Although the government of Guam is slated to receive about $634 million in the latest round of federal pandemic aid, projected shortfalls in 2022 could mean this pot of money will need to be stretched and saved.
That’s the perspective Sen. Joe S. San Agustin, the chairman of the Legislature’s appropriations committee, and Steve Guerrero, director of the Office of Finance and Budget, shared with The Guam Daily Post in an exclusive interview Tuesday. The pair said the subsidy from the newest federal law doling out assistance to states and territories is meant to be a two-year bridge to recovery.
Gov. Lou Leon Guerrero is looking to earmark about half of the $634 million for a new public hospital, while the Guam Visitors Bureau has officially requested $20 million to jumpstart the island’s tourism industry. Not much else is known about how the rest of the money will be spent.
“We just met with the governor last week, and that was one of our major concerns,” Guerrero said of pending commitments for the federal funds. “Even before we move forward trying to prepare the (fiscal year 2022) budget, we’d like to see how that $634 million is going to be spent. They told us outright they don’t have a breakdown of that amount; they do have areas which they’d like to see get funded.”
San Agustin is advocating for direct aid to businesses and individuals, to support “any way that helps put the funds out” in the local economy.
“I honestly believe – and I brought this to the governor – if you push, gosh, at least maybe 90% of that $600-plus million out, if everybody is spending, if businesses are open, it’ll generate (economic activity), then we’ll see the revenue come in.”
But San Agustin also acknowledged that many individuals have been getting aid throughout the pandemic, which could free up more money for local companies and infrastructure improvements. With the latest stimulus payments, increased eligibility in welfare programs and ongoing commodity distribution, San Agustin argued, “There’s enough subsidy out there.”
“Let’s invest in our people – invest in the businesses, invest in fixing our roads, cleaning up Guam,” he said.
‘We’re going to be dead in the water’
One of the major concerns over why some of the money should be saved for the upcoming fiscal year, which begins in October, is the anticipated end of Pandemic Unemployment Assistance, which, unless renewed by Congress, will stop being paid by the first week of September.
“Here we are thinking, ‘Oh, all this money is going to keep us afloat.’ No, it’s not; it’s going to end. And once it ends, what the hell do we have left? Who is going to come and bail us out? If we’re not smart and use this money to do long-term investments, to do long-term returns to the point where we can at least recover what we lost to a certain level, we’re going to be dead in the water,” Guerrero said.
The governor has more freedom to spend this round of federal subsidy compared to the subsidy provided in the CARES Act, for example, which didn't allow GovGuam to cover lost revenue as a result of tourism's pause, for instance.
“So now, the governor has more flexibility to actually pay for what she wants. There’s really no guidelines for her not to ... spend it. She can actually spend it for anything,” Guerrero said, while also noting that Guam and some 20 states are awaiting official guidance from the U.S. Treasury on whether the latest aid package can be used to offset the cost of tax decreases.
“So every business that is legally or legitimately hurting, she can help them get back on their feet so they can do what they need to do,” San Agustin said. “Remember, other than the $600 million, we’re looking at another $2 (million) or $300 million coming in because of the stimulus – separate. Can you imagine … we have to admit that here on Guam we have a lot of families that are more than just two kids. Some of them are 5, 6, 7 – so imagine if you had 10 kids, that’s $14,000 plus an additional $2,800. There’s going to be so much money, and if the government doesn’t help the businesses stand up, be ready to absorb the sales so that people can stop thinking of, ‘I’m going to go buy online.’ Hey, bring it in (to the local economy).”
San Agustin said there are already clear indicators that local government didn’t benefit from the majority of the subsidies given by Congress last fiscal year, including money for GovGuam, direct stimulus payments, and pandemic unemployment assistance.
“How much money of the $1.3 billion was actually circulating in the economy? We exported money, that’s what we did,” San Agustin argued, pointing to unaudited financial reports that show a preliminary surplus of just $19 million following that huge economic injection.
“That’s what I’m worried about,” he said. “If that $600 million, if 75% or 80% doesn’t circulate in the economy, you have just stifled the economy, because nobody is going to spend. What is there to spend except the stimulus money?”