by Lannie Walker

Guam - With a confirmation hearing held today for two members of the governor's fiscal policy team and an informational hearing on the state of the government's finances, it was bound to be up for discussion GovGuam's estimated $126 million budget shortfall. Aside from discussing where the money is going to come from to pay for unfunded obligations like health insurance and mental health's amended permanent injunction, discussions today focused a lot on a portion of President Barack Obama's 2009 economic stimulus plan that provided a tax credit of up to $400 for individual tax filers or $800 for joint filers.

It's called the Making Work Pay Tax Credit, which was supposed to stimulate the economy. On Guam, it's stimulated debate on whether it should be counted toward the government's shortfall because a large chunk of that money was spent before it was even paid out.

A lot of numbers were flying around during hearings before the Committee on Appropriations today. But one number - $55 million - came up again and again. The figure represents what the Executive Branch is identifying as money that was supposed to be spent to pay Making Work Tax Pay Credits for 2009 and 2010, but apparently was not.

John Camacho is the new acting administrator of the Department of Revenue & Taxation and said, "I guess the money was used in the previous administration and know it is a liability of the government." Committee chairman Senator Ben Pangelinan presided over the hearing where employees of the Bureau of Budget Management & Research, the Department of Administration, and Rev & Tax came before he and other members.

Acting director of BBMR Benita Manglona explained how the Making Work Pay Tax Credit was supposed to function, saying, "That was a credit that if you did your return in 2009, a single taxpayer would get $400 of $800, and the problem is the funds are used already and the credits that were supposed to be paid out were not paid out."

A memorandum of understanding was signed several years ago between the Internal Revenue Service and the public sector in which the feds would reimburse GovGuam for paying out the tax credits. But $55 million later, the new administration is trying to determine where exactly the money went.

Rev & Tax is several years behind in actually paying out tax refunds; the reason in part because GovGuam simply doesn't have the money. Deputy press secretary for Adelup Phil Leon Guerrero told KUAM News, "That's what our fiscal policy team is working on right now and when you hear about the cash liability issues that our government is facing this is just one example of them."

But Senator Pangelinan's view of the financial liabilities the government is facing continues to differ from that of the Executive Branch. "This is not a liability that we have to worry about as having to repay each year," he theorized. "So therefore we can't use that cash of $55 million that we borrowed for operations this year because we have to satisfy that liability. No, we are booking that as a liability in the income tax refund provision."

In fact, Pangelinan says some of the funds, which were supplied by the federal government in order to make up for a reduction in withholding collection, did go to taxpayers. "So we have paid people back their refund, which in some cases is inclusive of that credit," he confirmed.

Leon Guerrero agrees that a portion of the funds of a total of $62 million received by the federal government was used for its original intention, but adds, "We have to ensure that every single taxpayer, every single family that is eligible to receive this assistance gets the money that they are supposed to get." And Leon Guerrerro says what ever was not paid to taxpayers will need to be returned to Uncle Sam, adding, "If we don't replace the $55 million to go towards this tax credit program, it will no longer just be a liability or money owed to our families but it will be money owed to the federal government and that is a entirely different can of worms."

But Camacho says they must first get a firm grip on just how much should go to taxpayers by processing all 2009 tax returns. "Which means the government is getting something for the taxpayer, so in essence they want to account for that money and basically make sure the amount we actually received and then whatever is left we have to return," he said. "We will address that at that point in time when the returns are being processed and we have determined how much needs to be paid out then we will address at that time."

In the meantime, Manglona told the panel that the governor's fiscal team will be working with the Office of Public Accountability to determine the validity of all of the liabilities that make up the government's budget shortfall - that's expected to be completed next week.