Budget Critique #1: $18.3M GWA Payment to Force Rate Increase & Threatens Health Insurance

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Guam – The Calvo Administration is accusing Senator Ben Pangelinan of adding an amendment to the 2012 budget bill that will raise water rates by 18%.

In a release today [Wednesday] dubbed “Budget Point-for-Point”, the administration cites Section 4 of Chapter XIV Part I of the budget bill which  identifies $18.3 million as a fund source from GWA. The funds are listed as revenue and assigned to pay for the GovGuam EHalth Insurance Plan.

This $18.3 million was required by an amendment proposed by Senator Pangelinan which was attached to a GWA bond authorization bill last year. It requires that the utility repay to the General Fund money advanced by GovGuam to pay off an old bond debt by the former Public Utilities Agency of Guam [PUAG].

GWA did not make the payment. An administrative law judge has ordered the payment to be made after ruling that the law reuires it. GWA has filed suit in court to overturn the decision charging that the amendment is illegal and violates the bond covenant.

The release from the Governor’s office today points out that the $18.3 million is the subject of legal action and is NOT revenue. “Appropriating revenue that doesn’t exist is how the government gets into trouble in the first place,” states the release.

The Administration also argues (as CCU Chairman Simon Sanchez has said on many occasions) that if GWA has to make this $18.3 million dollar payment, the water utility will have to raise water rates.

And since the payment is the subject of legal action, the administration is pointing out that there is no guarantee that the money will be available to pay the cost of GovGuam’s health insurance plan.

 

READ the release from the Governor’s Office in FULL below:

BUDGET POINT-for-POINT: Won Pat/Respicio/Pangelinan Budget Will Increase Water Bills 18%, Jeopardize Health Insurance

There is an amendment in the budget bill that will force GWA to raise water rates as much as 18 percent. Section 4 of Chapter XIV Part I of the legislature’s budget bill (page 189), identifies $18.3 million as a fund source, which supposedly is to come from a “reimbursement” from Guam Waterworks Authority. There are a few problems with this logic:

1. This is not revenue. This so-called reimbursement is in court. GWA is contesting this amount. The first hearing actually is today. Appropriating revenue that doesn’t exist is how the government gets into trouble in the first place.

2. If GWA is made to pay this $18.3 million, then GWA has to get this money from somewhere. The only place where GWA gets money is from its ratepayers. If GWA has to pay $18.3 million, it will have to charge ratepayers more.

3. This so-called revenue source is appropriated to pay for health insurance. What happens if this is not received? ANSWER: Thousands of GovGuam employees, retirees and their dependents will be left without insurance.

BUDGET POINT-for-POINT: Won Pat/Respicio/Pangelinan Budget Will Increase Water Bills 18%, Jeopardize Health Insurance

 

There is an amendment in the budget bill that will force GWA to raise water rates as much as 18 percent. Section 4 of Chapter XIV Part I of the legislature’s budget bill (page 189), identifies $18.3 million as a fund source, which supposedly is to come from a “reimbursement” from Guam Waterworks Authority. There are a few problems with this logic:

  1. This is not revenue. This so-called reimbursement is in court. GWA is contesting this amount. The first hearing actually is today. Appropriating revenue that doesn’t exist is how the government gets into trouble in the first place.

 

  1. If GWA is made to pay this $18.3 million, then GWA has to get this money from somewhere. The only place where GWA gets money is from its ratepayers. If GWA has to pay $18.3 million, it will have to charge ratepayers more.

 

  1. This so-called revenue source is appropriated to pay for health insurance. What happens if this is not received? ANSWER: Thousands of GovGuam employees, retirees and their dependents will be left without insurance.