PNC :: GEDA: Buildup Comes With Some Big Negatives

PNC :: GEDA: Buildup Comes With Some Big Negatives

Friday, 29 January 2010

Guam - GEDA Administrator Tony Blaz has submitted his top concerns over the impact of the military buildup to Senator Frank Aguon Jr.'s Committee on Economic Development.

In his letter to Aguon, Blaz lists the following impacts and concerns:

*GRT, corporate income taxes and personal income taxes could be as high as $423 in 2014 and then declining to $104 million in 2017.

*There may be a time lag between when GovGuam revenues are needed and when they are available for use.

*The buildup would generate more demands on Guam for roads, ports sewer, water, power and other infrastructure and will increase the pressure for substantial borrowing.

Read GEDA's list of concerns and impacts

*Members of the military do not spend a great deal of their income in the local economy, especially if they are housed on base and buy their groceries on base. Currently only 12% of the enlisted military income is spent on Guam.

*The average annual income of military personnel is just $29-thousand dollars. 11,182 active duty personnel translates into a total annual payroll of #323 million. Just 12% will be spent in the local economy.

*Housing for the military will be provided by the military, not the Guam private market. Local shippers and wholesaler will increase sales to the military bases but when imported goods are sold on base, most of the value of those sales won't be realized and profits won't be reinvested locally.

*There will be a "recession-like" period after 2014 when business will have to lay off workers after the peak buildup period.

*Guam workers will likely see the cot of living continue to rise faster than their incomes.

*The cost of living during the construction phase could negatively affect households on fixed incomes, although other households could benefit from rising wages.

*Hotels could benefit conssiderably, but the service sector could undergo a difficult period due to loss of labor to higher paying jobs and pressure or increased wages.

Written by : Kevin Kerrigan