Guam legislators accept substitute FY2027 budget; fiscal teams warn BPT cut risks key projects

Legislators accepted the Committee-substituted Bill No. 266-38 COR (the proposed FY2027 budget) on a show-of-hands vote and immediately resolved into the Committee of the Whole to consider the bill in detail.

The Committee of the Whole set extended working hours and detailed rules for chapter-by-chapter review, including two rounds of five-minute questions for revenue panels and guidance that amendments must be submitted in writing to the clerk at session@Guamlegislature.gov and uploaded to the Committee of the Whole shared drive.

Steven Guerrero (identified in the transcript as director of the Office of Finance and Budget) opened the panel's testimony, saying the island's economy is expected to expand through FY2026 and FY2027 as tourism recovers and construction and federal military investment continue. Guerrero told members that, based on May consolidated reports, year-end general fund collections for FY2026 are projected to exceed adopted revenues by about $64,000,000 and that those collections have helped the government address priorities beyond amounts originally appropriated.

Guerrero said the FY2027 revenue projections were developed from historical collections, current trends, tourism activity and anticipated federal military construction. He listed the major categories that together account for roughly 98% of general fund revenues and noted fiscal-year adjustments including an anticipated reduction tied to a proposed additional half-percent cut in the business-privilege tax (BPT).

Vanessa Valencia of OFB presented OFB's numerical recommendations: a general fund available for appropriation of about $974,552,688; special funds of roughly $215,369,003; and federal matching/grants at about $213,485,004 for a total recommended revenue package of approximately $1,403,407,402. Valencia provided line-item projections including individual income tax (~$111 million), corporate (~$142 million) and withholding (~$333 million) for combined income-tax receipts of about $588 million.

OFB also listed subsidies and tax-credit amounts and identified six major special funds, including the Guam Education Facility Fund, Guam Highway Fund and the Healthy Future Fund. OFB noted the substitute bill and the body's amendments are available in the shared drive and said the listed technical amendments do not alter appropriation or revenue totals.

Lester Carlson of BBMR, speaking for the governor's fiscal team, said the June consolidated revenue report shows the general fund tracking roughly $88,000,000 above the adopted level and generally aligned with OFB's numbers. Carlson called the proposed reduction of the business-privilege tax rate from 4.5% to 4% the "800-pound gorilla," saying the change is estimated to reduce general fund revenues by about $40,000,000 and listing direct program consequences: the budget contains no funding for the Simon Sanchez High School project, and planned Department of Corrections (DOC) modernization work tied to prior-year audited surpluses is unlikely to proceed without cash appropriations.

"We're giving up a lot to reduce BPT from 4.5 to 4," Carlson said, warning that cuts would curtail funding for public-health local matches, behavioral-health contracts and developmental-disability home-care stipends. He also said some public-safety training cycles have been reduced and urged attention to funding shortfalls for school maintenance on leased schools slated to become government-owned in FY2027.

Edward Byrne, director of administration, and other administration representatives reiterated gaps in behavioral-health and residential-treatment funding and pointed to smaller new allocations in the bill, such as a 9-1-1 surcharge allocation and a matching grant for a Tuman rescue base. OFB read a staff list of about 10 technical corrections to chapter references, numeric wording and agency names (for example, correcting a cited subsection and the agency name for a provision now to read Guam Homeland Security/Office of Civil Defense); the director emphasized those corrections do not change appropriation or revenue amounts.

The Committee recessed for a one-hour lunch and was scheduled to reconvene at 2:15 p.m. to begin member questioning; the chair said OFB will provide the requested spreadsheets and an analysis of BBMR's presentation for the floor discussion.

Notes: At the opening of the floor session a motion to accept the substitute bill was made and recorded as passing by voice/show of hands; the transcript does not record a roll-call tally.