Lawmakers at 10:07 pm last night voted to pass Bill 282-35 — the fiscal year 2021 budget bill — less than two hours before the midnight deadline mandated by law.
Approved was a $950.78 million budget. Sen. Clynt Ridgell, the vice-chair of the appropriations committee, said the passed budget bill is about $108 million less than what was proposed in the executive budget request and $9.8 million less than the adjusted revenues proposed by the governor’s fiscal policy team.
“We spent three weeks deliberating, debating, and amending the bill. The bill cuts millions of dollars in spending. We had to make a lot of tough decisions. Ultimately we had a duty to work together to pass a budget bill by Aug. 31st. We fulfilled our duty,” Ridgell said.
The vote was 13 to 2. The two senators who voted “no” were Democrat senator Regine Biscoe-Lee and Republican senator James Moylan.
Senator Joe S. San Agustin, the appropriations committee chairman, recalled that earlier this year, when the Legislature was presented with the governor’s budget request pre-COVID, there was optimism that it was going to be a great year ahead. He said collections were up and revenues showed that some of the best days for Guam were ahead.
“Who would have known it was going to be a challenging year with a virus that could affect us for the next few years,” San Agustin said.
The appropriations chair then called for a one-minute silent prayer for the legislative employees who tested positive for COVID-19, including one of their own, Sen. Wil S. Castro.
The budget bill now goes to Gov. Lou Leon Guerrero for her approval or disapproval.
During her news conference earlier during the day, the governor was asked what she thought of the budget bill and whether she would approve or veto it.
The governor wouldn’t comment positively or negatively about the bill, saying that she still has to read the bill in detail and that she can only do that once she receives the final budget bill approved by the senators.
She did, however, continue to be optimistic about GovGuam’s revenues, saying that more military spending and federal government money earmarked for Guam would help boost the island’s economy until the tourism industry recovers.
By many indications, however, the governor will most likely veto the budget bill because it falls far short of the additional $7 million that she wanted.
Sen. Moylan earlier said this is probably the reason why administration officials were no longer actively attending and participating during the last few days of the budget discussion.
“It was almost like they were boycotting us because they couldn’t get what they want,” the Republican senator said.
Sen. Lee, one of the two who voted against the budget bill, said there are a number of provisions in the bill that would really present a challenge for Adelup.
“I mean I can’t really speak for the governor … but with a significant cut in the GovGuam budget, critical agencies could be in jeopardy,” Lee said during an interview with NewsTalk K-57’s Patti Arroyo.
Toward the end of the budget sessions, Lee tried to strike a compromise by proposing to increase the withholding tax projection by about $4.6 million and putting that money towards public health. This amendment, however, was disapproved.
Another factor that may lead the governor to veto the bill is an amendment to the bill introduced by Sen. Moylan which cuts the governor’s transfer authority from the 30% originally proposed in the legislation, down to just 15%. The amendment successfully passed 8-7.
“This budget process is certainly an anomaly when compared to recent budgetary discussions. We need to be meticulous and assure that check and balance measures are applied. Allowing the governor to transfer additional monies around would set a dangerous precedent,” Moylan said.
He added: “Lawmakers have had challenges attaining expenditure reports from the administration and it would be irresponsible for this body to allow more of these ‘hocus pocus’ disappearing acts, as we experienced with the monies for GMH.”
Another amendment that the governor might frown upon was one proffered by Sen. Telo Taitague, the minority leader. Her amendment prohibits Adelup from using unappropriated FY 2020 and FY 2021 excess revenues without an appropriation by the legislature. The amendment was passed with 13 other senators supporting Taitague’s amendment.
“At the end of the day, enough senators believed that the power of appropriation shouldn’t be shifted to another branch of government – doing so would be contrary to our separation of powers doctrine. Senators should never be willing to concede this important role to the executive branch thereby ignoring our system of checks and balances,” Taitague said.
