Spending cuts bill necessary for future viability of government
August 21, 2012
Governor Calvo submitted his spending cuts bill to the legislature moments ago. The bill, if enacted, has the potential to curb government spending on payroll and current payroll entitlements upward of $70 million annually.
“I think the legislature is on the right track by recognizing the need to cut operational spending and mandating a $14 million cut,” Governor Calvo said. “But that’s just not enough. That cut needs to be backed up by the reduction of the GovGuam workforce and the elimination of certain payroll entitlements. And we need to cut spending even more through attrition, early retirement, and the reduction of payroll benefit entitlements.”
The legislative budget chairman, in his substitute budget, is proposing to cut operational appropriations from the budget by $14 million and reinvest that savings to pay the balance of tax refunds for 2011, which are due now. He further proposes that the $100 million provision for tax refunds for Fiscal Year 2013 (beginning October 1, 2012) be used to pay for 2012 tax refunds.
While this pay-as-you-go situation is much better than the previous years’ fiscal policy of having taxpayers wait up to three years for their refunds, it is still not adequate. The provision for tax refunds collected in Fiscal Year 2013 should be set aside in a bank account for tax refunds for 2013. It also does not address the remaining deficit of vendor payables, the cash situation, and the simple fact that government continues to live well beyond its means. The legislature and administration, together, must fix the structural imbalance of the General Fund.
“The current budget proposal lacks a fiscal plan to pay down our debt and put money away for future tax refunds,” Governor Calvo said. “This is why we need to pass the spending cuts bill. We need to cut more operational spending so that money can go to tax refunds, vendor payables, and court-ordered payments.”
Alternative spending cuts & Senator Silva Taijeron’s proposal
The Governor previously welcomed senators to change his proposal so long as they replaced his spending cut provisions with another cut that doesn’t affect the bottom line.
“I want to thank Senator Mana Silva Taijeron for being the first senator to take me up on my offer,” Governor Calvo said. “She didn’t like the proposed cuts to the fire department, so she went to work looking for an alternative and she found one. I welcome her to propose that change on the legislative floor. Obviously, she understands the fiscal situation we’re in and she’s very serious about prioritizing the payment of tax refunds and our other bills to the people.”
Please call Troy Torres at 475-9304 or 486-8887 for more information.
Please click the link for a PDF copy of the Omnibus Fiscal Reform Act of 2012.

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