By Gerardo R. Partido
Variety News Staff

THE government of Guam’s financial health was the poorest among the insular areas in fiscal year 2005, an analysis commissioned by the Office of Insular Affairs showed.
The financial analysis was carried out by Crawford and Associates using a system called Performeter that has been utilized by the U.S. Department of the Interior to assess the financial condition of the insular areas.
Based on the Performeter analysis for FY 2005, which was released by the Office of the Public Auditor yesterday, GovGuam’s financial health and performance had an overall score of 1.7 out of a possible score of 10, the lowest reading in four years and the lowest among the insular areas.
Guam’s overall reading has gone from 2.04 in 2002, to 2.21 in 2003, improving slightly in 2004 to 2.86, but dropped to 1.7 in 2005.
Among the reasons cited by the analysis for Guam’s low rating was the magnitude of the general fund deficit, which stood at $344 million as of FY 2005, an increase of $30 million from FY 2004.
The deficit represented 70 percent of GovGuam’s annual revenues as the government incurred more expenses than it earned in revenue by $8.7 million even after adjusting for the sale of GTA of $28.3 million.
Other factors cited by the analysis include GovGuam’s inability to pay current obligations such as tax refunds and vendor payables.
For every $1 of current liabilities GovGuam owed, there was only 17 cents to pay for these liabilities, the analysis pointed out.
Reacting to the report, Sen. Rory Respicio, D-Agana Heights, said the OIA analysis confirmed what the Democrats have been saying all along—that GovGuam “needs to recognize that it is seriously in debt.”
According to Respicio, GovGuam was already in debt to the tune of $860 million as of 2005. “And this does not even include the EITC and COLA settlements,” Respicio said.
He added that at the end of FY 2006, GovGuam already had a $25 to $30 million shortfall and that if the administration does not reign in spending, GovGuam may end the current fiscal year with another deficit.
“I hope this new report would serve as a wake-up call and reality check for the administration,” Respicio said.
For her part, Department of Administration director Lou Perez acknowledged that GovGuam’s finances went down in 2005.
But she also pointed out that the analysis showed that GovGuam’s finances were healthy from 2002 to 2004.
Perez also said that GovGuam continues to show improvements in the areas of questioned costs.
The OIA analysis showed that while there were exceptions in 11 major federal program areas, the number of repeat findings declined to 23 percent.