GovGuam’s cumulative deficit is $1.8 billion

Public Auditor says FY16 surplus is $1.2 million and not $13.4 million.


GovGuam has a cumulative deficit of $1.8 billion dollars. While the administration has boasted about a 13 million dollars surplus for FY2016 Public Auditor Doris Flores Brooks says that the surplus was really only $1.2 million just a fraction of our cumulative deficit.


“Our past over expenditures plus the unfunded pension liability brought the number to a staggering 1.8 billion dollars,” said Brooks.

This 1.8 billion-dollar figures is GovGuam’s cumulative deficit. This was built up over 20 years of overspending. Whenever the government spends more money than it takes in there is a deficit. Add all the yearly deficits up for the last 20 years and add in the unfunded liability of the GovGuam retirement fund and the cumulative deficit is 1.8 billion dollars.

The Public Auditor says the only good news is that there was a surplus in FY2016. However, the surplus was not as large as the administration has claimed. The administration has said that GovGuam reached a 13.4 million dollars surplus. This was based on a report from the Public Auditor, however; Brooks explains that the surplus in 2016 was only a 1.2 million dollars surplus.

“Altogether we had almost close to 13 million dollars in surplus but 12 of that was really due to what we call timing. The left over bond proceeds that we had not yet distributed out which we later gave to Guam Memorial Hospital so the true surplus was really only 1.2 million dollars,” said Brooks.

Nevertheless, the Public Auditor says this is a good thing and a step in the right direction. “This is the first year and kudos to the Governor and his administration. We for the first time did not spend more than what we brought in,” said Brooks.

However, the Public Auditor also says this is still just a drop in the bucket and at this rate it will take us hundreds of years to pay off the deficit. “What we have to do is stop incurring debt to pay off operations that’s what we have to do,” said Brooks.

Then there is the current deficit of 106 million which Brooks says is comprised of cumulative deficit over the last three fiscal years. “That’s a true cash deficit. That’s why DOA continues to always struggle hand to mouth hand to mouth as soon as the cash comes in it goes right out as soon as section 30 money it goes out because that represents true over expenditures. We haven’t paid that off yet. That’s why the cash juggling still has not been relieved because we spent 106 dollars more in cash than we brought in. How are we going to pay it back? We haven’t yet. We haven’t paid it back through debt. So that’s why GovGuam continues to this day to have that cash problem,” said Brooks adding, “DOA Department of Administration will continue to struggle with cash that’s why tax refunds continue to just kind of drip drip drip out because as soon as we get a little bit of cash we saw what 1 and a half million out this past weekend right so as soon as we get a little we save it we pay out the tax refunds and that continues to be unfortunately a vicious cycle.”

So, what needs to be done to end this vicious cycle? “There’s two ways to stop this. You either raise revenues and were hearing already the backlash from people proposing to raise revenues or you reduce expenditures. Now is it practical for the government of Guam to reduce expenditures by a hundred million dollars? Probably not. But some kind of combination of the two is needed,” said the Public Auditor.

Brooks says this combination of raising revenues and cutting expenditures is needed because although GovGuam’s revenues have steadily increased over the years so has our spending. “Over time Guam’s economy has been good but expenditures have been growing faster. It’s always the case right we spend more than what we take in and we’ve shown that history for the last 19 of the 20 years we’ve shown that history that we’ve always done that we’ve always spent more,” said Brooks.

The Public Auditor says that Guam’s financial condition is not anywhere near as bad as Puerto Rico’s financial condition but she warns that we are currently headed down the same path.