Adelup urging senators to vote-down bill

by Ken Quintanilla

Guam - After receiving good news from the rating agencies, a bill introduced by Senator Ben Pangelinan and currently on session floor has the Administration worried about its possible affect on the government's latest credit rating. Worried that it would have a negative impact on the "A" bond rating the government received on Thursday, the Governor's Office had concerns with Bill 344, asking lawmakers to oppose passage of the measure.  

Governor's chief policy advisor Arthur Clark said, "The timing actually couldn't be worse; it would show a potential lack of cohesiveness in the government where we go out and make a representation and then two weeks later change the law, change the representation, especially after getting these ratings." The Administration was concerned that Bill 344 would change the rate of real property taxes significantly and increase the rent on Chamorro Land Trust Commission leases. 

Pangelinan concurs with Adelup's assessment admitting there was a calculation error in the legislation. "We never wanted to increase the property tax," he noted. "We were changing the percentage applied to the property assessment when we raised it from 90% to 93%, and the calculation was incomplete. And when we complete the calculation, we would go back to the original tax base that would be when it was at 93% and 90%, it would be the same."

 

Pangelinan says he introduced Bill 344 in order to remove CLTC property from the tax rolls and raise the debt calculation from 90% to 93%, which would boost up property values on the island to achieve the $240 million in bond authorization.  

Although there was a miscalculation, the Democrat lawmaker doesn't believe the bill will have an impact on the bond rating or interfere with the revenue stream in terms of repaying the bond. "The rating on the bonds are based on what are you using to repay the bonds, so it doesn't say how do you determine how much you're going to borrow. It says what revenue streams are you going to use to repay the bond, that's what determines you're rating," he said.

 

But the Governor's Office believes the measure could send mixed signals. Clark said it doesn't make sense to remove or amend the real property exemption after the fact of the rating. "The old adage applies in this case: if it ain't broke, why try to fix it? So we think that the timing might actually have the opposite effect of what he was trying to do. Maybe it could get us a little higher number but if it has an impact on our rating and ends up increasing our interest rate it could have a negative economic impact on us," he explained.

 

Despite the Administration's objections, Senator Pangelinan meanwhile says he intends to move forward with Bill 344 when it is discussed on session floor next week. At the same time the governor and members of his fiscal team will make a pitch to sell the bonds on the market.  They're hoping to put out a second bond series early next year to pay off the remaining tax refunds.