FOR IMMEDIATE RELEASE
July 1, 2013Governor Calvo’s promise to eliminate the deficit — doubted just last year during debate on the tax refund bond — came true. When Fiscal Year 2012 ended last September, GovGuam had a $30.1 million surplus.Governor Calvo previously believed the surplus would be somewhere between $10- to $25-million. The FY 2012 audited financials of the government of Guam, known as the Independent Auditor’s Report (prepared by Deloitte & Touche, LLC), released over the weekend confirmed the larger surplus number. The audit is attached here.
Governor Calvo, reacting to the news, gave all credit to others:
– “First, I thank my fiscal team. They executed our fiscal policies with courage and precision. They knew exactly what to do, and they navigated our government from near-collapse.” — Governor Calvo– “Government of Guam employees deserve praise for what they’ve been through the past two decades. Every time there was a fiscal crisis they were asked to sacrifice. Either their pay was cut, or their increments were frozen. To this day they are waiting for their pay to be adjusted to market standards so they can be paid for what they are earning. For two decades they remained patient as government leaders told them they couldn’t help them much because of the deficit. Well, now the deficit is gone. It’s time to reward our employees.” — Governor Calvo
– “Much of the change in attitude in how government treats tax dollars came as a result of our first and only elected Public Auditor. Doris Flores Brooks is a driving force of fiscal responsibility in Guam. She has warned over and over again about a very basic principle in accounting: don’t spend more than you take in. We took this to heart.” — Governor Calvo
FY 12 began with a General Fund beginning deficit Fund Balance of $303M and by the end of the fiscal year, the ending Fund Balance was a surplus$30.1M. The surplus is a sign of markedly-improved financial health of the government, but should not be seen as an opportunity to spend it away. It should also be clarified that the surplus does not mean money just laying around waiting to be spent. Most of those funds are restricted for use or earmarked for payment of liabilities not yet due to include encumbrances for goods or services received in FY 2012 but paid out in FY 2013.
The government still must make good on years-worth of unfunded promises and liabilities to taxpayers, its employees, and the Retirement Fund. The surplus gives GovGuam the breathing room to pay these liabilities and pay for critically-needed operations such as more police officers, teachers, and nurses. These priorities will not be possible if the government goes back to the days, when not too long ago, leaders overspent tax dollars by passing unrealistic budgets.
The government’s net assets (the value of its total assets minus all its liabilities) also improved, though a deficiency remains. GovGuam’s total assets increased by about $80 million in value. Total liabilities increased by about $74 million. Net assets include cash, the value of roads, schools and other facilities, etc. Liabilities include the government’s long-term debt (i.e., bonds) and other liabilities (i.e. the deficit, liabilities on the balance sheet, vendor payables, etc.). The bottom line is the net deficiency for Fiscal Year 2012 (-$194M) was improved from the net deficiency the previous year ($-199M).
In summary, the surplus realized for the first time in decades, speak to the success of financial management and the sacrifices made by our entire island community, from the taxpayers who have had to wait for refunds with unparalleled patience, to our dedicated government of Guam employees who have had to absorb additional duties and responsibilities for positions that became vacant and were not filled in order to reduce expenditures. We have a long road ahead of us and we are not out of the woods. There are many potential liabilities that by and large may put us back into the dark periods of deficit spending.