Guam – The Legislative Committee on Appropriations and Adjudication held a Special Economic Service meeting yesterday afternoon, where lawmakers received an update from the administration’s economic team on different budget projections versus the actual moneys spent for the past month.
A media release out of the Governor’s office yesterday pointed out that Public Auditor Doris Flores Brooks told senators at that session that GovGuam will see a “significant surplus” due to the “good cash management that [the Department of Administration] and the governor implemented.”
That statement wasn’t the only one made by Brooks, who gave the flip side of the coin during the same session.
Brooks pointed out to senators that one of the challenges GovGuam has had for the past three fiscal years, including the current one, is that projections have been “much rosier” than expected. When the budgets are set, she says what’s used is the “rosier number” she referred to and that, she explains, is how we end up in a deficit.
She further noted that expenditures aren’t adjusted to fall in line with the overly optimistic revenues.
“And here you see now, for example, $53 million, that’s quite significant. In the last three fiscal years per the audit, our revenue projections overall have been around $20 million more. In other words, actual revenues came down, did not meet expectations on average by about $20 million,” explained Brooks.
When speaking about withholding numbers, Brooks acknowledged that they knew they were going to suffer, but the reason for the shortfall is actually twofold.
“It’s a combination of two factors: the overly optimistic number that was adopted already last year, and we’re showing just from that number alone, the last three years, we’ve been over-optimistic to the tune of about $20 million. Then on top of that, the Trump Tax Cut hit us, with the withholding being lowered starting in January-February. So we got a double whammy this year,” Brooks points out.
Brooks says they had hoped some of that shortfall would be addressed with the increase in the business privilege tax by 25 percent, however, so far, only $12 million has been collected.
She says that trend isn’t very optimistic. The estimated amount they projected for the next six months is about $30 million.