By Gerardo R. Partido
Variety News Staff

GOVERNOR Felix P. Camacho yesterday submitted his fiscal year 2008 budget to the Legislature, acknowledging that the administration’s deficit has grown to more than $500 million, and is asking lawmakers for more flexibility in managing government finances.
Camacho said the recent addition of $30 million in earned income tax credit payments and $123 million in prior year cost of living allowance payments have exacerbated the government’s financial situation and significantly increased the administration’s deficit.
But the governor said his administration has already taken steps to convert these obligations to long-term debt.
In his budget transmittal letter to the Legislature, Camacho assured senators that his administration welcomes discussion on the government’s finances but asked that the talks be carried out in a “responsible” manner, alluding to recent statements by Democratic senators that the administration has been misleading the people about the deficit.
“We are concerned about the amount of misinformation that has been disseminated recently surrounding the government deficit, as well as the commitment of my administration to the critical services of education, health, and public safety,” the governor said.
He stressed that throughout his first term as governor, funding for these critical areas has continually been augmented.
Despite increasing expenditures in health, education and public safety, Camacho said his administration was able to reduce the overall general fund expenditures by $12 million from FY 2005 to FY 2006.
He blamed the limited control of expenditures within the line agencies to the limited allotment and cash management authority granted to him by local law.
“Restoration of this authority government-wide will allow me to properly manage the tax dollars of our people while holding all executive agencies accountable for their expenditure of our people’s money,” the governor said.
To counteract the deficit, the administration is projecting fiscal year 2008 revenues to reach $562 million, with $460 million coming from a “moderate growth” in general fund revenues, and $102 million coming from special fund revenues.
“General fund expenditures reflected in this budget are balanced against the revenues the government is expected to collect,” Camacho said.
Under the administration’s budget, education funding is allocated $206,810,392 representing 52.5 percent of the general fund under the executive branch. Government health services are funded at $68,610,661 or 17.4 percent of the budget while public safety gets $63,105,791 or 16 percent of the executive branch allocation.
All in all, the critical areas of education, health, and public safety are slated to receive $338.5 million or about 86 percent of the general fund revenues for the executive branch and about 73.5 percent of overall projected revenues.
“The remaining departments and agencies will continue to maintain austere operational funding levels as they share the remaining 26.5 percent of total revenues,” the governor said.
He described the economic outlook for Guam in FY 2008 as positive with tremendous growth expected in construction, as well as steady increases in visitor spending based on a report filed by the government’s chief economist. (See related story)
In the event that economic growth exceeds estimates, Camacho said the administration’s budget provides for the use of additional revenues to address the government deficit.
Although the governor reiterated his commitment to strict budget management, he also asked for flexibility to manage executive functions.
“It is critical that we are able to immediately and appropriately adjust operational funding levels for all government services as we respond to changes in revenue levels. In order to achieve this, I am seeking your support to allow the executive branch to manage the limited resources in order to meet the day-to-day operational requirements of our government,” the governor said.
He said he is committed to working closely with the legislature to ensure that the basic operational requirements of the government are met.