Clear Warning Signal Ignored by Republican Majority
Hagåtña, Guam — Governor Lou Leon Guerrero today responded to Moody’s Investors Service report on September 30, which flagged the Guam Legislature’s override of her Fiscal Year 2026 budget veto as a credit negative development.
While Moody’s did not formally downgrade Guam’s rating yet, the agency’s comment makes clear that the Legislature’s action to approve a phased rollback of the Business Privilege Tax (BPT) is a warning signal—a “yellow light” that often precedes a downgrade.
“Our administration has worked hard to bring stability, budget surpluses, and stronger financial management to Guam,” said Governor Leon Guerrero. “But Moody’s rating agency comment confirms what we have said all along: approving the rollback of the BPT—even before it has actually decreased—sends a dangerous message to the markets. It risks weakening our long-term credit standing and drives up the cost of borrowing for every project that serves our people. That is reckless, irresponsible, and risks the future of our people’s quality of life—protecting the few at the expense of the whole.”
According to Moody’s, the Legislature’s decision to reduce the BPT to 4.5% in Fiscal Year 2026—and again to 4.0% the following year—will cut roughly $80 million in annual revenues at a time when GMH continues to post operating losses approaching $65 million per year. Moody’s described the rollback as credit negative, noting it heightens risks to Guam’s overall financial position.
Despite the Governor’s veto and proposal to direct $40 million of BPT revenues toward GMH, the Republican majority in the Legislature ignored this clear cautionary signal, and the Governor had to introduce a Bill to support GMH with funding from prior years’ fund balances, which is a disincentive to future bond investors.
“This was a chance to hit the brakes and protect Guam’s credit,” the Governor continued. “Instead, the Republican leadership sped past the yellow light, racing toward another fiscal cliff with yet another BPT reduction next year. That is reckless and irresponsible leadership. And it is the people of Guam who will pay the price in higher borrowing costs, fewer resources for health care, and more strain on our families.”
The Governor reaffirmed her administration’s commitment to preserving Guam’s credit rating and ensuring that public services, including GMH, are protected:
“We will continue to defend the long-term fiscal health of our island, and we will continue to fight for sound, responsible policies that protect our credit, safeguard our hospitals, and build a stable future for all of Guam.”
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