The GovGuam general fund ended fiscal year 2018 with a $10.4 million deficit, despite the implementation of an increase in the business privilege tax, the Office of Public Accountability reported in its latest audit.
In FY 2018, the general fund’s total revenue was $688 million, a $21 million or 3 percent decrease from FY 2017.
OPA attributed the decrease primarily to the implementation of the 2018 Trump Tax Cuts and Jobs Act, which reduced GovGuam’s income tax collections by $36.6 million.
The prior year, before the Trump tax cuts came into effect, the GovGuam general fund posted a surplus of $32.7 million.
The general fund’s cumulative deficit stands at $83.4 million as of FY 2018.
Also contributing to the decrease in the general fund’s revenue was GovGuam not receiving prior year supplemental payments, which decreased Section 30 Federal income taxes by $9.4 million.
According to OPA, these decreases were slightly offset by the $32.6 million increase in Gross Receipts Tax (GRT) brought on by the Business Privilege Tax rate increase from 4% to 5%, which became effective in April 2018.
Gov. Lou Leon Guerrero, earlier this year, had asked the Guam Legislature to keep the BPT increase until GovGuam’s finances have stabilized.
OPA said the overall decrease in the general fund’s revenue would have been higher if not for the $29 million tax amnesty collections in FY 2018.
In FY 2018, GovGuam did attempt to cut down on spending as evidenced by the general fund’s decrease in total expenditures which totaled $683.8 million, a $30.8 million or 4 percent decrease from FY 2017 due to cost reduction measures by line agencies and decreased subsidies to autonomous agencies.
The prior year surplus was due to the $17.5 million surplus from the Guam Department of Education (GDOE) and $14 million in permanent transfers from special revenue funds.
OPA also reported that as of FY 2018, GovGuam was only $251.7M away from its debt ceiling.