Op-Ed: Governor Calvo – Tax Refund Lawsuits Will Delay Refund Payments

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Guam – Governor Eddie Calvo issued the following statement of opinion arguing that the tax refund lawsuits currently in process at the Superior Court will not ensure timely payments of tax refunds but instead delay them.

READ the Opinion from the Governor below:

Lawsuits will delay refund payments
By Eddie Baza Calvo

There are two separate court cases certain senators are pursuing with your tax money that will slow down the payment of tax refunds.

In the taxpayer lawsuit filed to force the government to pay the tax refunds we were already paying on time, the court awarded the lawyers $1.7 million. They originally asked for over $2.2 million, but our efforts thus far have already saved the taxpayers $500,000.  And through our appeal, we expect to reduce the judgment even further, possibly down to nothing. Yet those lawyers have since filed a motion with the court to immediately seize $1.7 million out of GovGuam’s bank accounts, even while the appeal is pending. I know Senator Ben Pangelinan is in favor of paying these lawyers.  He even introduced a bill (85-32) to force us to pay them. The irony is that if the lawyers are successful and Sen. Pangelinan has his way, this is $1.7 million that now won’t be going to tax refunds or government operations. It will go into lawyers’ pockets.

And now we face a declaratory judgment question that even by his own admission, Sen. Pangelinan has publicly acknowledged was never intended to get you your tax refunds any sooner. My administration is the first administration in 23 years to pay all the tax refunds on time.  It is the only administration that has ever fully funded the Trust Fund account to pay tax refunds. We’ve even put more in that required by law. Yet, mine is also the only administration being sued by the Legislature over this Trust Fund. Senators Ben Pangelinan, Rory Respicio, and their Democrat colleagues apparently aren’t happy with the way we’re paying tax refunds, which has sped up from being four-years-late to being paid just a few weeks after filing – the fastest payments have ever been. Why would any senator want to force us to change something that, for the first time in 23 years, is working? One senator, who now complains when he incorrectly thinks tax refunds are being processed four days late, is the same person who said he would rather owe you your refunds four years late than owe the bank. Is he happier with the way things used to be?

These two separate court cases have one thing in common: the leadership at the Legislature has been cheering these cases on despite having had a hand in creating the conditions they are now protesting.

Take the tax refund case, where we might have to pay the lawyers $1.7 million. The plaintiffs wanted to stop GovGuam’s practice of expediting tax refunds for people who were struggling with a death in the family, severe medical need, or financial hardship threatening the roof over their heads or the car taking them to work.

This was a practice in place dating back to the Gutierrez administration. It was done to help those most in need because tax refunds over those 20 years were always behind by years. Sen. Respicio should be aware of this practice because, during that time he was the Director of Community Affairs, the division that took in the requests and sent them to the Department of Revenue and Taxation for processing of tax refunds out of chronological order.

So commonplace was this practice of expediting tax refunds for our most vulnerable, that Senators Pangelinan and Respicio voted in favor of a law that mandated the setting aside a portion of the Provision for Tax Refunds to pay for “Emergency A Status Returns.” It was one thing to owe our people their refunds, which was wrong. But it was another to sit by and watch people suffer because of this government’s failure to manage its own finances. We felt that it was our moral obligation to at least speed up the tax refunds for medical treatments and to help people avoid evictions. Governor Gutierrez, Governor Camacho and (in the first months of my administration) I were not acting arbitrarily and without authority when we granted requests from desperate parents whose children needed cancer treatment; or young families who begged for their own money to turn the power back on their homes.

Senators Pangelinan and Respicio fought hard against us in 2011, when they didn’t want us to pay tax refunds with a bond. My Chief Fiscal Advisor was berated in session, my entire fiscal team were brought down for hearing after hearing after hearing, to explain to the legislative leadership why I wanted to pay you back your refunds.  We fought right back, telling these senators that the people never agreed to let us withhold their money and that they shouldn’t have to beg for it or justify why they needed their refunds.

We told the senators that the way to stop both the practice withholding refunds and forcing people in desperate need to beg for emergency refunds is to pay the refunds. Senators Pangelinan and Respicio disagreed with me so much that they separated my bond proposal from my budget proposal and amended the budget. This amendment, authored by Sen. Respicio, took $10 million from the $100 million for Tax Refunds and set it aside for emergency refunds—the same emergency refunds that we eventually got sued over.

Imagine my surprise when Sen. Respicio later started celebrating the tax refund lawsuit against me. The one that was brought against us for following a policy created by the Guam Legislature itself, by Sen. Respicio himself. Sen. Respicio became an advocate for the government to lose the lawsuit that would stop emergency tax refunds from happening. The end result? It didn’t result in our getting you your refunds any sooner. That plan was already in the works, and we saw it through. All that lawsuit did was subject us to a $1.7 million judgment to the attorneys. The average tax refund is $2,600. That’s 654 people who will have to wait longer to get their refunds, so we can pay the lawyers. That’s what these senators in favor of the lawsuit are advocating and what Sen. Pangelinan advocated in Bill 85-32: pay the lawyers, tax refunds and the people can wait. The ultimate irony, or duplicity if you will, is the record shows that the senators who directly requested employees of the Department of Revenue and Taxation to pull out tax refunds for their friends and relatives more than any other official were Sens. Respicio and Pangelinan, along with Speaker Won Pat and Vice Speaker Cruz. I guess if one were okay with the prior practice of having the people wait four years for their refunds, it’s no wonder why they have no problem letting you wait another four weeks or four months.

That’s not the direction I want to go in. The right direction is to continue managing things as we have managed them.