The Office of Finance and Budget, led by Sen. Ben Pangelinan, held a Special Economic Services meeting yesterday, during which several government agencies analyzed the effects of the looming budget cuts.
On Nov. 21, both houses of the Joint Select Committee on Deficit Reduction failed to come to an agreement on strategies to reduce the national deficit by at least $1.2 trillion.
Because of this, automatic budget cuts for some programs and services will occur from 2013 to 2021 pursuant to the Budget Control Act of 2011.
Public Auditor Doris Flores Brooks said Guam, along with the entire U.S., must begin to prepare for an overall reduction in federal funding.
“We need to think … that federal funding is not going to be at the level it used to be, just to mentally begin to prepare that a new era is coming; that there will be reductions in federal grants,” said Brooks.
Pangelinan provided a handout to representatives from the Department of Labor, Bureau of Budget and Management Research, Department of Revenue and Taxation, Guam Visitors Bureau and the Department of Administration, detailing the general reductions expected to occur.
The Congressional Budget Office estimates that from 2013 to 2021 there will be an 8.5 to 10 percent reduction in Department of Defense programs; 5.5 to 7.8 percent reduction in non-Defense programs; 8.5 to 10 percent reduction in non-exempt Defense programs; 5.5 to 7.8 percent reduction in other programs; reduction in premiums for Medicare Part B; and reduction in debt service costs of about $169 billion.
But even with the expected reductions, Pangelinan said the information provided by the CBO is too general to predict the potential effects the cuts may pose on Guam’s financial and economic outlook.
“It is in the best interest for government of Guam line agencies to gear up to prepare for the likelihood that this may happen,” Pangelinan’s handout states.
