Cruz to Adelup: Time to get real on revenues

June 2016 CRER reflects $16M collections shortfall
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Posted on Jul 26 2016

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Benjamin J. F. Cruz

Benjamin J. F. Cruz

HAGÅTÑA—Following the Bureau of Budget and Management Research’s (BBMR) publication of yet another dismal monthly Consolidated Revenue Expenditure Report (CRER), Vice Speaker Benjamin J. F. Cruz is calling on the Calvo administration’s fiscal team to explain how it will make up for a $16.5 million collections shortfall. Without a satisfactory explanation, the appropriations chair warns that adjustments may need to be made to properly account for the shortfall when crafting the Fiscal Year (FY) 2017 revenues, as reliance on Adelup’s rose-colored glasses may prove to be a futile exercise.

Statutorily required to be submitted to the Legislature on a monthly basis, the CRER serves as an update on the collection status of GovGuam’s General Fund (GF) revenue projections and expenditures. According to the report’s projections, $626.3 million should have been collected during the first three quarters of FY 2016. However, the June 2016 CRER reveals that the government has actually only collected $609.8 million—leaving a revenue shortfall of $16.5 million.

Despite this clear shortfall, the administration maintains that the months of July through September—which Cruz notes are historically-low revenue collection months—will yield record revenue collections and meet the total $825 million projected for the end of FY 2016.

“Every time our government adopts revenue projections we don’t meet, we grow our deficit, strain our cash flow, and make another empty promise to the people of Guam. If we want this to stop, we need to work together, we need to tell the truth, and we need to get real about the challenges we face,” stated the appropriations chair, who called out the Department of Administration in early June for recording over $10 million in GF revenue that had yet to be collected in April 2016, and artificially inflating GF revenue tracking in the April CRER as a result. “Let me be clear, unless Section 30 saves us yet again, I don’t see any real way we can climb out of a $16 million hole in 3 months. If the Administration’s revenue projections have a get-out-of-jail-free card, now is the time to tell us about it.”

Of particular importance to Cruz is the revenue tracking of the Business Privilege Taxes (BPT), which, according to the report, suffered a shortfall of $10.9 million. With projections at $185.4 million for the first three quarters of FY 2016, the report reveals that only $174.5 million was actually collected. Cruz notes that, despite the glaring facts, the Administration continues to insist that the government will hit the total projection of $247.7 million in total BPT revenues.

“If Adelup does not collect the $247 million in BPT we projected this year, how can its revenue projections say we will collect $273 million—$23 million more in FY17?” said Cruz. “This aggressive revenue tracking allows for pay-and-pray budgeting: promise to pay out more in government spending next year and pray we collect enough to cover it.”

The Committee on Appropriations will glean a detailed explanation and justification of the Administration’s revenue projections for the upcoming Fiscal Year 2017 at BBMR’s budget hearing this Friday.

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