Guam – In his final State of the Island address, Governor Calvo said the state of the island is “strong,” but the next few days could be a turning point for his administration as the island braces for deep budget cuts that will undoubtedly upend the island’s economy.
Hours before his speech, at a Special Economic Session to discuss the impacts of the Trump Administration’s tax reform cuts, the Office of Finance and Budget revealed the cuts are even deeper than originally thought.
Earlier this month, Adelup announced a $47.9 million shortfall. At today’s SES meeting, the OFB said a closer look puts the figure at around $67 million.
This revelation set the stage for the governor’s speech as he implored lawmakers to “rise above the politics” and pass his proposal to increase the gross receipts tax by 50 percent with a two year sunset provision.
After two years, a .75 percent increase will stay in place and will be used as a dedicated funding source for the Guam Memorial Hospital which has been dragged through the political mud in recent days upon the controversial release of a Joint Commission accreditation report that is the subject of the threat of accreditation loss.
Much of the governor’s speech was spent on boasting about the accomplishments of his administration since taking office in 2011, from publicized deportations to a decrease in the unemployment rates, an increase in the number of working ambulances, a reduction in the homeless population, and perhaps what will be his defining legacy–the timely payment of tax refunds.
Throughout his speech, however, the governor proposed no new initiatives, instead he continued his push for the 50 percent increase in the GRT, without which could change the course of his administration and the island.
A $67 million shortfall announced in the middle of the fiscal year with that number expected to rise next fiscal year could end in agency closures, school closures, personnel cuts and payless paydays.
This grim picture would be a stark contrast to the remarkable administration the governor painted throughout much of his speech–one with raises for public safety officers, ending injunctions and receiverships, the doubling of annual revenues and an increase in the GDP by $1 billion.
The governor used an anecdote to end his speech–the House of Taga in Tinian, which he says symbolizes the resilience of the Chamorro people from its ancestors to their descendants living today.
You can read the governor’s entire speech here.