By Gerardo R. Partido
Variety News Staff

ADMINISTRATION officials are set to testify in the Legislature today as senators hold session to discuss Gov. Felix P. Camacho’s revised fiscal year 2007 budget.
Camacho and Lt. Gov. Michael W. Cruz personally submitted the administration’s proposal to balance the fiscal year 2007 budget and maintain the viability of existing government services to Speaker Mark Forbes, R-Sinajana, late Thursday night.
The Legislature has started discussions on the new budget over the weekend with some senators already criticizing the governor’s proposal, especially his plan to raise the gross receipts tax.
But the governor has defended the new budget, saying that his proposal “balances” the budget by reducing appropriation levels and increasing revenues to protect the delivery of critical services, such as education, health care and public safety, without furloughing any employees or requiring any pay cuts.
Under Camacho’s budget proposal, the Guam Public School System is spared from any cuts.
“Our government faces tough times and elected leaders are called to make hard decisions. With six months left in the fiscal year, it is critical that we bring expenditures and revenues in line with financial realities,” the governor said.
Camacho said he has submitted a new budget that brings the overall spending authority down from $489 million to $477 million through cuts to all agencies except the school system. This amounts to an overall $12 million cut to the budget.
According to the Department of Administration, the structural imbalance of the current fiscal year 2007 budget must be fixed because although the current budget authorized spending at $489 million, this was backed up with only $456 million in cash.
The rest, totaling $33 million, was linked to lapsed funds not supported by any real cash.
“In order to reduce the budget from $489 million to $477 million, we reduced the spending authorizations and matched it with real cash revenues,” DOA director Lourdes Perez said.
She added that the administration is tracking revenues this year at only $434.6 million so it needs to bring in additional funds to balance the budget.
The administration’s proposed revenue enhancing measures include $30 million from tax amnesty programs and $12.4 million for a temporary 1 percent increase in the Gross Receipts Tax.
According to Camacho, his proposal would cut the budget by $12 million, bring in $30 million in outstanding taxes, and save another $12 million through his recent cost-savings executive order that slashes salaries in the executive department.
Overall, the administration expects to realize $54 million through budget cuts, savings and additional cash to the budget.
The governor is also asking senators to authorize an increase in GovGuam’s borrowing capacity to allow the administration to arrange for a line of credit not to exceed $30 million.
This cash infusion is expected to provide the working capital needed to meet GovGuam’s daily operational needs, specifically for the critical areas of health, education and safety.
“The effects of the budget shortfall are seen in the near daily coverage of the Guam Public School System’s inability to meet its full operational requirements. At present, even as the Department of Administration has complied with the cash disbursement schedule to the school system, GPSS has repeatedly failed to meet gross payroll requirements and its utility payments,” Camacho said.
The administration’s working capital authorization is expected to cover the budget shortfall to vendors of the government, including GPSS and critical health vendors such as pharmacies and off-island health providers who have not been paid for months.
The increased line of credit will be paid by Section 30 funds and the remaining months of the GRT increase for FY 2008 will replace Section 30 funds used for this purpose.
The governor’s proposal is expected to be heard this morning by senators. If adopted by the Legislature, Camacho has promised that there will be no furlough of employees.