EITC no longer available to back appropriations

A more than $50 million cashflow windfall that lawmakers were counting on for a variety of spending bills is no longer available to them. Now, they're scraping around for other ways to fund their appropriation measures.

It used to be that the Earned Income Tax Credit paid to low-wage earners was an unfunded federal mandate paid straight from the local General Fund. But under last year's American Rescue Plan, the feds finally agreed to reimburse the Government of Guam. That set off a flurry of funding bills using the EITC as a source, including annual appropriations for the construction of a new hospital and prison.

But Bureau of Budget Management & Research director Lester Carlson confirmed Tuesday that the Guam Department of Revenue & Taxation has been advised that reimbursement for Fiscal Year 2021 EITC will come in the form of an advance, to be set aside only for EITC payments. So all those EITC bills?

"We're basically telling you guys today: you can't do that," said Carlson.

But the first bill up for Wednesday's session was a $250,000 appropriation for the Guam Unique Merchandise and Arts Program. Senator Joanne Brown said, "It's taken us this long to find out from the administration very clearly yesterday that obviously the funding source that was originally looked at is not available. And there's what, $121 million worth of legislation that has been introduced to include this bill?"

And so as they must pivot on the funding, its not clear where it will come from. "So what's left is 2021 General Fund unappropriated revenue that hasn't even been audited," Senator Telo Taitague commented. "And here this body is making a decision to start appropriating funds that not even been audited yet. It's irresponsible."

Brown retorted, "And we also need to make sure that what we're appropriating is really the most critical priorities in government. Because as the months and the weeks go on, unless Uncle Sam has more money to spread out around the island, it's going to get tight, and we're  probably gonna have to come and start cutting."