Bonds

The government of Guam has settled on a $937 million budget for fiscal 2022, which starts Oct. 1.

Gov. Lourdes “Lou” Guerrero on Saturday said she would let the budget go into effect without her signature. The legislature transmitted the budget to her on Aug. 31.

The budget includes $623.6 million of total General Fund revenue available for appropriation, $198.53 million of total special fund revenue, and $115.1 million from federal matching grants.

“As tourism remains depressed because of the pandemic, Guam’s fiscal 2022 budgetary balance will depend on the government’s ability to respond to potential revenue shortfalls with prudent financial management and judicious use of federal funds,” said Pisea Chea, vice president at Moody’s Investors Service.

The biggest sources of general fund revenue are expected to be: $238.9 million of Business Privilege Tax, $235.4 of withholding taxes, interest, and penalties, $73.9 million of corporate income taxes, and $71.2 million of income taxes.

The budget’s biggest expenditures are: $205 million for the Department of Education, $66.7 million for debt service on bonds, $50.5 million for Department of Public Health and Social Services, $34.1 million for the Police Department, $32.9 million for retiree medical, dental and life insurance expenses, $32.8 million for the United Judiciary, and $31.6 million for the Fire Department.

Moody’s rates the islands’ Business Privilege Tax bonds Ba1. S&P Global Ratings rates the general obligation bonds BB-minus.

In a memo to Legislature Speaker Therese Terlaje, Guerrero said she had reservations about the budget. She said she had used her transfer authority to fund a 15% pay increase for nurses starting June 18. However, the budget does not include money to continue this increase. Now agencies will have to “divert financial resources from other important operational requirements” to continue this pay raise, Guerrero said.

The budget sets aside a projected $20 million surplus to be used to pay past due tax refunds. Guerrero said this was a problem because Guam cannot be sure the surplus will happen.

Guerrero said despite her concerns with the budget, she would work with it.

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