$ 75 million “cash advance” could decrease | Guam News
An alternative to the governor’s $ 75 million “cash advance” proposal for tax refunds would cut the amount by nearly half and delay the delivery of tax refund checks by a few months.
And a nearly 20-year-old law that says voters should have a say, before the government of Guam can take on debt above $ 25 million, should not be overturned for this proposed loan. , according to the replacement legislation proposed by President Benjamin Cruz.
Cruz also asked, in a letter telling Vice President Therese Terlaje that he was substituting the governor’s proposal, if the proposed loan was “used to mask the effects of overspending.”
Cruz’s version would reduce the amount that will be borrowed from $ 75 million to $ 40 million.
Section 30 Fund
The governor proposed to offer a federal funding source, called “Section 30”, as an automatic lien or automatic repayment backup, in case GovGuam does not have enough money to repay the repayment loan. proposed tax of $ 75 million.
However, the section 30 amount for the proposed automatic lien will nowhere be close to $ 75 million.
Guam delegate Madeleine Bordallo wrote to the president’s office on Saturday, Guam time, that any Article 30 funds exceeding the $ 68.6 million threshold would be used for war reparations. War reparations are payments the federal government authorized last year, using Section 30 funds above a certain threshold.
Last Friday, the governor’s office said $ 120 million was the threshold for war reparations.
But Bordallo’s recent letter indicated that she had clarified with the Home Office that the threshold was $ 68.6 million, so any Section 30 money above that lower amount would go towards reparations for war, not a tax refund loan lien.
Cruz calls senators to a special session at 10 a.m. today to discuss proposed changes to the loan laws, including:
- Modification of the borrowing schedule for this month no earlier than the start of the 2018 financial year, which is October 1 of this year;
- Limit borrowing to a single occurrence, for fiscal 2018 only, rather than the “cash advance” payment and borrowing strategy proposed by the Governor every year, over three years. The proposed substitute loan legislation will limit the interest rate to 3% for only one year. Two more years of borrowing under the governor’s proposal would have allowed the lender to increase the interest rate to 4% in the second year and 5% in the third year; and
- Remove terms that could increase GovGuam’s debt ceiling.
$ 40 million upper limit
The proposed wording to put an automatic lien on GovGuam’s Section 30 funds as a money-back guarantee will remain, as the governor has proposed, but the lien will be limited to a maximum of $ 40 million. Section 30 funds are money provided by the federal government from income tax payments of military personnel and retirees, as well as immigration and passport fees, among other sources of income.
Cruz had previously expressed concern that by allowing the executive to borrow $ 75 million for tax refunds this month and giving creditors an automatic lien on Section 30 funds, GovGuam could be prevented from using much of Article 30 funds for other critical governments. operations at the arrival of the new fiscal year.
Deferring the loan to Oct. 1 alleviates concerns that the same Section 30 funds may be budgeted twice, over a period of a few months.