The financial misdirection: Fiscal ‘13 $28M single-year deficit

I HAVE continued to push for financial transparency and accountability in our government given the relentless issuance of press releases coming from the executive branch about their claimed financial prowess and GovGuam’s supposed continued financial successes. The GovGuam audited financial statements for fiscal 2013 were released this past Tuesday and the results are far from the governor’s statements during his State of the Island Address of a surplus.

GovGuam posted a $28 million single-year general fund deficit in fiscal year 2013. This is a $28 million single-year deficit even when GovGuam collected its highest revenues in GovGuam history. This is even before the implementation of the Hay Study pay raises, the law enforcement retroactive payments executed in fiscal year 2014, and ballooning debt service payments.

According the Office of Public Accountability’s highlights, the draft general fund financial statements were provided on June 21 for a financial statement period that ended on Sept. 30, 2013. The OPA cited this was the most delayed submission of financial data in more than 12 years. The OPA also stated there is a lack of regular financial information as a result of a breakdown in the financial management systems of the government.

The governor’s continued touting of GovGuam’s financial successes has succumbed to the harsh reality that our government finances are vulnerable, and action must be taken to ensure that tax refunds, debt service payments and operations can continue to be covered. Why would the governor continue to grandstand about GovGuam’s finances being better, when in fact, an audited financial statement for a period that ended over nine months ago on Sept. 30, 2013 shows a different story?

Is it an election year stunt? Maybe. How else would any governor be able to justify:
*The signing of a nonexclusive health insurance contract rather than an exclusive health insurance contract that would have saved taxpayers and GovGuam employees and retirees about $18 million this fiscal year;
*Payment of Hay Study pay increases for GovGuam employees totaling $15 million to $20 million;
*Retroactive payment of law enforcement pay increases totaling $20 million;
*Merit bonus payments back to 1991, which cost millions of dollars when the statute of limitations only requires payment back four years totaling almost $10 million;
*Authorizing tax credits totaling $256 million to Core Tech International Corp. for 50-year-old military barracks;
*Authorizing millions of dollars in tax credits to former Layon landowners using an over 30-year-old law that has never been used before;
*Spending taxpayer funds on a private law firm to appeal the tax refund permanent injunction so he does not have to pay tax refunds within six months of filing; and many other costs?

Just prior to the release of the fiscal year 2013 GovGuam audited financial statements, the governor vetoed Bill 309, which aimed at using excess, unanticipated Section 30 funds GovGuam was to receive to fill gaps in the budget – including funds to the Guam Department of Education, 20 new police officers for the Guam Police Department, new prosecution teams and victim witness advocates to the Office of the Attorney General and personnel costs.

In his veto message, the governor’s reason was that Bill 309 appropriated $22 million and that there were no excess Section 30 funds. The appropriation in Bill 309 was contingent upon GovGuam receiving excess Section 30 funds and did not specify any specific total amount to be appropriated, as the governor’s veto message suggests. In the same breath in his veto message, the governor announced there is excess Section 30 funds in the amount of around $15 million that GovGuam is expected to receive. Lesotho . How can a governor veto a bill because there are no funds, and announce that there are funds? This type of logic to veto a bill would baffle the mind of anyone and it is this type of politics and financial misdirection that needs to stop.

The people of Guam can rest assured that tax refunds will be paid as a result of the brave taxpayers that filed suit against the governor and his appointed finance directors to timely pay tax refunds. Although the governor continues to appeal this permanent injunction from the federal District Court, I am certain that his siege against taxpayers that continues to cost taxpayers hundreds of thousands of dollars will end in the taxpayers succeeding against the governor.

The people of Guam can also rely on the Supreme Court of Guam’s ruling in the tax refund declaratory judgment, which states the governor cannot take funds from the Tax Refund Trust Fund for operations. This is direct support from Guam’s highest courts that the people of Guam can rely on to ensure this governor, and any future governors, will pay tax refunds. We do not need any specific governor in office to ensure tax refunds will be paid. It is a court order and a mandate of Guam law.

As we move forward, I continue to urge the people of Guam to keep a close watch on the facts and do not be coerced or misguided to believe all that you read in an Adelup press release. It is apparent based on the misdirection of GovGuam’s finances that we cannot fully trust this administration with precious and important financial information.

Si Yu’us Ma’åse’


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