Based on the Performeter and Audit Timeliness and Exception Resolution analysis, which rates the government’s financial health on a scale from one to 10, the government received an overall score of 1.31.
This is Guam’s lowest score in the six years of the performeter analysis. The island’s highest score of 2.86 came in 2004, according to the analysis done on behalf of the Department of the Interior’s Office of Insular Affairs.
The performeter concluded that nearly 121 percent of the government of Guam’s $985.5 million in assets were funded with debt or other obligations. This means that for every $1 of assets, the government owes $1.21.
According to previous years’ figures, 2008’s ratio remains relatively consistent with prior years, indicating that the government of Guam owes more money than it has.
The performeter is an analysis that takes the government’s financial statements and converts them into useful measures of financial performance. The overall reading is a barometer of GovGuam’s financial health and performance.
Assets and liabilities
According to the report, the analysis takes into account the full accrual version of the government’s total assets and liabilities.
At the end of fiscal year 2008, GovGuam’s net asset deficiency increased by $78.2 million or 54 percent from the prior year’s $131.5 million, indicating a continued deterioration of its financial condition.
The deficit increase resulted from an increase in expenses of approximately $100 million while revenues only increased by $14 million.
The deficit is being financed primarily by delaying the payment of income tax refunds, which totals $278 million at the end of 2008, the report said.
As a result of the government of Guam’s poor financial condition, the island has just 28 cents of current assets to pay $1 of current liabilities. While an adequate ratio is 2.0 to 1, GovGuam’s ratio for 2008 was 0.28 to 1, according to the analysis.
The government also has a quick ratio, or total cash and short-term investments to current liabilities, of 0.08 to 1. This indicates that GovGuam only has 8 cents in cash and short term investments to pay $1 of current liabilities.
A desirable quick ratio, said the study, is 1.0 to 1.
“These unfavorable current and quick ratios are indicators of the government’s cash flow difficulties and distressed financial health,” read the report.
As a result, the government struggles daily to fund payroll, vendor payments, tax refunds and other routine obligations according to the financial report.
The report also concluded that the government of Guam has nearly reached its debt capacity of $879.1 million, with $753.1 million of outstanding debt considered “public indebtedness.”
The remaining $126 million is available for future debt. However, the report identified two potential loans that if paid out, would bring the remaining debt availability down to only $7 million.
