Guam - Governor Eddie Baza Calvo followed through with his vow to veto the new budget bill that the Democrats passed by majority vote earlier this week. Prior to its passage the Governor warned that it was filled with empty promises. Among the several concerns he had with the new legislation was its provisions to fully pay hay pay raises and to fully restore COLA to retirees to $1800. The Governor said that the government could not afford it at this time but instead should pay hay raises in a phased in approach and pay an annual COLA of $1500. Committee Chair on Appropriations Chair Senator Ben Pangelinan called the Governor's concerns about the new budget propaganda and a veiled attempt to portray the Legislature's budget in a negative light.
Shortly after receiving the budget Thursday afternoon, Governor Calvo met with several republican senators at Adelup. The Minority senators did not vote for the budget and have agreed to work with the Governor on alternative legislation.
In a letter to Speaker Judi Won Pat Thursday evening informing her of his veto of the budget bill, the Governor listed the following objections with the legislation:
1. The Legislature lumped funding for the health agencies together, carved out appropriations for various programs, then left the balance for operations. This balance left the health agencies $3.7 million short of what they will need to operate.
2. The Legislature lumped funding for the safety agencies with the rest of the line agencies, delivering a total cut of $6.7 million from current levels. Every line agency, including the public safety agencies, already are operating at levels affecting the delivery of services.
3. The Legislature used the funding taken from these critical operations to help fund two empty promises: full implementation of the Hay Plan pay raises for all classified employees, and full restoration of the annual COLA. This is $15.4 million in new spending that is (a) taken at the expense of the health and safety of the Guamanian people, and (b) unsustainable and, therefore, subject to being cut through the fiscal year or in subsequent years. Furthermore, the Legislature failed to authorize the Hay raises for the unclassified service, effectively shafting the mayors and their staff, and hundreds more in critical positions of public service. The inequity would be onerous.
4. In addition to the fantasy appropriation for the Hay raises that neglects to include the unclassified service, the Legislature placed a bureaucracy of regulations in front of the implementation of the raises. It is completely disingenuous for the Legislature to claim its support of the full implementation of the Hay, when the language in this bill expressly prohibits implementation before January 15, 2014.
5. The Legislature had a lapse in memory dating to March 2007, when Standard & Poor's placed the island on CreditWatch for issuing a line of credit to pay for the Department of Education's operations. In fact, the ding on our credit was "based on (GovGuam's) disclosure of the need to borrow $6 million from local banks to meet its current payroll obligations for public school system employees," the report stated. It hasn't been seven years later, and the Legislature wants me to use this same line of credit to pay for DOE and Judiciary operations. This is completely irresponsible, irrational, and beyond comprehension; not to mention insensitive to the Judiciary and DOE employees, whose hopes were raised falsely by yet another empty promise from the Legislature.
6. There is no reason the Provision for Tax Refunds should be any higher than $113 million. We expect to pay about $107 million from the Provision this year. What mathematical formula did the Legislature use to add $13 million more to next year's Provision? A bump of $6 million is more than adequate to meet the Provision.
7. The Legislature created a lockbox provision over General Fund revenues, greatly restricting the administration's ability to manage cash flow. Such a lockbox endangers the viability of the government during low cash collection months. The Legislature disregards the ebb and flow of cash collections, pretending that tax payments are somehow beholden to a schedule created by the Legislature.
8. The Legislature created a lockbox provision over the Tourist Attraction Fund that, if etched into statute, would jeopardize tourism marketing operations during low cash collection months.
On Wednesday, the Governor indicated that he has an alternative budget bill and will be calling lawmakers into a special session to deliberate on it.