Democrats defend budget bill, $180M bond

MONDAY, 29 AUGUST 2011 00:38 BY THERESE HART | VARIETY NEWS STAFF

SPEAKER Judi Won Pat said it’s unfortunate Governor Eddie Baza Calvo would say she and her Democratic colleagues are not paying attention to the “working poor,’ since the budget the Legislature passed includes a $180 million bond, of which $120 million will be used to pay out 2010 and prior-year tax refunds to “our residents who are suffering daily.”

The $180 million bond borrowing does not allow the governor to borrow to pay for corporate taxes.

Last week, after the Legislature passed the budget bill in a narrow 8 to 7 vote, Calvo said he would likely veto an “incomplete and disastrous budget.”

“I’d like the governor to explain exactly what he means by ‘disastrous and incomplete,’” said Won Pat, stressing the Legislature passed a fiscally responsible budget that would weather any unpredictable outcome the U.S. Congress might enact that would affect Guam in terms of federal funding for the island.

“The budget that passed was reasonable. We didn’t raise the debt ceiling, so there is a $45 million cushion that we can borrow if anything unpredictable comes out of Congress. We’re seeing what’s happening in the U.S. In January, we’ll know how we’re tracking. If the governor passes this budget, there is the opportunity for him to borrow another $160 million,” said Won Pat.

Calvo said he was concerned about the lawsuit filed against the government for unpaid tax refunds.

“Senator Pangelinan has said time and again what measure the government is making to show good faith efforts that we’re paying out the tax refunds. We as lawmakers understand our role and we will remain firm in moving this government forward with fiscal responsibility,” said Won Pat.

“There is uncertainty over what cuts the U.S. Congress will make and how it will affect us. We need to prepare for this. Cautious optimism prevailed during our budget session and I hope the governor rethinks his immediate reaction to veto this budget.”

She said Congress’ intentions for Guam will be clearer in January, and the budget bill wasn’t just about the borrowing of the bond, but a durable bill with clauses that would displease the governor.

One such provision is the $8 million insurance rebate Calvo’s SelectCare would have to pay back to the government and GovGuam employees. “By signing the bill, he is agreeing that a rebate is owed. That’s one reason why I think he’s going to veto it,” said Won Pat.

Shutdown

Won Pat said if a budget fails to pass, a shutdown in government services is possible. In reaction to those lawmakers who voted against the budget bill, Won Pat asked: “Do they want to shut down this government?”

Senator Ben Pangelinan said he didn’t know why the governor would not sign the bill into law since it includes the authority to borrow the money to pay prior-year tax refunds to individuals.

Last week, the governor targeted Won Pat, Vice Speaker Benjamin J.F. Cruz, Senator Rory Respicio and Pangelinan, saying they were keeping tax refunds from the people.

“The Legislature, led by Speaker Won Pat, Vice Speaker Cruz, Majority Leader Respicio and Budget Chairman Pangelinan, unfortunately passed a budget that will leave Guam further in debt, and keep hundreds of millions of dollars of your money away from you,” said Calvo’s press secretary, Troy Torres.

Torres said the governor will continue fighting for all the tax refunds for every person owed a refund.

“We cannot believe Sens. Won Pat, Cruz, Respicio and Pangelinan can just ignore people who are suffering, struggling and begging for their own money. The most disturbing part about this is the government has not been able to pay tax refunds because of the budget deficits the past three years these senators created. Yet, when they had a chance to right this wrong, they just shut people out and threw the cries and pleas of the working poor to the side,” said Torres.

“The $120 million bond would pay only 30 percent of the tax refunds owed. What about everyone else,” according to Torres.

Won Pat said the $120 million from the bond borrowing plus the $105 million in the budget bill, both for tax refunds, is enough to pay 2010 and prior-year tax refunds to Guam’s working families.

Sen. Dennis Rodriguez Jr. was the only Democrat who voted against substituted Bill 145, along with the six Republican lawmakers: Senators Tony Ada, Frank Blas Jr., Chris Duenas, Sam Mabini, Mana Silva Taijeron and Aline Yamashita.
“The governor cannot, in good conscience, enact a law that will leave people behind. He will likely veto this disastrous budget proposal,” said Torres.

The Chinese Chamber of Commerce last week joined Guam’s mayors and vice mayors in endorsing Calvo’s plan to borrow $344 million.

The Chamber’s executive board members are expected to formally sign an endorsement at their board meeting this week, according to a press release from the Governor’s Office.

The budget bill was engrossed last Friday and will be transmitted to the governor.

CCU Proposes Loan

CCU proposes $210M loan
GPA plan includes upgrading facilities, equipment
By Dionesis Tamondong • Pacific Daily News
April 22, 2010

Power generation and distribution projects, a central office for Guam's power and water agencies, and investments into digital technology are among the things for which the Guam Power Authority plans to borrow about $210 million.

