Legislature squares off against Adelup in Supreme Court - KUAM.com-KUAM News: On Air. Online. On Demand.

Legislature squares off against Adelup in Supreme Court

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by Ken Quintanilla

Guam - Less than 24 hours after the tax filing deadline, the Governor's Office headed to Supreme Court this morning on the Legislature's request for a declaratory judgment over the use of funds in the Tax Refund Efficient Payment Trust Fund.  

Oral arguments began this morning in the lawsuit against the Governor's Office over tax refunds. The Democrats in the Legislature are alleging the governor is using money from the Income Refund Efficient Payment Trust Fund for operations and want the court to clarify whether money in the fund is supposed to be used only for tax refunds. "We're here today for a very basic question and it's a very basic answer as well is the Legislature authorized to enact laws restricting the use of certain revenues strictly for tax refunds," said John Terlaje, attorney for the Legislature.

In his brief, Terlaje alleges the governor has violated the law despite taking the position that he has the discretion to disregard the mandates of law as long as he finds a way to pay tax refunds in a timely manner. Today, Terlaje says law relative to the trust fund does not restrict the governor's collection authority or to give out refunds but it does affect the legislature's budget process. Chief Justice Robert Torres however questioned the manner and urgency in which the case was brought the court considering that refunds are current. Torres said, "But this has supposedly been going on for more than 20 years and there hasn't been a big rush to come to the supreme court and get a declaratory judgment previously so it apparently hasn't prevented you, the legislature, from going through and budgeting even with alleged failures of the governor to, I mean violations of chapters 50 and 51."

Terlaje said, "The reasons that refunds are caught up to today is because of the major act of the Legislature approving a bonding bill of over $120 million to come in and pay these tax refunds this wasn't the governor picking out and taking out from the general fund and pay $120 million out, this was a great act on the Legislature part we're here saying if we don't take out the money, and we don't budget, then what are we facing at the end."

Assistant Attorney General Shannon Taitano meanwhile says the Income Tax Refund Efficient Payment Trust Fund is a valid act and it inambiguously restricts the use of money in it. The court however noted that in the AG's amicus brief, they stated the judgment may not be appropriate for review because of undue delay. However Chief Justice Torres questioned whether the Paeste order in federal court could constitute why this case should not be delayed.

"I think the court could decide to hear this case in the interest of judicial economy although it is our position that requirements have not been met, because Governor Calvo has been paying refunds in a timely manner, however he will not be governor forever and the government has a history of not being able to pay refunds in a timely manner," he said.

The governor's chief policy advisor Arthur Clark had previously spoke with KUAM on the lawsuit saying it was a waste of time. Today he spoke not only of the jurisdictional requirements but the mootness of the issues raised.

"If they're not limited to just a review of their own actions or questions clarifying their authority and duties then anytime any law passed by the legislature is not followed, even if its criminal statute, that would open up the precedence for the legislature running into court saying we passed a law that isn't being followed, we'd like a judicial review of it," he said.

Justice f. Philip Carbullido noted that the court is not going to determine if withdrawals were made and how it's been used but instead should the case proceed, determine if the Legislature has the power to restrict the use of funds. Clark spoke on how the legislatures over the past decade have overappropriated money and overprojected revenues, so when public resources are unavailable to meet 100% of needs, the governor had practiced his executive authority. He adds when the Administration came in they inherited a $400 million operational deficit - $300 million of which included tax refunds which resulted in the governor going after a bond. As for the use of funds in the account? Clark says it wasn't the intent of the law when it was first enacted, but agreed with the interpretation that the law has provided a form of bridge financing or a line of credit that can be drawn down when funds are not sufficient.

Carbullido said, "But if its utilized in such a manner where if general operations, if there's no sufficient cash and if there's $60 million sitting in the trust fund, as long as the governor has the intent of repaying it can withdraw the funds and use it for other operations because you say these general responsibility and overseeing the proper function of government and then when there's sufficient fund, then he can go back and repay that, that's how it can operate?" Said Clark, "That's how it has operated."

But what about when for example if revenues drop and the governor is unable to pay it back? Clark said, "That actually has been the case for the last 20 years that's how we accumulated the deficit. Carbullido said, "So that at time is when the violation occurs? Because you say as long as he has the intention of repaying it and he repays it, then everything's okay. Clark responded with, "What I'm saying, your honor, because he has repaid it the issue was rendered moot."

The governor's legal counsel Sandra Miller meanwhile noted that it is permissable to pay tax refunds out of the general fund. She adds that if the governor has to advance money from the General Fund to pay tax refunds then he can later recover that money from the trust fund. Clark ultimately says this lawsuit is disingenuous because the overarching requirement have been satisfied in that tax refunds are being paid and in a timely manner. The court will now take the arguments under advisement. 

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