Governor's Weekly Radio Address - May 31
It's been important for us to let you know exactly where your money is going. It's been just as important to tell you about the true condition of your government.
By KUAM NewsNo Time to Waste
By Governor Eddie Calvo
I know you've heard our administration talking a lot about the budget and the deficit and your government's cash situation. It's been important for us to let you know exactly where your money is going. It's been just as important to tell you about the true condition of your government. Equally critical is how our fiscal policies, and the Legislature's willingness to pass our budget plans, will affect you.
We spent a lot of time in our first few months stabilizing government finances. Every dollar you gave to the Treasury had to be allocated very strictly. This was mainly because not enough cash was coming in to pay for operations, no matter what the budget said. We cut spending and our cash position is much better now. We looked at how much it will take to make payroll for all the agencies, to pay for contractual obligations, to meet court-ordered payments and to pay at least some tax refunds.
When we got everything under control, we turned our eyes to coming up with a plan to pay all the tax refunds government owes you. These tax refunds make up the greater part of the $349 million deficit. We thought long and hard about how we could pay this deficit and tax refunds. The most obvious solutions are to raise revenues and cut expenditures until the deficit is paid down. Even with severe tax increases and severe furloughs of government professionals, including teachers and medics, it would still take anywhere from three to 10 years to catch up on refunds. That's not a good option at all.
The only option left is to pay all the refunds at once this year by financing the deficit through a bond. This would transfer the huge debt from you to bondholders. By December, if this bond passes in the biennial budget in August, you will have your past-due tax refunds. We will be on schedule to begin making timely tax refund payments from next year, forward. It will be the first time in 20 years.
We have a good plan to set our finances on track and fix the structural imbalance of the General Fund starting in October this year, when the new fiscal year starts. The problem we are having now is getting through this fiscal year.
Unfortunately, Ray and I inherited a Fiscal Year 2011 budget that was short to begin with. Several critical agencies will begin running out of spending authority by next month. So will funding for health insurance coverage for 23,000 people. To be clear, the Executive Branch controls the spending of the cash that comes in. We've controlled this spending very well. In fact, we will have enough cash in the bank to provide for the bare minimum operation requirements in the agencies. But, in order to spend, the Legislature must first give the Executive Branch the authority to spend through a budget. The current budget shorted this spending authority for places like the Fire Department and the Department of Mental Health. This is not to increase spending beyond any levels. This is just to pay for bare minimum regular operations like payroll.
There is no way the government can operate without the spending authority I am requesting from the Legislature. This request is known as our Supplemental Appropriations Act for this fiscal year. We need this bill to pass the Legislature by this week in order to avoid any of the negative consequences. It has real revenue sources behind it, including revenues agreed upon between the Retirement Fund and our administration. This shouldn't be a problem and there shouldn't be a need to amend it. It's very clear where the money will go. I have to caution that significant changes to the bill will also have a bad impact on the operation of services.
This supplemental budget is about very simple but needed things for you. It means 23,000 employees, their dependents and retirees will either have health benefits, or not. It means ambulance services will either operate for the rest of the year, or shut down. The list of services this budget affects goes on. You shouldn't be made to suffer for this egregious error of government planning from last year, but I have a responsibility to let you know what this shortfall can cause if it's not fixed this week.
I have full confidence the senators will do their best to get this measure passed. Several senators have expressed their agreement that this supplemental budget must pass. We need to get through this fiscal year so we can build our way to financial health and sustainability. There are many people watching and counting on us to get this done. That's because there are many people who represent the faces behind all these numbers. This shortfall is hurting people and can hurt many more. This deficit is keeping people from getting the money that is rightfully theirs. It's hurting those who struggle most. I'm sure senators also want to do the right thing and pass our budget plans quickly. I look forward to their deliberations and support.
Thank you and God bless.