Guam – The Office of Finance and Budget is saying that the GovGuam financial shortfall for this fiscal year is actually going to be far worse than what the administration originally calculated. The administration estimated a $47.9 million-dollar shortfall due to the Trump tax cuts; however, the OFB is estimating the actual figure to be at $67.05 million. This means the shortfall for this fiscal year is now estimated to be nearly $20 million dollars higher.
How did they come up with such a significantly larger figure? The OFB says they reviewed and analyzed actual GovGuam income tax revenue data and withholding tax data from certain GovGuam agencies to get a more accurate picture. They found the biggest differences to be with the individual and withholding tax estimates. “With regards to individual and withholding taxes we applied an 18 percent decrease or reduction in both individual and withholding. The method we used for that is we took a sample of specific agencies I believe we have DOE UOG and even retiree annuities totaling about 11 thousand five hundred individuals paying withholding taxes and took a look at just one pay period of data that reflected the new withholding tables for 2018 and what we found and what was provided to us was a range of between 17 and 22 percent reduction in withholding,” said OFB Director Ricky Hernandez. Hernandez says they decided to apply an 18 percent reduction to withholding taxes for the rest of the fiscal year which gave them a figure of $33.44 million less in withholding taxes as compared to the previously estimated $5.6 million-dollar reduction. They then applied an 18 percent reduction to individual taxes which resulted in a $5.8 million-dollar shortfall for the fiscal year as compared to the previously estimated $1.5 million-dollar reduction. Hernandez says these are the most accurate figures they could come up with without detailed aggregate income tax data from the Department of Rev&Tax.
The new estimate was provided during this mornings(Tues) Special Economic Services meeting. After hearing the OFB’s presentation the Public Auditor said it matched figures she recently received from the Retirement Fund on its January 30th annuity payments. “The Retirement Fund income tax withholding decreased by $165 thousand dollars for that pay period alone. That was a 20 percent reduction. That translates to $2.8 million dollars for the remainder of this fiscal year or $4 million dollars for a full year. And that was a 20 percent and I thought that was high but now based on what you’ve just said that number was spot on,” said the Public Auditor.
Department of Administration Director Edward Burns also agreed with the figures presented during the SES meeting. “Mr. Speaker we now have those numbers and I would confirm Mrs. Brooks number we’re getting around 20 percent too for the government employees,” said Burns.
So how will GovGuam deal with this huge loss of revenue? Speaker B.J. Cruz says it will have to be a combination of spending cuts and revenue enhancements through increasing some sort of combination of taxes and fees.
BBMR Director Lester Carlson said the governor has re-issued the cost containment measures he introduced via an executive order he issued when he first got into office. “We are requiring and mandating general cost containment measures in the areas of power, maximizing office space, looking at potential reorganization, fuel consumption, procurement, consolidated training for staff and development, fleet management and maintenance and personnel actions. For the record we at BBMR are not processing any general fund funded vacancies for the positions that are funded for this fiscal year. We are also denying any travel requests that are funded out of the general fund,” said Carlson.
The BBMR director says these measures should allow GovGuam to reduce expenses by $15 million just in the Executive Branch and its line agencies. More money can be saved in non-line agencies like DOE which has been tasked with cutting $19 million dollars and the Legislative and Judicial branches.