GovGuam would be short $60M without economic stimulus

REV AND TAX: Dozens of people wait in line to register or renew their vehicle registrations on April 7 at the front of the Department of Revenue and Taxation building in Barrigada Heights. The pandemic is contributing to uncertainty about GovGuam's finances, even with an upcoming federal bailout of more than $600 million. David Castro/The Guam Daily Post

The ongoing pandemic continues to place pressure on government of Guam financial planning – even with an upcoming injection of about $634 million in direct federal bailout funds.

Without it, GovGuam is facing anywhere from a $40 million to $60 million revenue shortfall, according to Steve Guerrero, director of the Legislature’s Office of Finance and Budget. Guerrero and Sen. Joe San Agustin recently spoke at length with The Guam Daily Post to offer their perspective about halfway through a second fiscal year affected by COVID-19.

“Remember the shortfall in just the second quarter is not even $30 million … you got $600 (million),” San Agustin said, of revenue deficits reported by GovGuam’s fiscal agencies.

If this shortfall stays at a similar level, San Agustin argues the governor has “more than enough” to cover any revenue gaps.

Although Guam’s government will get more than enough to replace revenue lost due to depressed tourist arrivals and decreases in local consumer spending, a commitment from Gov. Lou Leon Guerrero to use half of that money to build a new hospital, and a lack of information on how else the funds will be spent is having its effects on legislative budgetary efforts for this year and next year.

The governor has to “be able to identify all that (federal) spending for the next two years,” San Agustin said. The senator and OFB are in the midst of planning the fiscal year 2022 budget.

The lawmaker has issues with the spending of federal pandemic funds used both from this latest congressional package and prior bailouts, arguing it should allow for a reduction in local government spending, especially for agencies given their own specific subsidies, such as the Department of Education.

“You got $44 million to start (from the first aid package), and then the next round they got $88 million, and we don’t know how much they’re getting in federal grants to help get them back on track. We’re hearing it’s about $100 million,” San Agustin said. “Everybody talks about, ‘We need to fix the air conditioners; we need to fix the bathrooms; we need to fix the buildings in general; we need to make it safe,’” he said. “Gosh, the amount of money they got, they can do all of that. They can also build Simon Sanchez (High School) without any (GovGuam) subsidy if they really wanted to because (these federal funds are) to reopen the schools. Build the school.”

San Agustin asked: “You know – the question is, what is your shortfall?”

No senatorial control over federal funds

The role of San Agustin and his 14 fellow senators is limited for federal funds, however. As with other federal grants, the Legislature has not appropriated money given to the government of Guam through congressional COVID-19 aid packages. Leon Guerrero has objected to senators attempting to dictate the use of these funds throughout the pandemic.

San Agustin said there may still be at least one option that lawmakers haven’t yet attempted: deappropriating local funds.

“The Legislature controls the budget – local funds. We don’t have to tell you what to do with federal money. But when we know you got federal money, and we know where it’s supposed to go, well, we’re not going to give you access to local money, when you got money ready to cover with federal (funds),” he said, adding: “We are already looking at budgetary reductions.”

“This time around, because we have all this federal money, use the federal money first. Allocate it, and whatever shortfall may occur as a result of not having enough federal dollars to do it, that’s when the local come in and basically cover,” said Guerrero.

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