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And he is also suggesting in a statement released this afternoon that the compromise tax refund bond he received from the Legislature may force more severe cuts than he had hoped.
Cautioning that GovGuam is not out of the fiscal woods yet, the Governor says he would have preferred authorization for the $343 million he originally asked for so that all tax refunds owed could be paid.
Because the full amount was not authorized, his Administration "will move forward with its cost cutting, reorganization and revenue enhancement initiatives."The Governor also cautioned that problems with the compromise bond bill may delay the issuance of tax refunds and COLA checks.
However the Governor says he is likely to sign the bond bill into law because "we feel this is a compromise we can work with."
READ the Governor's release in FULL below:
UPDATE: Victory for Taxpayers, More Change to Come
FOR IMMEDIATE RELEASE
September 16, 2011
The Governor is moving forward with his larger fiscal stabilization initiatives now that a bond passed in the legislature. The Governor will most likely sign the bill into law, starting a months-long process that will result in a $218 million cash infusion for tax refunds and COLA.
Officials are working with the government’s financial advisors to see whether the $198 million for tax refunds and $20 million for COLA will be ready by Christmas. The remainder of the $343 million bond authorization may be sought in a second bond series next year as debt rolls off or the debt ceiling increases. The $198 million that may be paid in December will cover refunds owed for tax years 2010 and prior.
Not Out of the Woods Yet
“We would have preferred the entire $343 million bond to pay all tax refunds at one time,” Governor Eddie Baza Calvo stated. “But we feel this is a compromise we can work with and this is a step in the right direction.”
Part of the problem with the compromise bond is there are added layers in the process, which will delay the refunds and COLA further. The legislature also placed amendments that reduce the amount for tax refunds and delay the ability to pay the 2011 tax refunds next year. This was one of the main points of contention made by all republican lawmakers and Senator Dennis Rodriguez, Jr. The Governor thanks these senators for wanting to pay the people all their tax refunds immediately. Unfortunately, their objections were muted by the compromise bill.
Director of Administration Benita Manglona explained that the lack of funding in the bond for tax year 2011 refunds means the administration will have to use the provisions for 2012 for the 2011 tax refunds. To make up for this, the administration will move forward with its cost cutting, reorganization and revenue enhancement initiatives.
“We will bring structural balance to this government,” Governor Calvo said. “No more of these bad budgets that get us in this mess in the first place. We will solve this problem at its root.”
Manglona emphasized that though the bond bill is a step in the right direction, there are still other obstacles to overcome in the government’s path toward fiscal sustainability.
“There will be some relief but there’s still going to be challenges. This year is tracking $35 million below so we are still not out of the woods,” Manglona said. “This is just part of the plan to help the tax payers get their money back.”
Reorganization and Streamlining
Governor’s Chief of Staff Franklin Arriola reiterated paying tax refunds are just the beginning of the administration’s initiatives to restore GovGuam’s fiscal health.
“The Governor has directed us to consolidate operations, eliminate redundancies and implement greater austerity measures to make government more efficient,” Arriola said. “I’ve already been working with agency heads on ways to streamline operations and make sure our finances are more manageable.”
Details will be released next week.
Governor Calvo’s Special Assistant for Social and Economic Affairs Henry Taitano discussed some of the administration’s economic development plans being set in motion to strengthen austerity measures and provide additional revenue enhancement.
“There are a variety of things we’re doing. From affordable housing initiatives, trade missions, and small business development, we’re working with GEDA to aggressively pursue economic development initiatives,” Taitano said. “Right now I’m working with our agencies and private sector partners to market investment opportunities with off island investors.”
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