March 5, 2018
Q. What is this fiscal crisis everyone is talking about?
A. There are two critical issues facing our community, federal tax cuts and our people’s healthcare via funding for our island’s only public hospital:
1. The federal government on Dec. 22, 2017 passed the Tax Cuts and Jobs Act, reducing corporate taxes by about 40% and withholding taxes by about 18%. Corporations and employers had until Feb. 15, 2018 to adjust taxes. That means, as early as January, GovGuam tax revenues started to see a decrease in revenues collected from corporate and withholding taxes. The federal policy is meant to stimulate the economy, but the immediate impact is a GovGuam revenue shortfall of $67 million for the next six months. All three branches of government need a temporary revenue bridge to address the immediate cash shortfall. Failing to do so would result in painful cuts to government services, including furloughs, and layoffs.
2. For the past 40 years, the hospital has been underfunded by as much as $30M a year. This has diminished the healthcare for Guamanian families on Guam and services provided there. GMH currently has approximately $10M in accounts payables — this is growing. If we want to improve healthcare for working families and fix GMH once and for all, we need to fully fund it every year moving forward with a dedicated funding source.
Q. How much time do we have to address the revenue shortfall?
A. Action needs to be taken immediately. Revenues have been reduced since January. There have been multiple meetings between the administration and senators. At each meeting, the administration stressed the need to act quickly. Everyday without a solution brings us closer to a payless payday or a government shutdown.
Q. What does it mean to have a $67 million shortfall for GovGuam?
A. Revenue collected from taxes is what pays for government services — the people who process WIC checks and food stamp, who provide public healthcare, our social workers; police officers who patrol the streets; the people who answer 911 calls, and those who process tax refunds, and the cost for the tools they all need to do their jobs … all are funded through the tax collections.
Q. What has been done to bridge that gap in revenues?
A. There have been multiple bills proffered by the Governor as well as senators. None of those bills have been acted upon by the Legislature — senators are the government’s policy makers and they ALONE have the responsibility of approving the government’s operational budget.
The executive branch, Adelup, executes policies passed by the Legislature.
Q. Lawmakers and community members have questioned why the Administration is taking drastic measures like shutting down public safety precincts. Some have implied that the crisis is being manufactured. What is your response to this?
A. Absolutely NOT. This is a real crisis we are facing as a community.
If a household knows that it will lose a significant amount of income the next six months, and no money is coming in to replace this, it must cut costs — no matter how much cash they have. This is responsible and prudent action. It ensures the family has a roof over its head, food on the table, and the car isn’t repossessed.
The Government of Guam is no different. Cost-cutting measures that are being put in place by the Administration are intended to help maintain government services and, at the very least, delay payless paydays or a shutdown of government. The Department of Administration has said everyday we go on without a bill that provides necessary funding, we get closer to payless paydays or shutdown. There is no longer a choice, unless the legislature passes a bill to address the severe funding shortfall.
Q. Is the Legislature closer to resolving the fiscal crisis keeping fire stations and the police stations open?
A. No. Senators continue to get wrapped around the axle on the same questions they have been asking since January. In addition to this, they continue to discuss cost-cutting measures that have a minimal impact in the context of a $67M shortfall for the remainder of this fiscal year — about six months.
Q. Senator Terlaje acknowledged that drastic cuts need to be made, but asked if senators could get cost-cutting plans in writing. Why hasn’t the Administration provided plans?
A. Senators were given a plan. Last month, the Bureau of Budget Management and Research sent senators the cost-cutting measures from individual line agencies. The administration also sent to senators the fiscal realignment plan.
Q. Why should the private sector be concerned about a payless payday for GovGuam employees? Isn’t the government bloated anyway?
A. There’s a few points we need to make: First, the government isn’t bloated today. GovGuam used to have more than 16,980 employees. Today, there 11,680 employees. Second, GovGuam employees help keep the private sector operating: They buy clothing at the malls, books and school supplies from stores, they eat out at restaurants, and get their cars fixed at auto shops. And third, if the government can’t pay its employees, then government services are, essentially, shut down because we can’t make people work if we can’t pay them – that’s illegal.