WITH our governor living it up at the Republican National Convention – accompanied by who knows how many horse-holders – how could anyone believe Guam is anything other than financially stable?
There are, nonetheless, signs that all may not exactly be peaches and cream.
In the wake of Judge Marshall’s ruling on the expedient payout of income tax refunds, the administration must now make sure that adequate refund money is set aside on a continuing basis. It won’t happen. GovGuam-elected officials will never be able to comply with the judge’s order because they’ve been accustomed to living beyond their means for so long that they don’t know how to do otherwise.
Sen. Pangelinan, in opining that there may be a six-month-delay deadline for paying out refunds, apparently thinks the countdown begins on April 15. He’s wrong about that, because the countdown begins when the tax return is filed. Many will be filed in January, February and March, and provisions must be made to pay those on time as well.
The fact is that the administration and the Legislature had no contingency plan to accommodate 2012 refunds even before the judge’s ruling. That means, of course, that GovGuam cash-flow prospects are now $100 million worse off than they were last month.
The Legislature has passed a 2013 budget – no doubt wearing the same rose-colored glasses that keep us perpetually in the red – making no concession to that additional $100 million shortfall. They now must regroup and whittle away at expenses in some way, or raise revenues in some way, to stay in line with whatever negotiators for the court-ordered permanent injunction come up with. If the judge doesn’t like it she’ll no doubt flex her legal muscle again and impose one of her own. It’s astonishing that some lawmakers are now complaining that they didn’t really understand how bad the situation is.
The interesting part of all this will emerge as lawmakers haggle over who gets the axe, because the axe must inevitably fall. They’ve tapped out virtually every borrowing avenue and raided various funds to the point where they’re now left to their own devices. There’s lots of painful heavy lifting coming down the pike. Speaker Won Pat last week commented that they must "find new revenue sources." You shouldn't have a lot of trouble decoding that statement.
I see no obvious alternative to eventual layoffs and tax increases. It would be great if GovGuam could grow the necessary body part to aggressively pursue accounts payable, including delinquent property and other taxes, but that’s a forlorn hope. It would mean inconveniencing voters, and that’s a definite no-no.
Symptoms of financial distress surface almost daily, notwithstanding buckets of federal money in the form of grants and entitlements that arrive with no less frequency. Let’s briefly review some of the sticky issues surrounding the GovGuam cash flow situation, some eventually resolved through expensive emergency measures. Recent indicators include:
- Abandoning the Homeland Security bunker because the air-conditioning and the toilets broke and there were no repair parts on-hand and no money to fix;
- The Guam Election Commission had no funds to buy ballot stock and their credit was no good;
- GMH lacked money to buy critical medical supplies with the same result – bad credit;
- The hemodialysis machine went up in smoke;
- The Decolonization Commission considers asking for public donations to stay afloat. No money from DOI and they’re not likely to see any while the voting rights lawsuit progresses; and
- Last but not least, there are still millions of dollars owed for overdue 2011 tax refunds.
I ask you now – is that the reflection of a financially healthy government? In June I wrote that it would take only a nudge in an unfavorable direction to tip GovGuam over the edge of the insolvency cliff. Judge Marshall’s ruling may just do the trick.