February 8, 2018


(Hagåtña) – Our island needs its elected leaders to find solutions to maintain our financial and economic stability. 


Governor Eddie Calvo and Speaker BJ Cruz put differences aside and came together on common grounds to discuss the impacts of the federal decision of tax policies on our island community. 


In a press conference today, alongside the government of Guam’s senior fiscal leaders, he reiterated the need for a decision to be made so that immediate action can be taken to address the repercussions of a potential $47.9 million revenue decrease.


“The tax reform is the latest in a line of federal policies that is going to impact our island very soon,” Governor Calvo said.


For the long-term, the new law is expected to stimulate the American economy. The more immediate impact to Guam is a revenue decrease for the current and the next fiscal year. The federal “Tax Cuts and Jobs Act,” signed by President Donald Trump on Dec. 22, 2017, left Guam with only enough time to rush to decipher its actual impact on the government services provided daily to every child, woman and man in our island community. The new federal tax reform law decreases the amount of taxes paid by many individuals and companies.


“Some hard and possibly unpopular decisions need to be made. I have submitted revenue enhancement solutions to the Legislature, including draft policies that would eliminate existing tax exemptions for businesses and increasing BPT with a sunset provision for part of that adjustment,” the Governor stated.


Delays in making a decision could mean reduced work hours, furloughs or even no-pay paydays.


This new federal policy was developed for states, yet is being applied to territories in a one-size-fits-all philosophy. Solid waste management, Earned Income Tax Credit, costs associated with Compact Impact court orders and disproportionate Medicare / Medicaid reimbursement rates — are just a few of the grievous federal decisions that harm our island’s economic health.


In the 2019 budget transmittal letter to Speaker Cruz, Governor Calvo states the Government of Guam’s options clearly – Option 1: Proposes a 2% increase in BPT to augment the General Fund revenue loss – 1.25% would sunset in a few years; Option 2: drastic cuts to all Government of Guam services and employees with no new revenue source to replace the loss.


Last month, the Bureau of Budget Management and Research asked line agencies to find creative ways to cut costs and enhance revenue while maintaining their core missions.


“I am looking to Speaker Cruz’s leadership at the legislature in light of the situation that we are facing. Now, more than ever, we need to work towards finding a solution that is both speedy and sustainable,” Governor Calvo said. “I am rolling up my sleeves and I hope that the legislature will do the same so that we may pull our island through this together.”

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