Governor Calvo to amend Fiscal Realignment Plan & cut additional $1.52 million

Former governor Eddie Baza Calvo (PNC file photo)

Guam – The governor has turned in his fiscal realignment plan that is required in order to enact the 1% business privilege tax increase in April and a 2% sales tax in October. The FRP is supposed to identify $30 million in cuts however the Office of Finance and Budget’s analysis reveals that the FRP is short by $1.52 million.

In order to enact the 1% BPT increase and 2% sales tax the administration was required to submit a financial realignment plan that identifies $30 million dollars in cuts. They submitted their plan saying it identified $42 million in cuts. However, the OFB conducted an analysis showing that it was instead short by $1.52 million dollars.

How did this happen? Well the OFB says that because an additional $1.52 million was appropriated to GMH for the remainder of this fiscal year it increases the overall budget which means the budget was not reduced by $30 million but instead reduced by about $28.48 million.

Speaker B.J. Cruz wrote a letter to Governor Calvo pointing this out and asking the governor to “amend your FRP to reflect the net appropriation reduction of $30 million, as required by law.” The Speaker wrote that this is necessary “because of the critical nature of this law, and the need to ensure its effective date provision is not challenged in the courts.”

“We would like to work with him and though we believe we’ve done the necessary cuts we want to make sure that there’s no wiggle room in terms of any technical issues with regards to the $30 million,” said Governor Calvo.

Governor Calvo says he has instructed his fiscal team to make a light pro rata cut amongst other agencies to make up for the additional $1.52 million that was given to the hospital.

“The Speaker is a former judge. He’s a lawyer and I think he’s doing this in terms of goodwill and ensuring that full compliance is …we don’t want any more complications period. So, one and a half million spread out over many agencies, we can absorb it,” said Governor Calvo.

As for the cash flow of GovGuam the Governor says while March has been tight he’s looking forward to some better times in April.

“I do know we’re still tight for March we’re gonna see an uptick in revenues in cash coming in April but that’s tax time. So, the good news in April is there’s gonna be a lot more monies coming into the government of Guam but the reverse side it’s also a big payout period for such things as tax refunds. So, we do believe things will loosen up a little bit in April but again there will be some major payouts that we need to ensure are made so that we can keep up with our obligations. And then of course May, May we hope to see the increased revenues come as a result of the passage of law that allowed for the BPT to go from 4 percent to 5 percent,” said Governor Calvo.

Despite this the governor says its wise for GovGuam agencies to continue with the lengthy furlough process just in case furloughs are necessary. “So understanding how complicated the furloughing process is, I believe it is prudent to continue and then as we evaluate the situation in the days and weeks ahead, then if it is necessary to make any course changes, we’ll make those course changes,” said Governor Calvo.

The administration also says Adelup will continue their voluntary 32-hour workweek that started this past pay period.