HAGÅTÑA (The Guam Daily Post) — Gov. Lou Leon Guerrero’s administration anticipates receiving more than $553 million in federal aid within the next few days. That money is the island’s allocation of Coronavirus State and Local Fiscal Recovery Funds under the American Rescue Plan.
Department of Administration Director Edward Birn submitted the request Tuesday morning, according to the governor’s spokeswoman Krystal Paco-San Agustin.
While far from the $660 million figure that local officials had been discussing, the administration said there are still county and non-entitlement elements that are estimated to add up to $604 million. That figure also doesn’t include capital projects funding — $10 billion that the U.S. Department of the Treasury is yet to allocate.
“I think we’re going to get close to $661 million,” Guam Delegate Michael San Nicolas said during a Tuesday press conference on guidelines for the recovery funds.
“Those figures that we provided were the initial committee determinations, but everything ultimately gets refined when it passes into law and the agencies have to look at the defining statutes and crunch the numbers. … Between the $553 million and the other funding source, it looks like it’s going to be just over $600 million. And then the Capital Projects Fund, we’ll see where that takes us closer to the $661 million we were originally anticipating,” he added.
The treasury announced the launch of the Coronavirus State and Local Fiscal Recovery Funds on May 10, alongside guideline details. The general usage areas include:
• Supporting public health expenditures — fund Covid-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff.
• Addressing negative economic impacts caused by the pandemic — this includes economic harms to workers, households, small businesses, impacted industries, and the public sector.
• Replacing lost public sector revenue — use of funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic.
• Providing premium pay for essential workers — offer additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors.
• Investing in water, sewer, and broadband infrastructure — make necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet.
Can’t be used to offset tax cuts
While the funding can be used to offset government shortfalls attributable to the pandemic, it cannot be used to offset tax cuts. If a state or territory cuts taxes, it must demonstrate how the cuts are paid from sources other than the Coronavirus State and Local Fiscal Recovery Funds or CSLFR. If the federal funding is used, it must be paid back to the Treasury.
“That’s an important point because I know there’s been a lot of debate about using these funds to offset, potentially, a reduction in the business privilege tax. We cannot use these funds to do that,” San Nicolas said.
However, the congressman noted that the reimbursement of earned income tax credits is not governed by the CSLFR provision and if the local government wanted to offset business privilege tax and gross receipts tax cuts with EITC reimbursements secured earlier, he said that might be an option.
The moneys also cannot be used to offset outstanding liabilities of the Government of Guam Retirement Fund, San Nicolas added.
Legislature’s priorities
Prior to the Treasury announcement, local lawmakers had submitted their list of priorities for federal moneys to the governor. San Nicolas went over that listing’s viability given the Treasury guidance.
San Nicolas believed cases for funding could be made for most of the listing under the CSFLR guidelines.
This includes implementation of the Recovery Income Support and Empowerment Program, the local stimulus program, although San Nicolas said his analysis would need to be revalidated with the U.S. Treasury.
Lawmakers carved out the Guam Memorial Hospital as the single largest item for the ARP moneys, including $200 million as an advance to fund a new facility. San Nicolas said that needed to be vetted through the Treasury, but he believed a case might be made through usage for supporting public health expenditures.
Funding for the Guam Police Department, Guam Fire Department and Department of Corrections will need to be carefully looked at because it was difficult to find a direct correlation with the guidance, but there is a possibility to fund those items under replacing lost public sector revenue and speeding up the recovery of tourism, San Nicolas said.
However, the congressman said he could not see how proposed a bond refinancing for the Layon landfill could fit within the guidelines, nor funding for the Ordot dump closure.
“We may be able to fit that into water and sewer infrastructure but that was a tough fit,” he added.
Speaker Therese Terlaje said she appreciated San Nicolas aligning the priority list with the guidelines.
“I’m really happy that we’re going to be able to spend a lot of this money in those areas that we’ve outlined,” Terlaje said. “I promise to further collaborate… I think that’s the only way forward.”
