OFB finds that abolishing agencies only saves 3 percent of General Fund

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Guam – The Office of Finance and Budget has completed an analysis of the maximum amounts that reorganization could save GovGuam under the provision in the recently signed Business Privilege and Sales Tax bill.

According to a release from Speaker B.J. Cruz the reorganization provision proffered by Senator Frank B. Aguon, Jr. allows the Governor to abolish any agency with a Priority Number of 301 or higher by executive order. The OFB found that abolishing all the agencies in this category would only save GovGuam 3% from the general fund.

Because of this the Speaker is calling for a Special Economic Service meeting on April 3red at 10:00am in order to “more thoroughly discuss how the government’s reorganization will reduce expenses.”

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Abolishing Agencies Would Save 3% of General Fund

APPROPRIATIONS CHAIRMAN CALLS FOR SES TO REDUCE EXPENSES

(March 20, 2018– Hagåtña) Sixty-five percent (65%) of all General Fund dollars are committed to education, health, and safety. This means that abolishing other “less essential” entities would save just 3% of the Fiscal Year 2018 Budget, according to an analysis recently published by the Office of Finance and Budget (OFB) today.

In light of the government’s dire financial state and the expanded reorganization authority granted to the Governor of Guam by Public Law 34-87, the Speaker commissioned the report to determine the maximum budgetary amounts that could be saved. Under the reorganization provision proffered by Senator Frank B. Aguon, Jr. the Governor may by executive order abolish any agency of the government with a Priority Number of 301 or higher.

According to the OFB:

  • Entities under Group 100 (prioritized agencies in health, education, and public safety) made up $443.4 million or 64.56 % of the total General Fund
  • Entities under Group 200 totaled $25.1 million or 3.66 % of the Total General Fund
  • Entities under Group 300 totaled $22.6 million or 3.29% of the Total General Fund

The report further breaks down each agency’s reliance on Special Funds by percentage and real dollar amounts. According to the OFB, the amount appropriated to Groups 200 and 300 totaled $138.29 million or 15% of GovGuam’s total appropriations in Fiscal Year 2018.

Just 35% of that appropriation comes from the General Fund totaling $48 million. In simple terms, if we assume that the FY19 General Fund revenue shortfall is $100 million, and abolished every agency assigned to Groups 200 and 300, the alleged shortfall would still exceed $50 million.

“I asked for this report and prayed that rightsizing alone would be the answer to our problems—it isn’t.” said Cruz. “When Group 300 agencies account for just 3% of General Fund dollars spent, abolishing agencies that serve the disabled, protect farmers, and help our people get to work aren’t going to get us all the way home—even if we recognized home once we got there.”

In light of the announcement, the Speaker is calling for a Special Economic Service meeting at April 3, 2018 at 10:00 AM to more thoroughly discuss how the government’s reorganization will reduce expenses. An official notice containing the meeting’s agenda will be issued shortly.