Guam – DOA Director Benita Manglona today confirmed that tax credits are being used to pay off the debt owed to the former Layon landowners.
A court judgement awarded those former landowners an additional $24-million dollars after their property was condemned and used to build the new landfill.
Manglona issued the statement after Vice Speaker B.J. Cruz issued a release of his own calling on the OPA to conduct a detailed audit of the tax credit program [read Senator Cruz’s release below].
Cruz acknowledges that there is nothing illegal about using tax credits to compensate landowners whose property has been condemned. Hhis concern is the loss of income for GovGuam.
However, in her statement, Manglona said “We hope neither the Vice Speaker, nor anyone else is suggesting that we ignore our bills. And she points out that we had to start making payments or taxpayers would be liable for a whole lot more.”
READ the reelase from DOA Director Manglona below:
“We’re paying this liability down using tax credits in lieu of cash. We decided to do this after looking at the interest that kept growing every day. We had to start making payments or taxpayers would be liable for a whole lot more.”
“There was even the possibility that the landowners could take the land back, and then we would really have been in a bind with the consent decree on Ordot and Layon.”
“This is a great vehicle to use to pay down debt, and thankfully landowners agreed to be paid with tax credits instead of cash, at least for now. And unlike the Vice Speaker’s unqualified statements that are not backed up by any evidence or data whatsoever, we do not have an untenable or precarious cash situation.”
“Our cash situation is just fine, thanks to our hard work to get the government’s finances in order. We hope neither the Vice Speaker nor anyone else is suggesting that we ignore our bills. That’s the kind of attitude that caused the back log of tax refunds to the people when we came into office. We oppose the attitude that we should owe the people and not the bank.”
READ the release from Senator Cruz below:
Cruz: Audit ‘Dormant’ Tax Credit for Land Program; Vice Speaker Calls for Repeal, Revocation of Any Tax Credits Issued
(March 5, 2014 – Hagåtña) In the hopes of clearing speculation that millions in tax credits have been granted to select Layon landowners, Vice Speaker Benjamin J.F. Cruz has called for a detailed audit of a tax credit program that allows property owners to elect to receive tax credits in exchange for cash owed for publicly acquired private lands.
In a letter sent to Public Auditor Doris Flores Brooks this morning, Cruz stated that the tax credit program in question had already been flagged as “dormant”, citing a performance audit of Government of Guam Tax Credit Programs issued in November 2007 (OPA Report No. 07-15).
The report held that the Tax Credit in Lieu of Cash Payment program created by Public Law 14-69 in 1977, was “never implemented” and that the authorizing agency, Department of Revenue and Taxation (DRT), was “unable to produce any documentation of tax credits granted under this thirty-year-old program”. Additionally, the OPA recommended the repeal of the program, as well as other dormant and unimplemented tax credit programs identified in the report.
In an attempt to establish evidentiary data, Cruz filed a Freedom of Information Act request with DRT Director John P. Camacho on Feb. 24, 2014, seeking a list of all recipients of tax credits under the Tax Credit in Lieu of Cash Payment program as allowed under 11 Guam Code Ann. § 38101, the applications for those credits, and the certifications required under 30 Guam Administrative Rules & Reg. § 2405 indicating government acquisition of privately-held land.
DRT’s Feb. 28 response explained that tax statutes render the agency “unable to provide a listing of all recipients of tax credits as allowed under [11 GCA § 38101], nor provide copies of the applications for such tax credits”.
“While I fully expected a statement confirming the dormancy of this program and that no such list existed, DRT’s response seems purposefully evasive,” stated Cruz. “Consequently, the very nature of this denial begs the question: If the program is truly inactive, why is DRT purporting that there are tax credit recipients to protect? Why are there applications to be kept confidential?”
Cruz’s letter goes on to explain that the provisions of 11 GCA § 38101 “may be abrogated by, or in conflict with, another provision of law found within the same title”. 11 GCA §15101(b) states that no real property or property other than money “may be received by the government of Guam pursuant to §38101 of [GCA] without prior specific statutory authority for the transaction”.
While Cruz denies knowledge of “specific statutory authority” permitting the issuance of tax credits under 11 GCA § 38101, he stressed that “the public purse should not be subject to massive revenue losses because of conflicting laws or statutory ambiguity.”
“Given the absence of a ceiling on tax credits issuable under this program, the potential impact of unbudgeted tax credits on [the government’s] already-struggling cash position, and the discretionary basis by which this authority may be exercised, I request that you conduct a detailed audit of the Tax Credit in Lieu of Cash Payment program,” urged Cruz, who in his letter to Brooks also stated that he will introduce legislation to repeal the program and to revoke or void tax credits issued under 11 GCA § 38101 since OPA’s 2007 audit.