Editorial: Buildup, war reparations, tax refunds: They’re all connected
Intertwined Guam issues came to a converging point last week.
First, more on the military buildup.
Gov. Eddie Calvo surprised many last week by announcing he'd withdraw support for what's been agreed between the United States and Japan, to reduce about 9,000 of the U.S. Marines stationed in Okinawa, and move 4,100 of them to Guam, where a Marine Corps base is being built.
The Guam part of this bilateral agreement between the two nations has been in the execution phase for years now, with about $500 million of the Japan- and U.S.-funded projects completed or under way. High-level Japanese officials have been visiting Guam the past few years, to check on the progress of its investment toward easing the number of U.S. troops in Okinawa.
Japan, according to previously released federal reports, is paying $3 billion out of the $8.7 billion estimated cost of relocating Marines to Guam.
The U.S.-Japan agreement isn't about to unravel simply because Guam's governor, once an avid military buildup advocate, has had a change of heart.
The governor did release a subsequent explanation saying "I want the buildup to happen, but I also want to ensure that Guam isn't left behind."
With the high rate of H-2B foreign worker visa denials, the governor said, Guam's civilian projects would get more expensive, or get delayed because the depleted labor force would mostly go to the military projects.
The governor's statement prompted immediate responses from the Guam Chamber of Commerce and the Guam Contractors Association, whose members account for most of the private-sector jobs on the island.
For these employer groups, any talk of a buildup pause or delay can be unnerving. There have been past delays in the execution of the military buildup, and many who made investment risks based on the earlier military buildup plans, going as far back as 2006, lost a lot of money and had to let go of workers or scrap hiring plans.
For employers, a somewhat change of stance by the island's governor on this hoped-for economic stimulant could add another layer of worry to the island economy standing on two main "legs": tourism and military spending. Tourism, too, faces a challenging time, with arrivals from No. 1 market Japan continuing to show a decline, before United Airlines' recent plans to shrink its Guam hub.
The irony of the governor's statement – withdrawing his support for the buildup because federal immigration denied nearly all of Guam employers' petitions for H-2B foreign workers – hurts a funding source from which he wants to tap as a repayment for another one of his borrowing proposals.
Section 30, buildup interrelated
A federal funding source called "Section 30" became intertwined with the buildup issue's complication, and GovGuam's need for more money for tax refunds.
On Friday afternoon, the governor submitted a proposal to the Guam Legislature to borrow $75 million each year, over three years, from a financial institution, starting this summer. He proposes to pledge Section 30 funds, which are income tax payments from military personnel stationed on the island.
In the past few years, this Section 30 funding source has ranged between $70 million to $80 million a year, or almost one tenth of the government of Guam budget out of the General Fund.
If the governor delays the buildup, this could further delay the move of the thousands of Marines to Guam, whose paychecks could help GovGuam get more money out of Section 30.
These income tax payments from military personnel have been pledged as a source of repayment for a number of GovGuam borrowings, including a $236 million bond debt taken in 2016. Needless to say, increased military presence, via the Marines' relocation, could help pay for tax refunds, or the governor's proposed loans for tax refunds. The Marines' future income tax payments have previously been projected as an additional funding source for GovGuam.
War reparations tied to buildup, too
In addition to buildup and tax refunds, a third issue related to the above issues is the U.S. Congress' approval, which became federal law last year, to pay more than $100 million in "reparations" to the families of Guam Chamorros who died, were injured or endured other forms of suffering during the Japanese atrocities of World War II.
As enacted, the source of funding for these payments would be the same Section 30 funding that has been pledged for by GovGuam for other commitments, and could also be pledged for future tax refund borrowing repayment, if the Guam Legislature agrees with the governor's proposal.
The war reparations legislation passed Congress as a piggy-back provision in the National Defense Authorization Act, which also authorized more military construction funds for Guam bases.
There isn't an endless stream of Section 30 funds.
So according to the governor's office, it hopes that another federal funding source would be provided for war reparations.
However, under the Trump administration, going back to Congress for another funding avenue would prove quite the challenge.