Gov. Lou Leon Guerrero said she is worried that without additional help from the federal government, she could “lose employees because of our cuts from fiscal year 2020 to now fiscal year 2021.”
The governor, Friday morning, participated in a discussion on federal funding with the House Committee on Financial Services, led by Chairwoman Rep. Maxine Waters. Guam Del. Michael San Nicolas is vice chairman of the House Committee on Financial Services.
Governors from various states, including Minnesota, Kansas and New Mexico, also presented their support for additional federal funding to assist with pandemic response and recovery efforts.
Leon Guerrero thanked Waters and her colleagues for Guam’s inclusion in federally funded programs to help Guamanians. She said Guam’s unemployment rate prior to the pandemic was about 4%.
“Now nearly half of all private sector employees qualify for the Pandemic Unemployment Assistance and Federal Pandemic Unemployment Compensation programs this Congress has established,” the governor stated. “Your actions helped people you may never meet in ways you may never know.”
However, the governor noted, those programs “are temporary economic backstops that are already beginning to fade.”
“Now, government revenues which rose enough in fiscal year 2019 to cut our deficit in half may see a 7.2% decline in fiscal year 2021,” she stated.
“This means dangerous cuts to our Guam public health operations, drastic cuts to public safety, and potentially severe cuts to education.”
San Nicolas asked Leon Guerrero and the other participating governors if the local governments, without additional financial assistance, also face a risk regarding their ability to pay debt service, which also could deteriorate their capacity to maintain their bond ratings.
Leon Guerrero and other governors said there is a risk, and help is needed to ensure their respective governments can continue to pay debt service and maintain good credit ratings. Leon Guerrero said her administration is seeking other industries that can help boost revenues in light of a dried-up tourism market, but noted that immediate assistance is also needed as work to develop additional revenue sources are explored.
San Nicolas, addressing the governors and fellow representatives, said he wanted to ask that particular question because of the potential long-term impact of not supporting state and territorial governments with another financial aid package.
“As our governors are faced with the difficult choices of whether to fund health, education, public safety, service debt, etc., the bond rating agencies are going to be looking at the revenue circumstances and adjusting their risk profiles accordingly,” he stated. “And that would not only have an impact on the ability for our states and territories to go out and secure capital on an ongoing basis, but it would also provide circumstances where their long-term prospects will be adversely affected because of these credit impacts. And so as the financial committee, we have a responsibility to our states and territories to be able to provide them with the capital facilities they need in order to make sure that we do not have these kind of credit impacts.”
Waters noted during the hearing: "The successes that you have been able to realize are all because of your representative. I want you to know that your congressional representative here has done a fabulous job in recognizing your territory."