September 19, 2012
Over the next fiscal year the government is expected to collect $1.2 billion in cash to pay for $1.37 billion in expenses and bills. Tax refunds again will be in jeopardy if the legislative leadership continues denying the financial realities and the need to cut spending.
“When one of the senators didn’t want to finance tax refunds to the people because he said he’d rather ‘owe the people than owe the bank,’ I knew we were facing an uphill battle to get spending in line,” Governor Calvo said.
The legislature budgeted just enough to ensure the $1.2 billion in cash equals to $1.2 billion in spending; however, senatorial leadership failed to include $171 million in bills that must be paid by December next year. Most of these bills will be owed to taxpayers in the form of tax refunds.
Here’s the math:
$   40M owed to taxpayers for Tax Year 2011 and prior tax refunds
   +40M owed to vendors and others owed cash by the government
= $80M (est.) in cash owed right now to people
 +105M that will be owed for Tax Year 2012 refunds come January
=$185M (est.) in cash that will be owed to people come January
  -114M that the legislature appropriated for tax refunds
= $71M (est.) cash the government still needs to get through Tax Year 2012
 +100M the government should put away next year for Tax Year 2013 refunds
=$171M cash shortfall by Dec. 31, 2013 if spending isn’t cut
(You can view an animated presentation explaining this further by CLICKING HERE or visiting the Governor’s YouTube channel on
There are only three options available to the legislature:
1.     Increase cash collections by raising taxes and fees. This will be met with a VETO from the Governor. Paying refunds by taxing the people owed the refunds makes no sense.
2.     Decrease spending on payroll. The other expenses of the government are too small and not viable. They include debt service, tax refunds, matching grant requirements, welfare, scholarships, utilities, capital leases for schools.
3.     Do nothing. This will force other actions, either by the Executive Branch, or the District Court.
“Across the island, people are losing their jobs and wages,” Governor Calvo said. “Thousands have given up any hope they can find meaningful employment. Small businessmen and women worry about the real possibility of their business closing, leaving their employees out of work. Family and friends struggle with medical conditions or disabilities. This is the reality for many people. It’s why I’ve made a concerted effort for government to pay tax refunds by cutting spending elsewhere. Yet senators are acting as though these realities don’t exist. In their fantasy, the everyday common person continues suffering while government just keeps spending their money.”
Please call Natalie Quinata at 488-6013 or Phillip Leon Guerrero at 929-7467 for more information.

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