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Tax refunds may be out by June
TWO major rating agencies have given the latest government of Guam bond high marks, which means tax refunds could come out by mid-June after the governor’s fiscal team heads to the bond market later this month.
Gov. Eddie Calvo yesterday announced that the latest Guam bond received a rating re-affirmation from the international bond rating agencies. Standard & Poor’s gave Guam an ‘A’ rating while the Fitch rating agency issued an ‘A-' rating, both with a stable outlook.
“This high rating will help and assist us as we market these bonds in the next couple of weeks,” Calvo said. “We anticipate good news for the government in terms of its fiscal condition and stabilization and great news because we intend to get those tax refunds in the next several weeks.”
“We came in to this house in the shape that it was," said Karl Pangelinan, administrator for the Guam Economic Development Authority. "We looked at the mess in the corner and said we are going to fix this mess. The plan since day one was to borrow the entire $343 million to pay for tax refunds because we just had about that much in outstanding tax refund debt. This is not new debt. That’s been sort of our battle cry since day one, that this not new debt.”
During the media briefing, a question was asked about the $1.2 billion long-term debt that was presented by the Fiscal Responsibility and Tax Refund Commission on Tuesday. Calvo said the government already has a fiscal stabilization plan which would restructure that current debt.
“That’s what caused this deficit because it was a current obligation. What we’re doing is we’re putting a current obligation – which was this cumulative deficit of close to $400 million – and paying it off. But we’re restructuring it into a long-term debt that can be paid in about 30 years,” Calvo said, adding he believes this course is the most fiscally prudent way to go.
“It’s important to know that as we pay off this entire accumulated deficit, we don’t get it back. That’s why we’re making some of the tough decisions that we have to make to ensure that we don’t get into this position. That means being very accurate in revenue projections and not spending more than what is taken,” the governor stressed.
For his part, Republic Minority Leader Sen. Frank Blas Jr. said the favorable ratings are a result of the collaborations between the Legislature and the administration in the past several months.
“We actually focused on what is most important: getting our government back on solid ground and also giving people back their money that was held,” Blas said.
“The people deserve their money. In getting their money back, it helps to spur more growth. Now people have the opportunity to pay off any debt that they have. They also have the opportunity to start up businesses, get an education, or get better health care.”
GEDA Administrator Pangelinan is hopeful that GovGuam will receive the same interest rate it got last November, 4.94 percent.
“The plan is to pre-market and ultimately price it during the last week of this month,” Pangelinan said. The money, though, won’t be in until the first of June.
The tax refunds will be for those who were owed for 2010 and individuals who filed their 2011 tax returns early.
Pangelinan said they also have to take care of repayments to the Retirement Fund, which is about $25 million, and health insurance, which is about $18.2 million.
Troy Torres, the governor’s spokesman, said the payments for the Retirement Fund and health insurance were not part of the original plan but were included in the operational expenditures of the administration’s bi-annual budget.