Substitute Bill No. 55-36 (COR), the fiscal year 2022 budget bill, has lapsed into law without Gov. Lou Leon Guerrero signing it.
In her transmittal letter to Speaker Therese Terlaje, the governor said that in passing Substitute Bill No. 55-36 (COR), now Public Law No. 36-54, the Legislature has satisfied its duty, but unfortunately, specific provisions of the bill are concerning, especially considering the island is still dealing with a global pandemic that has affected almost every aspect of the community, including the island’s financial state.
“However, taken as a whole, we will make this budget work as we have done with other budgets since taking office. Our proposed budget included revenue projections we believe are reasonable given our island’s present circumstances, accounting for reduced tourist arrivals and increased federal spending, both in military projects and aid designed to address the adverse effects of the COVID-19 pandemic,” Leon Guerrero said.
She welcomed the increased appropriations to certain agencies, including the Department of Revenue and Taxation, which acknowledges the agency’s criticality and its broad impact on government operations and services, including business and driver’s licensing, tax collection and refund processing, insurance, and banking regulations.
However, given the projected business privilege taxes, the governor said other agencies, many of which are also tasked with providing vital services during this difficult time, should have also been granted enhanced appropriations.
“Simply, the Legislature could have, and should have, done more. Modernizing government pay structures and paying workers their due compensation have been my Administration’s top priorities, which is why I previously directed the Department of Administration to update pay plans for nurses, educators, and law enforcement officers,” Leon Guerrero said.
In addition, the governor said the budget bill includes an amendment increasing the Fiscal Year 2021 Budget Act’s provision for tax refunds to reflect and lockbox an anticipated $20 million surplus rather than simply agree to her administration’s request to increase the provision.
The governor said the budget bill is premature at best and reckless at worst since initial internal projections regarding an anticipated surplus should not be acted upon until reported numbers clear the audit process, which will not be completed until May 2022, at the earliest. She said this surplus is merely a projection until that time, and the senators are “building important structures in the sand.”
“While I understand the desire to earmark these potential funds for crowd-pleasing measures like paying tax refunds, doing so at this early juncture is simply irresponsible and likely unenforceable. The Legislature cannot appropriate this projected surplus as long as the General Fund reports an accumulated deficit. Moreover, this measure is unnecessary — my administration has paid out more tax refunds during the current fiscal year than other administrations have managed in decades,” Leon Guerrero said.
Finally, the governor said that in a bid to restrict her ability to redirect appropriations, the budget bill carries an amendment limiting her transfer authority from the customary fifteen percent (15%) to a “paltry” five percent (5%).
“The purpose behind this drastic action is unclear. Since I have taken office, I have implemented strict fiscal discipline that led to stabilization of our finances, retiring the deficit by more than ninety-eight percent (98%). The Legislature’s attempts to limit my transfer authority during a global pandemic are short-sighted and rash,” Leon Guerrero said.
However, despite her stated objections, the governor said her administration is committed to work with Substitute Bill No. 55-36 (COR) for the upcoming fiscal year.