Senator Ben Pangelinan, chairman of the Guam Legislatures finance committee and the Office of Finance and Budget, yesterday recommended some solutions to Governor Eddie Calvo which would help alleviate the government of Guams dismal financial condition.
Pangelinan was the guest speaker at the Association of Government Accountants meeting yesterday.
The former speaker also added that the press releases from Calvos administration œsaying the sky is falling is a small irresponsible.
Pangelinan was referring to the $116 million cash shortfall Calvo claims the government will incur if it doesnt tighten its operations. Calvo has signed an executive order directing department and agency heads to implement cost-saving measures within their agency.
With careful plotting and following the deficit reduction strategy in Chapter One of the 2011 Budget Act, the government will weather the shortfalls as well as have funding for all the appropriations that were budgeted for 2011, including the Hay Study, said Pangelinan.
œYes we are struggling, but I dont reckon we should be pulling the panic button at this time. We should face the realities that we see and find a way to deal with them, but to run around and say that we are going to be in a financial shortfall of $120 million with the operations of this government is a small irresponsible given where were at today in the revenue collections and the plot thats contained in the budget to deal with some of these issues, said Pangelinan.
Pangelinan said the numbers he has is approximately a $35 million cash shortfall. The lawmaker quantified three items of unbudgeted expenditures for Fiscal Year 2011 which will have to be re-negotiated between the executive and legislative branches. They are: the Calvos SelectCare contract appropriation which will run out in April 2011 and is in the amount of $20.8 million; the Department of Mental Healths Permanent Injunction which costs $12.2 million; and the annual leave cashout or lump sums for unclassified personnel of the Camacho administration in the amount of $1.7 million.
During his PowerPoint presentation, Pangelinan suggested cash management solutions to the Calvo administration.
Pangelinan suggested that the $36 million of Capital Improvement Projects from the State Fiscal Stabilization Fund (SFSF) awarded to the Guam Department of Education for Fiscal Year 2011 payroll should be reprogrammed.
Pangelinan said the CIP bids are not out yet and are subject to delays from bid protests. This means GDOE risks losing funds not spent or obligated. The local funds appropriated for GDOE can be reprogrammed as a continuing appropriation to capital outlay for CIP. This will make the reporting requirements for expenditures of GDOE payroll less burdensome to the administrative infrastructure of the department.
SFSF will also insulate GDOE from cash crunches faced by the government of Guam and ensure compliance of school operations, said Pangelinan.
Further, local funds relieved by SFSF will allow the government to meet impending small-term cash obligations, including the Mental Health Permanent Injunction as well as the unbudgeted part of the Calvos SelectCare contract.
The reprogramming will also allow GDOE to preserve and retain jobs, consistent with the overarching principle of the American Recovery and Reinvestment Act.
Another cash management solution Pangelinan recommended involves the Guam Waterworks Authority refinancing.
Public Law 30-145 requires GWA to use bond proceeds to relieve General Fund Debt Service obligation. This is a potential savings of $9.8 million payment in FY 2011 and $9.8 million payment in FY 2012, Pangelinan said.
Yet another solution, said Pangelinan, deals with the Department of Mental Health and Substance Abuse permanent injunction. The ability to expend $12.2 million by the end of fiscal year 2011 is not likely, said Pangelinan.
The lawmaker suggested that the governor reprogram FY2011 in Compact Impact funds and request an alternative deposit schedule. He also suggested that Calvo challenge the court-ordered deposits.
And lastly, Pangelinan said the ARRA Make Work Pay Tax Credit has expired and from January to September, this will bring in an additional $12.25 million in cash collections per month or $11.25 million.
Further, from January to September, the Social Security tax cut would bring in an additional $210,000 cash collections per month or $1.9 million total.
Pangelinan said he did not believe that the $116 million cash shortfall that the Calvo administration claims is right. He said the Calvo administration quantified a shortfall but is mixing the shortfall with the operations of the government based on the budget that was passed. This means that Calvo would have to pay out the $18.8 million of the COLA class all at once, and Pangelinan said he didnt believe the governor intends to do this.
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Article source: http://mvguam.com/index.php?option=com_content&view=article&id=16376:pangelinan-the-sky-is-not-falling-&catid=1:guam-local-news&Itemid=61
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