PACIFIC ISLANDS REPORT

Pacific Islands Development Program/East-West Center
With Support From Center for Pacific Islands Studies/University of Hawai‘i

By Frank Oliveri and Mark-Alexander Pieper

WASHINGTON (Pacific Daily News, Dec. 19) - Now that President Bush has signed legislation that authorizes the write-off of about $157 million in government of Guam debt, a crucial next step will come from Gov. Felix Camacho.

Delegate Madeleine Bordallo succeeded in getting her debt-relief proposal signed into law within six months after she wrote the legislation. Guam also will receive $14 million annually over 20 years, about double what it had been receiving annually, for services provided to regional immigrants.

But before the federal government forgives some or all of the estimated $157 million in debts owed by several GovGuam agencies, the governor must meet a key deadline.

Gov. Felix Camacho has 120 days to itemize and justify his debt-relief plan. The report must have the input of an independent accounting firm, according to a time line from Bordallo's office.

The Camacho administration also must provide an accurate census of regional immigrants.

"We're going to try to consolidate all the information we can to justify our arguments we present to them," Camacho said. "We may not get all the debt relief we are seeking but certainly we'll get a good portion of it."

Camacho said he believes what debt relief the local government receives will be available to Guam by the end of this fiscal year, or in September.

The biggest chunk of debt GovGuam wants forgiven is a $108 million Guam Telephone Authority debt to the U.S. Department of Agriculture for telephone infrastructure.

Bordallo had argued that Guam is owed $187 million for government services it provided to regional immigrants during the past 17 years. So she proposed forgiveness of an estimated $157 million in GovGuam debt in exchange for the 17 years of unreimbursed regional immigration costs to Guam.

The debt-relief provision for Guam is included in the Compact of Free Association Amendments Act of 2003, which extends financial assistance to the Federated States of Micronesia and the Republic of the Marshall Islands.

"I'm thrilled with it. I think we have made real strides forward in addressing compact impact for Guam," Bordallo said. "The president's signature concludes a process of great importance to the peoples of Micronesia. We needed this shot in the arm. We have had our share of storms in the past year."

The governor yesterday said the debt relief would be a great boon for the island's autonomous agencies.

The Guam Waterworks Authority owes $9 million to the Navy for Fena water use.

Consolidated Commission on Utilities Chairman Simon Sanchez said that the water agency has been paying off the Navy debt on a monthly basis -- thanks to the 11.5 percent water surcharge ratepayers pay. He said the debt relief will mean the surcharge won't have to last as long.

"If you remember the surcharge was initially created by the (Public Utilities Commission) to pay for the debts owed to the Guam Power Authority and we simply asked them to amend that to include a payment mechanism for the Navy," Sanchez said.

Last June, the PUC agreed to extend the seven-year surcharge by another two years to pay for the Navy debt. Sanchez said that if the Navy debt is forgiven, it will likely mean that the extra two years on the surcharge are dropped or the actual surcharge amount could be reduced to pay off the millions in overdue power bills in the nine years.

Whatever happens, PUC members will have to ultimately decide what happens with the surcharge, Sanchez said.

The new federal law signed yesterday authorizes a minimum of $600 million over the next 20 years, or $30 million a year, to be shared between Guam, Hawaii and the Commonwealth of the Northern Mariana Islands.

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