Legislative budget hearing debates rollback of Guam business-privilege tax amid warnings of shortfalls and federal cuts

Members of the Legislature's General Government Operations and Appropriations committee clashed over a proposed rollback of the business-privilege tax rate and the broader fiscal tradeoffs in the draft FY2026 budget during an extended hearing. Committee chair Carlson opened the discussion by clarifying that a prior budget bill enacted a 5% BPT rate into statute and said, “So it is not illegal,” when asked whether the rate was lawful.

The debate centered on whether a 0.5 percentage-point rollback — described by several senators as a roughly $40 million reduction in annual general-fund revenue — is prudent while federal grants and reimbursements are uncertain. BBMR Director Lester Guerrero and budget staff warned that unspecified federal funding cuts and new federal tax changes complicate revenue projections for FY2026.

Why it matters: Lawmakers said the rollback would reduce revenues available for operations and debt service, could strain the government's ability to pay court‑mandated tax refunds on time, and might weaken…