By Gerardo R. Partido
Variety News Staff

THE placing of Guam on the credit watch list of bond rating firm Standard & Poor’s over the weekend has lent more urgency to the Legislature’s ongoing inquiry into the state of the government of Guam’s finances.
Vice Speaker Edward J.B. Calvo, R-Maite, said because of the administration’s “lack of candor” during previous roundtable discussions on GovGuam finances, he is compelled to become tougher by taking the discussions to a higher level by scheduling an oversight hearing this Wednesday to make sense of GovGuam’s current financial condition. (See related story on page 6)
Calvo and other senators participating in the more informal roundtable discussions held previously were disappointed when administration officials were not able to shed light on GovGuam’s true financial condition.
Senators were further incensed when the administration did not inform the Legislature about its plan to issue a $6 million line of credit to cover Friday’s payroll for the Guam Public School System.
“There we were discussing the government’s financial situation and not once did they mention the plan to get a line of credit,” Calvo said.
The senator, who also heads the finance committee, deplored the lack of candor and alleged “disparaging statements” made by administration officials last week.
“The extent of the financial crisis was never clearly stated despite several inquiries by the committee,” Calvo said in a letter to Gov. Felix P. Camacho.
Because of the lack of data provided by the administration, senators are expected to be tougher during the oversight hearing this Wednesday, especially after S&P announced that it has placed GovGuam on its “CreditWatch” with negative implications.
The CreditWatch cites the structural imbalances in the GovGuam budget, the long-term liabilities, and the inability of the government’s revenue base to show long-term growth.
Standard & Poor’s specifically cited the efforts of GovGuam to secure a $6 million line of credit to meet the operational needs of GPSS, pointing out that this highlighted the inability of the government to meet its operating needs without seeking financing.
Senators have already taken the administration to task for attempting to get money from autonomous agencies to shore up its finances.
Although the administration has denied this, Sen. Jesse Lujan, R-Tamuning, said he has seen letters sent to the Port Authority of Guam, the Guam International Airport Authority, the Guam Economic Development and Commerce Authority, and other autonomous agencies, asking them to funnel funds to the executive department.
Lawmakers have also questioned the validity of the government’s Qualifying Certificate program, which gives tax perks to selected companies at a time when GovGuam needs all the revenues it can get.
Sens. Ben Pangelinan, D-Barrigada, and Judith Guthertz, D-Mangilao, have introduced a bill that seeks to suspend the issuance of new qualififying certificates, end the practice of renewing tax perks soon to expire, and prohibit the modification of existing certificates.
Sen. Adolpho B. Palacios Sr., D-Ordot/Chalan Pago, also believes that qualifying certificates should not apply anymore to hotels and resorts on island, adding that the Qualifying Certificate program, now on its 10th year, has become “nothing but a loophole that big companies take advantage of at the expense of the people of Guam.”
Guthertz, who was very disappointed by the results of last week’s roundtable discussion, has issued her own proposals to reduce GovGuam’s deficit.
The senator’s “talking points” contain several measures intended to increase GovGuam’s revenues and decrease its costs.
In its report, Standard & Poor’s warned that although GovGuam’s main revenue sources have been “relatively stable” over the last several years, “the continued implementation of exemptions and credits have prevented those revenues from realizing stronger growth.”
Reacting to the Standard & Poor’s report, acting Gov. Michael Cruz said that without the line of credit, the administration would not have been able to meet the needs of GPSS “which, in itself, would have triggered the CreditWatch or even greater credit rating declines.”
“This CreditWatch only further emphasizes what Governor Camacho said in the State of the Island Address that our fiscal situation is serious and immediate action needs to be taken on this current fiscal year budget to restore stability,” Cruz said.
According to Cruz, addressing the problems will take work from both the executive and legislative branches to make immediate changes to existing laws so that significant adjustments to the operations of the government can be made and the structural imbalances in the current budget can be addressed.
He added that the administration is finalizing its immediate and long-term plans to address the financial situation of the government and that Standard & Poor’s has indicated that they will resolve the CreditWatch following their analysis of GovGuam’s plans.