LETTER: The Argument for Extending Energy Credits | Opinion

For more than two years, I have called for a more accurate and realistic approach to budgeting in Guam, urging my colleagues to recognize the discrepancy between conservative revenue projections and actual revenues received.

The issue has come to the forefront again with the recent passage of House Bill 355-37, a supplemental appropriations measure that would allocate $51 million of excess revenues collected in FY 2024, with energy credits being offset by excess revenues in FY 2025.

While I supported the bill because I would support anything that gives people energy credits this holiday season, it was not structured the way I proposed as part of my 357-37 Electric Credit Extension bill.

My bill sought to include more accurate fiscal year 2025 revenue projections from the outset to fund the electricity credit extension, rather than relying on excess revenues from the fiscal year that had just begun.

I understand Governor Lou Leon Guerrero’s reservations about the precedent set by appropriating funds based on projected excess revenues in FY 2025. If we expect excess revenue, shouldn’t it be part of budget forecasts and allocated accordingly?

The passage of House Bill 355-37 highlights a flaw in our budget process: revenue projections that are consistently too conservative. For fiscal year 2024, our tax collections reached $1,058,616,619, far exceeding our original projection of $149 million.

This was not a windfall, but a predictable outcome, given economic indicators indicating rising incomes due to military buildup.

The same downward projection is evident in the FY 2025 budget, and while this cautious approach may seem fiscally conservative, it results in reactive, chaotic spending as we pocket “excess revenue” during the year as it is received, and non-deliberative and planned. budget process.

House Bill 357-37, my proposal to extend the energy credit, sought to address this issue by increasing fiscal year 2025 revenue projections to include the energy credit as a planned part of the budget, providing stability for our residents.

However, the final version of the bill, 355-37, instead decided to appropriate funds from “FY 2025 excess revenues,” functionally the same revenues we expect, but creating an unsound budgetary precedent for appropriating unrealized, unplanned excess revenues. Any business owner will tell you that running a business is impossible.

Despite a sluggish tourism sector that has yet to reach pre-pandemic levels, the local economy is benefiting from a surge in construction activity and federal spending that is generating reliable tax revenue. These factors and actual revenue tracking indicate that revenue expectations exceed fiscal year 2025 budget projections.

To break this cycle of underestimation and reactive spending, we must consider more accurate, data-driven forecasts that take into account federal spending, construction growth, and actual revenue tracking so we can make strategic decisions that will prioritize the needs of our people from the beginning .

Bill 357-37 was an attempt to move us in this direction by including an extension of the energy credit in the budget using revised and more realistic revenue projections.

The current approach, based on calculating and projecting excess revenues, perpetuates uncertainty and prevents us from committing to long-term programs that provide tangible benefits to residents.

I fight so hard for this because energy credits are not only a financial relief measure for households, they also act as a Keynesian economic stimulus that supports broader economic activity in the absence of our pre-pandemic tourist numbers.

In 27 months, the energy credits have put money back into the hands of residents, who then spend it at local grocery stores, restaurants and other small businesses. This spending stimulates the local economy, helping to offset the economic shortfall caused by continued low levels of tourism.

Consider this: If families didn’t receive a $100 monthly credit, they would have to allocate that amount to their energy bills, reducing their discretionary spending. For many local businesses, that $100 can make a significant difference.

This translates into dining at local restaurants, shopping at local stores, and shopping that keeps businesses afloat. During the critical Christmas season, when many small businesses rely on consumer spending to keep them going through the tough months, this incentive becomes even more important.

If the Governor were to issue a line-item veto of the power credits, as Bill 355-37 did, I implore the Legislature to consider extending the power credit through House Bill 357-37 to include financial relief in a stable, realistic budget plan. The benefits of this expansion support consumer spending, which keeps our local economy growing.

If we fail to recognize the true state of our economy and continue to underestimate income, we will remain in a cycle of reactive management that is unable to effectively prioritize our people.