OPA says the over estimation of revenues with no corresponding reduction in expenditures is partly to blame for deficit.
Guam – Meanwhile the Office of Public Accountability says that deficit spending is another area that continues to plague GovGuam.
The Public Auditor has released her citizen centric report and in it she talks about GovGuam’s “penchant for deficit spending” or spending beyond the revenues it brings in. She points to the FY2015 $59.5 million dollar deficit which brings the cumulative fund deficit to $119.1 million. The report states that “at the government-wide level, GovGuam’s unrestricted net position now stands at $1.8B, representing two decades of cumulative over spending, and the recognition of unfunded pension liability of over $800M.” The report points out that all of this deficit spending has been financed by long term bond borrowing
Of the $1.1 billion in long-term bonds $766.7 million was issued to pay for operational expenses like tax refunds and COLA. The Public Auditor does however point out that a contributing factor to the deficit is the dramatic increase in Earned Income Tax Credits which have gone from $6.2M to $56.8M in 2014. However, another factor for the deficit is the over estimation of revenues with no corresponding reduction in expenditures and certain preferential benefits. The report states “these are politically difficult choices to make and it is easier to overspend than to cut back and face the wrath of the beneficiaries.”