Guam – During a visit to the Dept. of Administration today, Gov. Lou Leon Guerrero and Lt. Gov. Josh Tenorio reiterated that deficit reduction is a manageable priority for their administration.
Lou and Josh made their way through the various floors, halls, and offices of DOA at the ITC Building in Tamuning on Thursday afternoon, stopping by Acting Director Edward Birn’s office, the human resources and payroll divisions, and other areas.
Demonstrating a taste of the transparency and accessibility that the Leon Guerrero-Tenorio Administration aims to make hallmarks of its first term, the Maga Haga, Segundo Maga Lahi, and Director Birn responded to pressing concerns about GovGuam’s annual shortfall due to various outstanding liabilities and new government accounting rules–and about the necessities of day-to-day cash management.
Noteworthy was their response to the Dept. of Interior’s recent finding that the island government wound up $889.5 million in the hole by the end of FY17.
“The deficit that you’re talking about, the $889 million, is a government-wide deficit, including all the pension liabilities, whereas the previous administration was looking—and, we’re obviously…working through the numbers now—towards a surplus for the general fund,” Birn told PNC.
“In our transition committee report that was presented, we saw…just the general fund deficit was negative $73 million, and so this fiscal year I think had a positive $13 million surplus, so that decreased the general fund deficit to a negative $63 million, Leon Guerrero said.
“So our transition report is going to be public I think sometime next week or the week after,” Tenorio said. “We had people from the outside come in. So we had our island’s top accounting CPA’s from the private sector to come in to help us with the transition, taking a look at the financials and giving us a true picture.”
Tenorio reminds taxpayers that the Government Accounting Standards Board, which GovGuam adheres to, has introduced more stringent reporting requirements.
“The Government Accounting Standards have changed, and they’re also requiring governments to record the unfunded liabilities,” Tenorio said.
“It’s gonna be for health insurance, life insurance, all the obligations and promises that the law and the government have made to our employees and retirees that are definitely going onto the financial statements.”
“The government-wide deficit–you know you try to pay down the deficit as you go along every year to year, but the general fund…is the one where we do the operations on a regular daily basis. That’s the one that I’m going to really follow very closely,” Gov. Leon Guerrero said.
“OK, but there’s an opportunity to reduce through tax collections [and] refinancing?” PNC asked.
“Sure,” the governor said. “Yeah, refinancing is another way where you do cross savings and you refinance and lower the debt, so then you don’t use as much of your cash paying the debt.”
Leon Guerrero said frugal spending, collecting taxes, plugging up financial leaks, and licensing rogue businesses are among other ways to stem the deficit. She aims to monitor finances closely to achieve a paper surplus and retire the deficit.
Director Birn affirmed that some of the GASB requirements have had the effect of deepening the government’s deficit. Lt. Governor Tenorio said the independent, private sector assessment of GovGuam’s financials has affirmed the excellent choice the administration has made in keeping Birn on board at DOA.