months? Is he kicking the can down the road for the next maga'lahi to solve? Last year he borrowed $45 million to bail out GMH but it continues to operate in the RED. With annual shortfalls of $9 million, how far will the new loan go before it needs another bailout?

Is Calvo mired down by such a deep financial morass that he is willing to borrow in order to keep GovGuam solvent for another 17 months? Is he kicking the can down the road for the next maga'lahi to solve? Last year he borrowed $45 million to bail out GMH but it continues to operate in the RED. With annual shortfalls of $9 million, how far will the new loan go before it needs another bailout?

GMH continues to face solvency issues while our government applies bandages instead of finding real solutions. A former GMH board chairman, Lee Webber, recently stated that the board should be allowed to run the hospital without political interference. A strong board should be appointed and then trusted to do a good job and allowed to make tough decisions. There have been many recommendations which addressed management controls and leadership for years. Alas, they have gone unheeded.

Part of GovGuam’s problems clearly is the result of crying wolf too many times over the years. How many times have leaders declared financial emergencies for critical programs? Be it overtime shortfalls or textbook shortages or failure to pay vendors; it is miraculous just how many times fairy-tale money is discovered just in time to save the day.

Over the years, our people have become believers in enchanted finance. No matter the crisis, magic money was always found. Did we ever ask from where it came? No; we didn’t care. The practice of not paying vendors and uncontrolled borrowing has sucked GovGuam down into this financial quagmire. We are in fiscal crisis but are still in denial.

Congress created the Puerto Rico Oversight, Management, and Economic Stability Act, or PROMESA, to deal with Puerto Rico’s financial crisis. Schools, health care and public safety are becoming non-existent in Puerto Rico. Their residents are jumping ship for better conditions and jobs in the mainland. Overextended borrowing has brought Puerto Rico to its proverbial knees, along with bankruptcy and federal receivership.

Guam’s public debt is only $2 billion. With our population of 160,000 people, each citizen owes $12,500.

Our governor wants to borrow and borrow because he is worried about protecting his legacy. He is troubled to be labeled the gusta pues ajao (spend then borrow) maga’lahi who left us with a unsustainable public debt.

I don’t necessarily believe that we are all opposed to borrowing. However, I do believe that many of us are opposed to borrowing just to spend more when nothing has been done to address GovGuam’s appetite for overspending.

Will Guam become another Puerto Rico? I welcome your comments.

Pacific Daily News
Copyright © 2017 Guam Pacific Daily News. All Rights Reserved

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Comments

Having read Mr. Ishizaki's commentary, I cannot help but see Chuuk in parallel with Guam on that subject of borrowing beyond one's means.

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