The Consolidated Commission on Utilities on Tuesday approved the power agency's plan to borrow up to $210 million for various improvement projects and refinancing efforts.

The bond financing needs the approval of the Legislature and the Public Utilities Commission. The loan would be paid back with future revenues collected from ratepayers.

The agency also has plans for another series of rate increases starting April 2011, according to a resolution the utilities commission passed Tuesday night.

CCU Chairman Simon Sanchez said a bulk of the borrowed money would go toward upgrading the agency's transmission and distribution facilities and equipment. If those facilities are able to run more efficiently, it will help lower the agency's operating costs, and in turn, delay or reduce future rate increases, Sanchez said.

The agency plans to invest in a $33.2 million Smart Grid Project, which has been estimated to produce up to $5 million per year in fuel savings, according to the CCU resolution. The agency received a $16 million federal grant for the digital technology project, but it must come up with the rest of the money.

A shared, central facility is also planned for the two utility agencies, which would called the Fadian Administration and Operations Center.

The building would help reduce costs for leasing and renovating existing facilities while streamlining operations for the two agencies, the resolution stated.

Bond Sale Closed by June 17

Bond sale closed by June 17
Tuesday, 09 June 2009
by Therese Hart
Marianas Variety News Staff

THE sale of government of Guam bonds will be finalized by June 17 and the money will be in the government account the next day, according to Tony Blaz, administrator of the Guam Economic Development Authority, who just returned from New York after successfully marketing the landfill and general obligation bonds.

“I’m happy that the landfill bond sold, but I’m also happy that our manamko will finally receive their COLA money. They’ve waited so long for this and when they pass on without seeing that money, it’s a sad day. We have to remember that they built this government through their hard work and dedication,” said Blaz.

The government of Guam successfully sold $473.5 million of triple tax-exempt bonds in the municipal market last week in New York—historic bond sales—which marked two of the first large high-yield transactions since the global financial fallout of the municipal market in fall of last year.

The two bond issues included $270 million of general obligation bonds, rated “B+,” and $202.4 million limited obligation Section 30-backed bonds, rated “BBB-.”

The successful issuance of the $270 million debt service bonds will pay for overdue tax refunds, a court-ordered cost of living allowance and other government debts.

The $202.4 million Section 30 bonds will pay for the construction of the new landfill as well as the closure of the Ordot dump.

“These people did their part. I know many people have said, hey, we don’t need to take care of them. But these people helped build the government of Guam and we have to be grateful,” Blaz said, referring to the government retirees who are owed their COLA.

Blaz acknowledged that it was a long standing obligation that should have been addressed decades ago. “But we didn’t. And today, we delivered for the people of Guam. This governor made it happen,” he said.

Overwhelming investor interest led to adjusted bond yields downward on both transactions, saving over $100 million in debt service on the general obligation bonds and over $56 million in debt service on the Section 30 bonds, compared to estimates a few weeks, according to a Guam Economic Development Authority press release.

The final yields ranged from 6.20 percent to 7.18 percent for the general obligation bonds and 3.95 percent to 6 percent for the Section 30 bonds.

“This was well below the interest rates that the government anticipated even a few weeks ago, and below the interest rate caps set by the authorizing legislation,” said Blaz.

Ben's Pen

ben's Pen : Conspiracy theorists line up here
Tuesday, 24 March 2009 04:03
by Sen. Ben Pangelinan
Marianas Variety

LAST Friday, as it seems to be the practice of our esteemed federal court chief judge to release orders right before the weekend, found the government of Guam in contempt for the failure to deposit $993,700.00 as ordered by the court in its Feb. 13 order.

The court only cited this section of her order and did not even comment on the other aspects of Public Law 30-1, which was crafted by the Legislature after careful and deliberate and repeated reading of the entire order.

The court did order the payment of the $993,700.00 beginning on March 1. The court also encouraged the legislative and the executive branches to continue efforts to find “viable alternatives” means of financing the consent decree projects at a later time. Public Law 30-1 did not wait for a later time and instead gave the court a viable financing plan prior to March 1.

In the proceedings of the committee of the whole, prior to passing Bill 51 which became P.L. 30-1, I asked point blank the government of Guam’s financial advisor and the underwriter of the bond issue if the conditions for the security of the bond issuance in the bill was viable. These conditions are:

1. It authorized the issuance of the entire amount estimated by the receiver as what is needed to fund the consent decree projects, $202 million.
2. It pledged the full faith and credit of the general fund as a guarantee for the payment of the debt service.
3. It sets the maximum interest rate for the bonds at 9 percent.
4. It approves the terms and conditions and authorizes the Governor to issue the bonds

Both financial experts stated that this was a viable financing plan. Quoting from the same order: “Should this occur, the court will suspend the weekly payments provided the court is satisfied that at a minimum, authorized without the need for further legislative authorization or action, the maximum amount of bonds.” The Legislature clearly did that in the bill it passed.

