July 2, 2018
Hagåtña — Senator Tommy Morrison and Speaker BJ Cruz berated senators for failing to understand the situation the government and island’s economy faces for removing the sales tax without providing a funding shortfall.
Sen. Morrison said the funding shortfall would adversely affect the economy. Though he has stated publicly support for repealing the sales tax he believes a solution has to be found to address “a very real shortfall” caused by the federal Tax Cuts and Jobs Act.
Morrison said at least several senators had been working to try to help GMH and DOE – even before the new federal tax policy complicated government finances. He said DOE has “deferred maintenance that would cost the government to the tune of $90 million. That occurred in 2013, and we still haven’t figured out how to address our schools throughout this island.”
Morrison added that during the SES meeting on June 22, Department of Labor Chief Economist Gary Hiles said the sales tax is removed and not replaced there would be an adverse effect to the economy.
Speaker Cruz told his fellow senators: “The loss to the General Fund is real.” He said while painful, there has to be a solution proffered and not just a simple removal to the sales tax provision currently allowed by law: “How are we supposed to raise the revenue?”
“All of you attended, well most of you attended, the public hearings,” Speaker BJ Cruz said, noting that the Administration submitted two options for the Fiscal 2019 budget – one with a funding source addressing the shortfall created by the federal tax cuts policy and a second option that is without.
“I didn’t even look at Option 2” Cruz said noting examples like the Department of Corrections budget under Option 2 lacked funding for fixed costs, like feeding the inmates.
Similarly, the Guam Behavioral Health and Wellness Center “didn’t have moneys for the residential care for children … but they came in under their budget ceiling.”
Senators Frank Aguon, Regine Lee, Mike San Nicoals, Dennis Rodriguez, and Fernando Esteves have called for the removal of the sales tax WITHOUT PROVIDING A SOLUTION. The sales tax, which was passed into law earlier this year, does three things:
• Addresses the revenue collection shortfall (estimated to be $120 million to $160 million by the Legislature’s Office of Finance and Budget) caused by the federal tax cuts
• Ends 40 years of funding shortfall for GMH, the island’s only public hospital
• Provides DOE with funds for school improvements
July 2, 2018