Tuesday, February 02, 2016

More Pay Raise News and Abuse

I haven't been following this issue closely enough, and so I thought I would post some articles about it as a means of forcing myself to get up to date. Tailugat yu' pa'go na puenge, pues bai hu go'go'te ha' i fino'-hu yan hinasso-ku siha put este para un otro na diha.


Enact the Payraise Rollback
The Guam Daily Post

We encourage Gov. Eddie Calvo to sign Bill 204 and roll back the hefty, retroactive pay raises elected officials gave themselves in November 2014. We are aware that the governor supports the raises – as he has consistently stated – and that his signature on the bill is unlikely, but we are hopeful that position will be reconsidered, particularly in light of the government’s “cash crunch.”

We have opposed the raises and supported the rollback efforts since the raises were enacted. They were enacted less than three weeks after the 2014 election in order to avoid any reaction from voters – which would certainly have been negative – at the polls. And, in what can only be considered the negation of transparency, they were made retroactive.

We have also contended that the government of Guam simply could not afford to allow the elected officials to be so generous with themselves. This has become most obvious in recent months as the public hospital’s overdue payables have come to total more than $20 million – including about $3 million due to the Government of Guam Retirement Fund. The hospital’s power and water were within a couple of days of being disconnected for nonpayment. These are debts owed by the hospital that can only be resolved with payment; if the government had sufficient cash, it would surely pay these debts.

Similarly, the Guam Department of Education – which has been chronically underfunded resulting in a shortage of teachers, support staff and instructional supplies – actually had the power to its offices disconnected in September 2015 because it owed more than $2.6 million. The Department of Corrections owes its staff more than $600,000 in overdue overtime pay.

We are among those who are disappointed that it took so long for a rollback bill to pass. Clearly some legislators, such as Sens. Michael San Nicolas, Nerissa Underwood, Tom Ada, Frank Aguon and Vice Speaker Benjamin Cruz joined the rollback effort early on. But the outcome of Friday’s vote was correct. The taxpayers’ money that was used for the raises is needed for the community services for which it is intended as much now as ever. We are hopeful that the raises will be rescinded and the money directed where it is most needed.


The Law of the Land
"Building a Responsible Guam"
Senator Michael San Nicolas
The Guam Daily Post

Last week I talked about trust in the rule of law and now we turn to a natural extension of that discussion, the basis of the law itself. On Guam, this "law of the land" is the Organic Act, passed by Congress in 1950 and which ostensibly has functioned as our jurisdiction's "constitution" for the last 66 years. This foundation for our laws and government is important because no laws can supersede the fundamental principles and processes laid out in the Organic Act and it elevates certain rights and structures beyond the realm of the political.

We saw recently that pay raises for appointed and elected officials have caused widespread mistrust in government and an ongoing political struggle for over a year now. The federal government passed an amendment to prevent elected officials from giving themselves a raise by passing the 27th amendment to the U.S. Constitution, requiring that any pay raise go into effect in the next term and not the current one. This meant it was the people who decided if their elected official should get this raise. This elevated the issue beyond the political fray and prevented such parliamentary mechanics like the "notwithstanding" provision which can override any regular law.

While most of the amendments to the Constitution have been incorporated into the Organic Act, this particular amendment was not in the Organic Act because it was not in the Constitution in 1950. A bill has already been introduced in the House of Representatives by Guam Delegate Bordallo to resolve this omission, and I pushed for and support her action.

A local constitution can serve as our foundational "law of the land," one that is drafted, debated and decided by the people of Guam. The U.S. Constitution provided a framework for the prosperity and civil liberties Americans enjoy today. A local constitution is beneficial to our people because it sets the limits of government, prevents government overreach into our lives, prevents excess borrowing, and protects our individual rights.

The Organic Act currently sets a limit on our government's borrowing capacity, but certain forms of indebtedness do not count toward the debt ceiling because it is not specified to be included in the debt count by the Organic Act. This is one reason the unfunded liability in our retirement fund was allowed to balloon to the current $1.3 billion. A Guam Constitution can close these gaps in the law.
Fortunately, the right to write our own Guam Constitution is recognized by the U.S. federal government, yet we have been unable to see it all the way through. We've had two efforts to draft a Guam Constitution, one in beginning 1969 and another in 1977, and both were unsuccessful. I think it is long overdue for a new generation to look at the issue once again.

While we need to work on the trust that people have in their leaders in order to accomplish a Guam Constitution that people will support, I think it is an important step that needs to be taken. As we work to restore the public's trust in leadership, we must begin the dialogue of a constitutional framework. We need to research where it has been and what needs to be done, in order to assess if this issue's time has come. A law of the land that is truly representative of the people of Guam is fundamental to our progress.