The court also required that the “governor and the Guam Economic Development Authority in good faith and to the court’s satisfaction move to sell the first series of these bonds as soon as possible and such other bonds as soon as possible and such other bonds at a later date as required to keep the Consent Decree projects and on schedule.”

The court did not even ask the governor or GEDA if they “move to sell the first series of these bonds.” Why? It is clear that the court is not interested in what the Governor is not doing and it remains unknown to everyone, except the court. It is clear that she remains fixated on not only what the Legislature is doing, but on what it is not doing that displeases the court.

It appears that the court as well as the federal government wants a landfill built that serves the needs of someone else other than the people of Guam.

What is your theory?


ben pangelinan is a Senator in the 30th Guam Legislature and a former Speaker now serving his eighth term in the Guam Legislature. E-mail comments or suggestions to
senbenp@guam.net. ctzenben@ite.net

GovGuam Can't Afford $1,000,000 a Week for New Landfill

Cruz: We can't trim:
Camacho weighs cuts to pay for landfill
By Agnes Donato
Pacific Daily News
January 16, 2009

Acting Speaker Benjamin J. Cruz yesterday rejected a suggestion for the government to rein in spending so it can raise money for the dump closure and a new landfill.

According to Cruz, a cost-cutting plan isn't an option because the government of Guam is insufficiently funded as it is.

"Where do you want to start making the cuts? The police department? The last budget we passed is not even enough to run the government. We have not paid tax refunds in 15 years," said Cruz.

The administration of Gov. Felix Camacho said it is looking into the possibility of cuts.

"Austerity measures have always been important, and key members of our fiscal team are working to identify different options and their respective impacts," governor's spokesman Shawn Gumataotao said.

Time running out
Time is running out for GovGuam to close Ordot dump and open a new landfill. The solid waste receiver in a report Wednesday said the dump will be full in two and a half years, barely five months after the new landfill is scheduled to open. The receiver said GovGuam must pay $1 million a week, beginning in March, to finance the project.

Cruz said it would be impossible to come up with $52 million a year. The amount represents about 10 percent of GovGuam's budget for fiscal 2009.

"We're not like the federal government that has plenty of money. They can print money anytime they want to because they have credit to back it up. The government of Guam does not have that ability. GBB has to understand that," said Cruz, referring to solid waste receiver Gershman, Brickner & Bratton.

Cruz said he is glad the court recognizes the government's financial problems and is now willing to entertain alternative means of funding the landfill.

District Court of Guam Chief Judge Frances Tydingco-Gatewood has given the administration a week to respond to the receiver's demand and to present an alternative funding plan that GovGuam could afford.

Court order
But Cruz lashed out at the receiver for insisting that the government pay $993,700 a week, beginning in March, to replenish the initial $20 million deposit Gov. Felix Camacho made under court order earlier this month. Cruz said the demand is "unreasonable."

The acting speaker also said lawmakers shouldn't be blamed because they failed to pass the $160 million bond bill that Camacho submitted to the last Legislature. Even if the bill went through, he said, GovGuam would not be able to float the bond because of the global economic crisis.

"Even if we wanted to, we couldn't float the bond today. Almost nobody can float bonds. GBB has to understand that," he said.

Cruz added that the terms of the government's existing loans prohibit GovGuam from floating any further bonds.

GovGuam has three outstanding loans with Bank of Guam: a 2002 loan with an outstanding balance of $5 million, a 2008 loan with a balance of $13 million, and the $20 million entered on Jan. 2, 2009, to pay for the landfill deposit. Under the terms of the 2009 loan, the government cannot float a similar bond until these loans are paid.

GovGuam Bonds Upgraded to B +

GovGuam bond upgraded to B+
By Sabrina Salas Matanane
Published Oct 29, 2008
KUAM NEWS

Ratings authority Standard & Poor's has upgraded the Government of Guam's General Obligation bonds to "B+" from "B". The upgrade follows a recent trip by Guam Economic Development and Commerce Administrator Tony Blaz, governor's chief of staff George Bamba, and Bureau of Budget Management & Research director Bertha Duenas, who met with the company two weeks ago.

During that meeting the governor's financial team highlighted "the projected growth of Guam's economy including the imminent military buildup and tourism diversification efforts with regards to the China Visa Waiver Program," stated Blaz. According to a report issued by S&P, "The upgrade is based on the general government's improved financial performance, which is the direct result of greater political consensus to enhance revenues and control expenditure growth."

The report went on to state that it was also based on the general government more fully addressing the unfunded long-term liabilities on Guam's balance sheet. "This is excellent news, which speaks to this Administration's serious commitment to stronger finances," Governor Felix Camacho said. "When I came to office in 2003, I promised to improve the government's finances and take us up the road to fiscal recovery. I'm proud we're accomplishing this for the benefit of the generations that come after ours. "

"There is a long road ahead and we're going to keep working to eliminate the deficit, pay our people what they are owed and strengthen the government's financial position further," he added.