Governor clashes with San Nicolas over measure to pay tax refunds


The Governor’s bill seeks to authorize GovGuam to issue a Tax and Revenue Anticipation Note or TRAN for what essentially is a yearly $75 million line of credit.

Guam – Last Friday, Governor Eddie Calvo introduced a bill that touts a faster release of tax refunds, but perhaps the most vocal dissenter since the bill’s introduction has been Senator Mike San Nicolas.

The Governor’s bill seeks to authorize GovGuam to issue a Tax and Revenue Anticipation Note or TRAN for what essentially is a yearly $75 million line of credit.

The bill says all Status A refunds will be paid by May if this measure becomes law following the April legislative session and boasts of the availability of cash sitting in the bank come January next year and every year following to allow for tax refunds to be paid immediately upon processing of error-free refunds.

But in response to this measure, San Nicolas took to social media arguing that the Governor’s proposed bill is the second time the administration has tried to, “borrow against what is nearly the entire Section 30 money of $75 million that we get in September, that is supposed to pay for upcoming obligations.”

However, Adelup emphasized that this would not be a bond nor would it be long-term debt, but rather a tool for the Department of Rev and Tax and the Department of Administration to pay all refunds at the beginning of the year.

Yet San Nicolas says there’s still $245.5 million owed in vendor payments and other obligations that the Section 30 money is reserved for. He also implied the Governor was sun-setting the program in alignment with the administration’s term. In a post on Facebook, the lawmaker quipped: “Government spending over the years has ballooned by hundreds of millions and not a dime more into the tax refund account to pay the people. And now he wants to borrow. Again.”

In defense of his measure, the Governor wrote a letter addressed to the lawmaker claiming that the bill would provide greater flexibility to plan deposits into the tax refunds savings account. The Governor wrote, “In household terms, this is closer to the difference between an installment loan and a revolving line of credit. Every penny used throughout the year must be paid by September 30 of the same fiscal year. The reason financial institutions allow this line of credit to many cities, counties, and states at such a low interest rate is simple: the payback source is what the government freed up by paying the program upfront with this tax and revenue anticipation note. All this TRAN does is it front loads the payment of tax refunds at the start of the year, instead of making the payments as cash comes in scattered points throughout the calendar.”

The Governor concluded his letter aimed at the Democrat lawmaker, saying, “I ask that you continue your due diligence in researching this. You may call on my fiscal team to answer your questions and you may challenge any assertions I’ve made. But, please, do not allow your misconceptions or inability to see past the politics to interfere with your parliamentary duties.”

You can read the governor’s bill along with his response to Senator San Nicolas attached below.