Governor "likely" to sign bond
The battle of the bond seems to have come to an end or at least a compromise for that matter as both Governor Eddie Calvo and the 31st Guam Legislature seem to come to an agreement in finally paying back the people of Guam their tax refunds.
By KUAM News
Guam - The battle of the bond seems to have come to an end or at least a compromise for that matter as both Governor Eddie Calvo and the 31st Guam Legislature seem to come to an agreement in finally paying back the people of Guam their tax refunds. And it may not be what the governor had originally wanted…but it's a start.
"For this administration, we are so happy today," said the governor. "We believe some very good news has been put forward now, good news for the people of Guam, good news for the taxpayers that have been owed refunds for many, many years. The first part in the process in getting people their money back has now been accomplished." And with those words, Calvo and his fiscal team, although looking tired, are satisfied with the outcome of the fight to get people their owed tax refunds.
Although it wasn't what they had originally requested, the governor is now moving forward taking the next steps for the Government of Guam to pay back the people and get back on its feet. Calvo says overall Substitute Bill 1-3-S was a collaborative effort with the Guam Legislature and is he most likely will sign the legislation and the budget bill. "Based on what the discussions are and the language that we saw on the floor, I see no reason why not to, but it has been going through thorough review by the fiscal policy team," he said.
Substitute Bill 1-3-S authorizes $343 million in borrowing in one or more series of bonds, caps the interest rate of 6.5 percent and caps borrowing levels at 90 percent of our debt capacity. In the substitute bill, up to $198 million will go toward the payment of unpaid income tax refunds plus interest for 2010 and prior tax refunds, up to $20 million for the payment of COLA, up to $26.4 million for payments owed to the GovGuam Retirement Fund and if no alternate source of funding is available for the payment of health insurance premiums for Fiscal Year 2012.
The Guam Economic Development Authority estimates a net of the $244 million will be about $218 million. The governor's original bond proposal for $343 million would have netted $311 million solely for tax refunds. He expects the $218 million to be available by December 1.
Before going out to the market and seeking the second series of the bonds, Guam Economic Development Authority administrator Karl Pangelinan says two things must occur - an independent financial analysis by the University of Guam and convening of the Deficit Commission and their recommendation. Said Pangelinan, "Our experts are telling us that now is the time to act; interest rates are at their all time low, they're low considering, and they believe that there's an appetite for this issue in the market right now, so we're eager to get it at that point. But there's steps that we need to take prior to, before we get to the sell of the bond. We've got a lot of work to do."
He adds they are optimistic the first series will be sold and are committed to the governor's promise of distributing money before Christmas. He adds the allocated funds will go toward and probably absorb most of the funds to paying A-status refunds that are already filed.
As part of the substitute bill, an amendment made by Majority Leader Rory Respicio passed to set aside $20 million from bond for tax refunds to pay out requests for humanitarian purposes. "So we always talk about the drive for these tax refunds payments are made because of people who need off-island medical referrals, people who have a death in the family or owing on mortgage loans or money to GWA and GPA," he said.
Governor Calvo's fiscal team assures that in addition to this $20 million, they are still committed to helping offset people who are waiting on tax refunds on their bills. Because tax refunds won't be paid until a few months, it will still be a temporary relief.
Moving forward, the fiscal team namely the Department of Revenue & Taxation is working on revenue enhancements such as being more aggressive on tax collections, monitoring closely contractors for the military buildup, its implementation of its five-year driver's license rate of $45 and real estate projects on Guam. Calvo adds that this bond and budget is just one part of his total fiscal stability plan and hopes now the focus will be put back on building government, improve quality of services and continued growth in the economy.
"It's all this past due debt, this obligations that are currently owed to the people," he stated. "We are now restructuring it and moving forward, it's building a government and reorganizing it and streamlining it so we ensure this never happens again."