I HAVE a suspicion that nothing is as it seems in the current budget battle.
Everybody is talking about the need to pay the people's tax refunds but that seems incidental; an afterthought; in the bigger scheme of things.
Everybody talks about layoffs and restructuring, but that is the last thing any politician out there wants because they are deathly scared of the political fallout.
The truth is GovGuam is fast running out of money to fund its operations. The Calvo administration discovered that stark truth way back, when it first took over the reins of power.
Now Adelup wants to float a $311 million bond, ostensibly to pay off outstanding tax refunds. But that may not be the main reason. The administration wants to take out the loan simply to continue funding its operations and make the deficit a little more manageable.
Some of the money will be diverted to the tax refunds, sure, because that is the hook the administration is dangling over the Legislature. It wants to rally popular support for the bond proposal and exert political pressure on the Legislature to pass its budget bill. And what better hook than the tax refunds issue? No politician can argue against that and everybody wants it.
The Legislature, on the other hand, wants to block the bond, warning about GovGuam going deeper into debt and insisting that its own budget proposal is better, with a better system of paying out tax refunds.
The senators' warning about taking on too much debt and their counter budget proposal have merits, but what is not mentioned is that money allocated for the tax refunds will have to be taken from somewhere, specifically money for other GovGuam operations.
This could only lead to what all the politicians fear – GovGuam layoffs. The only other choice would be to raise taxes and nobody wants that. But for the Legislature, at least the buck has been passed back to the governor who would have no choice but to order the layoffs to find money for GovGuam operations.
Of course, we can already see what will happen next. Adelup, in implementing the layoffs, will in turn blame the Legislature for the downsizing. The administration and the Legislature will attempt to pin the blame on each other to escape the wrath of the GovGuam voting bloc.
But the truth is we really need a restructuring of the government, bond or no bond. If we are to borrow money from the bond market just to fund the status quo, we will never get out of the financial morass we are in.
The senators may be a little sensitive about talk of GovGuam layoffs and downsizing because they are up for re-election next year. And Adelup is quite aware of this vulnerability, which is why it is using the threat of layoffs to get what it wants.
But if the administration manages to win this budget battle and decides to forgo reorganization and maintain the status quo, then its victory becomes pyrrhic.
On the other hand, Calvo doesn't come up for re-election until 2014. If he embarks on a drastic reorganization of GovGuam now, he won't have to contend with the political fallout, if any, until three years from now. That is a long time, politically. By the time 2014 comes, the savings accrued from rightsizing GovGuam would have benefited the economy and everything would be forgotten. Moreover, if the buildup finally happens, there will be money forthcoming and we may not even need the bond to pay off the tax refunds and pare off GovGuam's deficit.
In the meantime, Adelup would have achieved an unprecedented and historic “rightsizing” of the government that has long been necessary but that every other governor had been afraid to try.