By Mar-Vic Cagurangan
Variety News Staff

THE administration should prepare an alternative option in paying the $123 million cost of living allowances owed to government retirees in the event that the U.S. Supreme Court issues a ruling on the bond borrowing case that would pose impediments to the proposed loan agreement, Sen. Ben Pangelinan, D-Barrigada, said.
The administration’s proposed $123.8 million loan agreement with the Bank of Guam-led consortium requires clearance from the Attorney General’s Office and the Department of Administration, certifying that the deal doesn’t violate the debt limitation set by the Organic Act. The debt ceiling question involving bond borrowing is the issue now awaiting decision from the U.S. Supreme Court.
Pangelinan said even if Bill 23, the COLA payment measure, is passed, the government of Guam will not be able to execute the loan agreement and release the proceeds to COLA recipients “until the U.S. Supreme Court issues its decision on the borrowing case.”
As an alternative to the bank loan option, Pangelinan suggested that the Department of Administration instead issue a negotiable promissory note that each retiree can sell to a bank or use as collateral.
In a letter to Gov. Felix P. Camacho, Pangelinan said such alternative “has the potential to facilitate a more immediate payment and allows parties the maximum flexibility in seeking financing for the payments. Ultimately, this will result in better value for the government.”
Under Guam law, any creditor of GovGuam who is not paid within 30 days upon filing the claim may request DOA for a one-year promissory note bearing a 7 percent interest a year.
“The director of administration shall issue the promissory note or dispute the claim. In the COLA case, the claim is undisputed since all parties settled, consented to the award, and waived their right to appeal the case,” Pangelinan stated in his letter.
The government’s COLA obligation to 4,000 retirees and their survivors has been upheld by Superior Court Judge Arthur Barcinas in a ruling that capped the 13-year-old class action.
In the meantime, Pangelinan said, the Legislature must pass legislation that appropriates $10 million from Section 30 funds and $3 million from the general fund as repayment sources of promissory notes to be issued to the retirees. This means that retirees who sell the notes or any party who buys them can redeem the credits against the appropriation.
“This alternative allows the retirees class to seek their own financing package without the need for GovGuam to issue new debt. The note becomes marketable and the retirees can either use the note individually or the class may package a portion and sell it in tranches,” Pangelinan said.
“I am willing to work with your administration to develop possible alternatives that are not dependent on the outcome of the U.S. Supreme Court borrowing case. Research into these alternatives looks promising,” Pangelinan told the governor.
Last week, Vice Speaker Eddie Calvo’s committee on revenue, finance and commerce heard Bill 23, which is now awaiting the panel’s action.