‘Shortchanging critical agencies’
After the voting last night, Sen. Lee issued a release stating that for all the good the FY 2021 budget bill does to maintain financial oversight and fight illegal dumping, it shortchanges critical agencies far too much.
She said Public Health would be forced to respond to this pandemic with less money than it needs to serve a COVID-free island and the island’s public schools are in jeopardy of losing millions in federal grants that serve the neediest students.
“Guam Customs and Quarantine has been saddled with how to afford their rent when they should be focusing on protecting our borders from the coronavirus. GVB and GDOE may lose out on millions because this bill gambles their funding against a far from guaranteed bond refinancing process. During deliberations on the measure, I tried and failed to direct money into these important areas. My colleagues were skeptical over raising revenue projections to do this, and I respect the will of the body to go another route. Although I’m grateful other amendments I proffered were adopted, this measure still does not address these fundamental shortfalls,” Sen. Lee said.
She added: “This pandemic is getting worse, not better. The budget bill did not go far enough to protect lives and I could not vote for it in good conscience.”
‘Substantially different budget bill’
Sen. Taitague, who was a very vocal critic during the budget sessions, said she voted “yes” because it was “a substantially different FY 2021 budget bill” that she and several of her colleagues worked to improve during the past few weeks.
The budget bill approved by senators included more than $50 million in cuts to general fund and special fund appropriations compared to the FY 2020 budget.
Taitague said adding a standalone provision to the government’s annual spending plan specifically restricting the use of excess revenues without legislative authorization “is a first.”
“Arriving at a final decision on the FY 2021 budget bill was difficult for me for so many reasons. From the way our budget session and subsequent virtual meetings especially these past several days were conducted – to being fully aware of the bleak financial outlook facing our economy – holding the line when it came to rosy revenue projections and efforts to fund pet projects was critically important,” Senator Taitague stated.
While the revised FY 2021 budget is not as conservative as she wanted, Taitague said this by far does not stop the current legislature or the next legislature from making additional cuts to the government as needed.
“At a time when more than 30,000 Guamanians are out of a job or have less hours to support their families, and with small businesses across our island struggling to survive, I honestly believed going into this year’s budget deliberations that this legislature would do everything in our power to reduce and eliminate costs wherever possible as well as introducing legislation that would assist our small businesses and families. I remind this legislature, Adelup and other decision-makers of our solemn obligation to be good stewards of taxpayer dollars,” Taitague said.
A very different budget session
This year’s budget session was very different from previous ones and would probably be the first and the last of its kind unless the COVID-19 crisis extends to the budget session next year.
Because of the COVID-19 pandemic, the legislature was forced to conduct its hearings online after legislative staffers tested positive for the virus.
The budget sessions had also been mired by different interpretations, estimates, and analysis of GovGuam’s revenue coming from Adelup and the Legislature’s Office of Finance and Budget.
It took more than a week before the lawmakers could move beyond the first few pages of the budget bill because of differences in revenue projections.
Office of Finance and Budget Director Steve Guerrero generated some controversy during the start of the budget sessions when he admitted his office and the Bureau of Budget and Management’s revenue estimates for fiscal year 2021 were at best just “guesstimates.”
With regard to corporate taxes, Guerrero also had a grim prognosis, pointing out that of the 3000-some businesses on Guam, half of them are currently being adversely affected by the coronavirus.
“If unemployment will continue at the rate it’s going, it’s kind of difficult to figure out how much, if anything, corporate taxes will be affected next year. Remember, corporate taxes being collected this year is as a result of events that happened in 2019. What will happen in 2020 by the end of the fiscal year? At the rate we’re going, we all know there’s going to be a reduction. But what the impact of that is … is again anybody’s guess,” Guerrero said.
Later on, during the budget session, Guerrero pointed out that what the island is experiencing now economically, is what’s going to be reported out in 2021.
“So you got to consider the effects of what’s not going to be around next year,” Guerrero said.