FOR IMMEDIATE RELEASE
September 11, 2013
Governor Eddie Baza Calvo signed the budget into law with a stern warning to senators: any irresponsible appropriations bills sent to him will be vetoed.
Irresponsible appropriations will be vetoed to prevent another deficit
In a letter to Speaker Judi Won Pat accompanying the signed bill, the Governor wrote,
“Heed this warning, senators. From this point forward, I will veto any appropriation bill or any bill requiring funding if it does not contain the following:
– BBMR Fiscal Note: A fiscal note from the Bureau of Budget and Management Research detailing the cost of the proposed measure, its economic impact, how it affects the job market, and whether the appropriation is sufficient and sustainable.
– OFB Fiscal Note: A fiscal note from the Office of Finance and Budget certifying that the appropriation is sufficient and sustainable, whether the appropriation is being made at the expense of funding needed for education, health, or safety priorities, and how the measure will impact the economy.
– DOA Fiscal Note: A fiscal note from the Department of Administration stating whether the appropriation can be sustained with actual cash based on its cash flow projection.
“Much more discipline is required when there’s a surplus. We need to be careful. We need to exercise caution. We must be clear about our spending priorities, and strategic in how we budget the people’s tax dollars and the ends we seek through these investments. Otherwise, senators, mark my words, we will turn the surplus of this century into another deficit, in much the same way the surplus of the ‘90s disappeared for 20 years.”
Health and safety concerns outweigh Governor’s reservations in signing budget
Governor Calvo also explained his reservations about the bill, and why his concern for the health of Guamanians led him to sign it into law. In the same letter to Speaker Won Pat, Governor Calvo wrote,
“I signed this budget into law for one reason alone: I needed the authority you were willing to give me to fund Guam Memorial Hospital in September. For the record, you were only willing to give me this authority if I were willing to accept all the other provisions of your budget. So be it. If this is what it takes to convince the Democrats that GMH is worth funding, then I acquiesce, for the people’s health and safety are far more critical than your politics.”
Line item veto shares sacrifice among administration & legislature budget offices
The only line item veto in this law affects the Office of Finance and Budget. During the discussion on the bill, the Democrat majority decreased funding to the Bureau of Budget and Management Research by ten percent. Governor Calvo agrees this is a good example of financial discipline.
“I wish to thank senators for recognizing that fiscal restraint begins with the example set by the budget offices of the Executive and Legislative branches. You made this clear when you reduced the appropriation to the Bureau of Budget and Management Research, the budget arm of my office, by 10 percent. However, I believe by oversight you neglected to allow the Office of Finance and Budget, the Legislature’s budget arm, to share in this example. I have made the correction for you through my line item veto authority. This is a shared sacrifice, with the savings in revenues now available to pay prior-year obligations,” Governor Calvo wrote.
For your convenience, the text of the Governor’s letter follows. A signed copy of the letter is also attached to this release for your reference and use.
Transmittal letter to Speaker Judi Won Pat
September 11, 2013
Honorable Judith T. Won Pat, Ed.D.
Speaker
I Mina Trentai-dos na Liheslaturan Guahan
155 Hesler Place
Hagatna, Guam 96932
Dear Madam Speaker,
Enclosed is Bill No. 1 (4-S), which I signed into law today with reservations. I explain my objections below. Bill No. 1 (4-S) now is Public Law 32-068, and becomes the budget act for Fiscal Year 2014.
The passage of this bill is the worst exercise of political gamesmanship over the past two years. It is so painfully obvious some senators had just one thought in mind: ‘Where can the Legislature appropriate all this money for the greatest number of votes?’
I signed this budget into law for one reason alone: I needed the authority you were willing to give me to fund Guam Memorial Hospital in September. For the record, you were only willing to give me this authority if I were willing to accept all the other provisions of your budget. So be it. If this is what it takes to convince the Democrats that GMH is worth funding, then I acquiesce, for the people’s health and safety are far more critical than your politics.
There are several miscellaneous provisions and other language throughout the budget act I do not agree with, but because they are not appropriations, I cannot veto these provisions without vetoing the entire bill.
For the first time in two decades, the government of Guam is at a point where our government’s major debts to its taxpayers, vendors, and employees have been paid. These are the result of the hard work of our administration:
– We reversed the deficit into a surplus
– We financed most of the tax refund debt, then managed cash to get current with tax refunds
– We began paying down old obligations, zeroing out liabilities that have been on the balance sheets for years
– We accomplished these fiscal initiatives because of our stringent fiscal policies, which included a reduction in the workforce through attrition and increased accountability, revenue increases through the existing rate- and tax bases, and responsible cash management practices, such as the 15-percent reserve.
