DOA budget hearing probes cost of GovGuam’s late payments

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The General Services Agency (GSA) has been augmented to accelerate procurement matters before the end of the fiscal year.

The Department of Administration is requesting an overall appropriation of $11.7 million for FY19. Here’s a quick look at what went down at DOA’s budget hearing this morning over the cost of overdue vendor payments in the midst of controversial tax hikes and government hires.

Guam — As recently as early March the Calvo Administration was shutting down police and fire stations to dramatize the need for tax increases. And it worked. Lawmakers responded and taxes shot up within weeks. Then an audit and a public hearing revealed the Dept. of Revenue and Taxation was dragging its feet on millions of dollars in overdue taxes and failing to recruit at least 40 approved hires. Yet, Adelup was reportedly hiring employees at a cost of millions elsewhere, while Paris was burning.

So is there an emergency or isn’t there?

It’s a question of liquidity. How much debt can the Government of Guam afford to juggle in its admin department before accounts payable become unmanageable?

That may depend on who you talk to. Budget hawks like Sen. Michael San Nicolas see red when accounts payable accumulate. And don’t want anyone sitting on their hands waiting for bills to pile up. This morning San Nicolas told DOA management that the way vendors process purchase orders from the General Services Agency is a costly case in point. He said vendors mark up prices as much as 300 percent for risk of not being paid for a year.

“And so as long as we continue this practice of allowing for goods to be procured without monies to actually pay them on a timely basis, we’re impacting the budget of this government by making the cost of those goods and services skyrocket, because we’re not able to make timely payments,” San Nicolas said.

The squaring of payables and receivables is the workaday world of DOA. And either there’s no reason for alarm, or administrators are too close to the trees to see the forest fire ahead. Whatever the case, the top brass at the department seemed less than worried at their budget hearing this morning.

“I agree with you; you can’t certify funds if you don’t know if the cash is going to be there, but where we’re at right now with our vendor payables, we’re at a total of $23 million,” DOA Deputy Director Vince Arriola said. “Eighteen million of that is current—one to 30 days. That’s probably the best position I’ve ever seen—again, in a long time, and I think a lot of that is simply because we’ve held back on purchase orders.”