Pacific Island Times No. 10 Volume 2 - Page 4

FROM THE PUBLISHER’S DESK “ W Lessons from Puerto Rico e have a lot to learn from Puerto Rico,” Gov. Eddie Calvo said following the sister terri- tory’s recent referendum, which yielded an overwhelming vote in favor of statehood. It’s not just from Puerto Rico’s self-rule exercise that Guam is expected to learn a lesson. Puerto Rico is beset by an incredible crisis. The commonwealth government is buried in $73-billion debt that it does not have the capacity to repay. Its infra- structure is crumbling and its health care system is ailing. Almost 70 percent of Puerto Ricans rely on either Medicare or Medicaid. Rather than blaming the feds or plead- ing its colonial status to justify its failures, — which, incidentally, is Guam’s favor- ite political balderdash when things go wrong—Puerto Rico Governor Ricardo Rosselló bravely accepts responsibility for his government’s overspending and bor- rowing its way into bankruptcy. Statehood is Puerto Rico’s salvation. economic expansion,” the rating agency said. Governor Calvo may continue to swagger about Guam’s strong economic growth but Fitch Ratings has warned that such blessing is negated by the govern- ment’s inability to sustain a structurally balanced budget due to a “very long trend of weak financial operations and high debt levels.” Based on Guam Economic Development Authority’s September 2016 debt abstract, Guam’s total debt was pegged at $2.7 billion in all categories. Revenue bonds total $1.58 billion and a total of $1.119 billion in limited and general obligations bonds are subject to debt ceiling, which is equivalent to 10 percent of aggregate tax valuation of property in Guam. Besides the limited and general bonds obligation, GovGuam has $148.5 million in debt not subject to debt ceiling, $87.1 million in principal toward the Tiyan lease agreement, and $171.1 million in previ- ously approved financing that has yet to be borrowed — pushing the public debt to over $1.525 billion. The amount translates to approximately more than $9,500 blaming debt per person on Guam. From an economic standpoint, Governor Calvo said, Guam is in a much better po- sition than Puerto Rico. In which case, Rather than he added, Guam voters can make decisions without duress. the feds or pleading But whether the governor is taking a cue from Puerto Rico’s cautionary tale is open to question. Now on his last term in office, Governor Calvo is mak- ing his new pitch for a $125-million bond borrowing and gross receipts tax raise to bankroll the Guam Memorial Hospital Authority capital improve- ment projects. He is proposing to raise the GRT from 4 percent to 4.75 per- cent, which we all know will be passed on by business owners to consumers. In its Dec. 22, 2016 report, Fitch Ratings highlighted GovGuam’s binge borrowing legacy. The agency charac- terized Guam’s long-term liabilities as “exceptionally high”—a red flag that contributed to Fitch Ratings’ decision to demote the government of Guam’s $763.3-million business privilege bonds from A-minus to BB. “Guam has limited gap closing capacity and would likely experience fiscal distress in a moderate downturn. It has had difficulty reaching budgetary balance even during this extended period of 4 its colonial status to justify its failures, — which, incidentally, is Guam’s favorite political balderdash when things go wrong—Puerto Rico Governor Ricardo Rosselló bravely accepts responsibility for his government’s overspending and borrowing its way into bankruptcy. Statehood is Puerto Rico’s salvation. Meanwhile, the Office of Public Ac- countability repeatedly reports Gov- Guam loses an average of $30 million a year to delinquent tax accounts. In its most recent audit, OPA noted that the Department of Revenue and Taxa- tion lost out on $2.3 million in ɕٕՔ)ͥ䁉͔́ɔѼЁ)չ̸)]ɕՕЁɥ́Ѽѡ)ɭаѡٕɹЁٕȴ)́ѡѥչͽɍ́ѡ)ЁхѼЁ̸ٕ́)ѡ͔ݕݸչѕх)չ̰I؁Q́Ѽѡ)ѕѼ՜ѡ)́ѡɽ՝ݡѡЁՉ)́)Qɑхȁݡ́)ɽչ́́ѡͥ)ЁեѼٕɹЁ)եЁѡЁԁe)ٔи)%́ȁɕаэIѥ)ݼݽɑ́ȁՅAՕѼI)AՉ͡)5ȵY Ʌ)Չ͡ͱѥ̹)ѽȵ ) Ս1)ѽͱѥ̹)ͽєѽȀA9єAԤ)=չ-́-ͽ)ͽ)Aԁ ɕԁ ) ɹє ɕ)ɕɹѕ) ɥѥ]ɥѕ))ɕ مՄ)Iɐ ɽ))͕5)5)5ɬIɥՕ)I͕I))M)MՅQ)ȁUɉ)e͡ф)ѽɥ ѽ)ɕ9Ʌ)Ḿ5ɭѥᕍѥٔ))M8խ݄)ͱѥ̹) ٕͥ́Ё5))!͕)͕ͱѥ̹()A%Ё9́M٥11 )UЁ4ā5 4 ե(IєذT)QĴ耠)A%ͱQ)]ͥєܹͱѥ̹)@< -ɽȰAԀ)Q)QA%ͱQ́́Չ͡ѡ)ɍձѕՅAԁѡA)%Ё9́M٥11 ѽɥ)ٕѥͥՉͥ́ɽ䁽ѡ)A%ͱQ́Ёѕݥѡ)͕ЁѡՉ͡ȸÝ́ɽ)ɥѽ́Ёͅɥɕɕ͕Ёѡ)ѽɥͥѥѡA%ͱQ̸