Look back in history. Twenty years ago a small deficit was on the climb. Some blamed the $5,440 adjustment in pay for every GovGuam worker for the deficit. I don’t believe that’s what really happened, though it was a convenient story line for those in the Legislature who needed to shift the blame for their political excesses on someone else.
If you look back at all the bills and the laws passed through the Committee on Ways and Means between 1991 and 1994, what was called the golden years in GovGuam finances, you see appropriation after appropriation for one pet project after another. A good portion of these appropriations were vetoed by then-Governor Ada, and in his objections he wrote to the senators about the excesses of their fiscal policies, warning that their actions would one day cause the surplus to turn into a deficit. Despite his objections, the Legislature at the time overrode the Governor at every turn.
The appropriations became law. The money ran out. And 20 years of darkness began.
Heed this warning, senators. From this point forward, I will veto any appropriation bill or any bill requiring funding if it does not contain the following:
– A fiscal note from the Bureau of Budget and Management Research detailing the cost of the proposed measure, its economic impact, how it affects the job market, and whether the appropriation is sufficient and sustainable.
– A fiscal note from the Office of Finance and Budget certifying that the appropriation is sufficient and sustainable, whether the appropriation is being made at the expense of funding needed for education, health, or safety priorities, and how the measure will impact the economy.
– A fiscal note from the Department of Administration stating whether the appropriation can be sustained with actual cash based on its cash flow projection.
Legislatures that preside over the purse during deficits normally have little choice but to refrain from spending with impunity. At the very least, senators must contend with the pressure from the public and from auditors to reduce spending and justify every expense.
Much more discipline is required when there’s a surplus. We need to be careful. We need to exercise caution. We must be clear about our spending priorities, and strategic in how we budget the people’s tax dollars and the ends we seek through these investments. Otherwise, senators, mark my words, we will turn the surplus of this century into another deficit, in much the same way the surplus of the ‘90s disappeared for 20 years.
In this spirit of restraint and sustainable fiscal responsibility, I vetoed one appropriation contained in the Fiscal Year 2014 budget act. My objections follow:
I have vetoed the appropriation for the Office of Finance and Budget by 10 percent of the appropriation set by the Legislature. I wish to thank senators for recognizing that fiscal restraint begins with the example set by the budget offices of the Executive and Legislative branches. You made this clear when you reduced the appropriation to the Bureau of Budget and Management Research, the budget arm of my office, by 10 percent. However, I believe by oversight you neglected to allow the Office of Finance and Budget, the Legislature’s budget arm, to share in this example. I have made the correction for you through my line item veto authority. This is a shared sacrifice, with the savings in revenues now available to pay prior-year obligations.
I have considered vetoing other appropriations contained in this budget act for the simple fact that they were appropriations made without the benefit of public discussion. These were, in essence, pet projects of certain senators who inserted these appropriations without regard to fiscal impact. My disagreement with the method in which these appropriations were made are tempered by the great possibility that these appropriations may be beneficial to the community. Can we say that with certainty? No. That’s what underscores the importance of a public process to vet these appropriations. This also underscores the warning I left to senators above about future appropriations.
Finally, I speak for the rank and file in the agencies who have to deal with your onerous mandates when I state for the record my objections to the administrative restrictions you’ve placed on the Executive Branch. Your superfluous reporting requirements sacrifice our employees’ time to concentrate on their work. Senators, the employees of the Executive Branch do not work for you, nor do they report to you. They work for the people of Guam. Every time you bother them for information you can certainly have your paid staff research on their own time, you burden their ability to serve the Guamanian people.
Your revenue restrictions also burden the Executive Branch. How do you expect our administration to manage cash resources when you either do not understand the ebb and flow of cash, or you simply ignore the truth of the difficulty in managing cash with the revenue restrictions you’ve again placed in the budget? Nevertheless, we will manage, especially where we believe your provisions are inorganic and an unconstitutional breach of the Separation of Powers doctrine.
While certain of you spend time pondering ways to hamstring this administration in its endeavor to pay bills on time while providing quality services, I will push on to do the work we were elected to accomplish.
Thank you for your time.
Sincerely,
EDDIE BAZA CALVO
*****End of Release*****