IT’S no secret that since 2009, there have been several federal and local actions taken that pushed the government of Guam’s expenditures beyond what the collections from our current tax base can sustain.
The Earned Income Tax Credit (EITC) tax policy changes associated with the American Recovery and Reinvestment Act, through expanded eligibility and increased benefits, pushed the necessary 2009 and 2010 income tax refund payments to an all-time high.
Law enforcement raises increased payroll by over $14 million in Fiscal Year 2010 and the government of Guam’s health insurance costs increased by $28 million in FY2011. The government’s expenditure outlay has increased by more than $50 million for these three items since 2009, with the government’s health insurance accounting for over 50 percent of that increase.
These details are important to understand when discussing the impediments that the government faces in trying to deliver services to the people. The government needs to control those expenditures that it can.
Because Guam mirrors the IRS income tax code of the United States, the federal government controls changes to EITC tax policies. Although I have championed the reimbursement of both Additional Child Tax Credit (ACTC) and EITC tax credits back to the government of Guam, we have only been successful in receiving the ACTC reimbursement from the United States Treasury over the past years.
I continue my efforts to secure the reimbursement of the EITC and it is imperative that Guam’s congressional delegate get more aggressive in this effort as well.
Since Guam cannot control federal tax policies that have a trickle-down effect on our government, what policies must it change that are in its control? Crafting the best policy necessary in creating competition for the government of Guam’s health insurance contract is one and it accounts for 50 percent of our increased cost of running the government.
Change in those policies that our local government can control is immediately necessary, because the source of future income that was expected to pay for these increasing expenditures is now disappearing before our eyes. The honeymoon phase of the private investment in our island as a result of the announcement of the Marine realignment back in 2007 has already tapered off due to the uncertainties surrounding the buildup. This will negatively affect our government’s revenue-generating capability from all aspects of our economy.
In the face of such difficult choices on how to pay for the existing cost to run the government, policies must be developed to bring competition into the government health insurance program. Since the government has reduced its program to one health insurance carrier, the cost of insurance has skyrocketed to astronomical levels.
With the new cap on profit for health insurance carriers set at 15 percent, the government can expect to have health insurance carriers compete with each other with little to no risk to the government. Just good old-fashioned private sector competition aimed at excellent coverage for employees and vulnerable retirees, at the best prices we can afford.
Unless our current carrier can insure against financial suffocation, I hope both the governor and lieutenant governor will remain impartial and unbiased and direct their appointees and hired consultants on the health insurance negotiating team to make objective decisions on behalf of the people of Guam. Furthermore, I hope my colleagues at the Guam Legislature will support my efforts to reduce the cost of health insurance, which is the largest single expenditure with a vendor contract in the government of Guam today.
If we do not decrease the expenditure level of this government through controlling those policies that we can, the government of Guam will surely suffocate from financial distress.