Gov. Eddie Calvo can no longer ignore the government’s fiscal problems and must begin to take steps to focus the government of Guam’s limited resources on the island’s top needs.

The governor can start by signing Bill 204 into law. It would repeal the retroactive pay raises that Guam’s appointed and elected leaders received in November 2014.

The bill was passed after a resolution to reconsider another vote on Bill 204, which failed last November in an 8-7 decision. Bill 204 passed in a 9-5 vote on Friday.

“The financial realities have reached a point where I don’t think anybody can turn a blind eye to reality,” said Sen. Michael San Nicolas, who wrote the bill. “I’m confident the governor will also come to terms with how the issue has been shifting and will come around to signing the bill. If he doesn’t, I’m confident that at least one of our colleagues, one more colleague, will give us the override necessary, if it comes to that.”

Calvo also needs to ensure that the controversial and illegal retroactive pay raises for 107 Adelup office staffers are paid back to taxpayers. The raises, which were given in December 2014 but made retroactive to a year earlier for most of the staffers, cost Guam taxpayers more than $800,000.
These retroactive pay raises weren’t part of the governor’s office budget. That means the money to pay them has to be taken from elsewhere, something this government simply can’t afford — just as it couldn’t afford the retroactive pay raises for elected officials and Cabinet members.
Calvo must stop behaving as if GovGuam is flush with money. It isn’t, as evidenced by a plethora of fiscal problems.
The governor has a duty to all of us to do the right thing and must reverse these retroactive pay raises.


Legislative director accuses governor of 'retaliation'

Following weeks of Freedom of Information Act requests and financial mismanagement allegations against the legislative branch, the Legislature’s executive director, Vince Arriola, last week accused the governor’s office of “retaliation” for the exposure of illegal retroactive pay raises at Adelup.
Gov. Eddie Calvo’s office recently called on Public Auditor Doris Flores Brooks to conduct a forensic audit of the Legislature’s Capital District Fund — the account used to pay off the $4 million bank loan that paid for the reconstruction of the Guam Congress Building.

“While your demand for a forensic audit is clearly political and retaliation for the public exposure of the illegal Adelup payments, we stand ready to provide any and all information with the public auditor as well as your office,” Arriola wrote to Calvo on Wednesday.

The executive branch is accusing the Legislature of misusing the account to pay for legislative operations such as payroll expenses.

Adelup officials cited the Fiscal 2015 budget act, which appropriated $330,965 to the account and included language prohibiting those funds from being used for operational costs.
Documents the Legislature provided to Adelup under the FOIA request, showed a withdrawal of $330,965 out of the account in January 2015. The documents indicated that the funds were used to pay for staffers’ unused annual leave cash outs.

All legislative staff are considered terminated at the end of each term, allowing them to cash out their unused annual leave. January 2015 marked the end of the 32nd Legislature.

Arriola and other legislative officials confirmed the money was spent on the lump sum payments as it was a timely obligation. However, they contended any notion that they violated the law, pointing to a previous statute – Public Law 31-285 – that gives them transfer authority of all legislative accounts to pay for prior year obligations.

“There has been absolutely no determination by the attorney general that any activity regarding the Capital District Fund is suspicious,” Arriola wrote.

Acknowledging the Fiscal 2015 budget restriction, the legislative officials noted they couldn’t have specifically expended the $330,965 appropriation because the Department of Administration was doling those monies into the Capital District Fund in four quarterly installments throughout the fiscal year.

By January 2015, only a quarter of the $330,965 appropriation had been received.

According to the latest bank statement of the Capital Fund, which the Legislature released to the public auditor, the governor’s office and posted online, there was $1.36 million in the account at the end of December.

After the Legislature withdrew the $330,965 in January, the account had just over $964,000, meaning the account had been replenished and accumulated an additional $64,000.

Since Adelup officials have called foul on the Legislature’s use of the Capital Fund, the Calvo administration’s finance officials confirmed with lawmakers that recent lump sum obligations have caused the government to deposit less-than-mandatory amounts of funds into Income Tax Refund Efficient Payment Trust Fund – a violation of Guam law.

Funds in the account are to be used to only pay tax refunds.

Acting DOA Director Katherine Kakagi said the government recently paid $13 million in cost-of-living-allowances for retirees, creating a “cash crunch.”

“Because we still need to make these payments and make theses single onetime payments, we’re in a cash crunch,” Kakigi said, when referring to the tax refund account.

Department of Revenue and Taxation Director John Camacho added that the “cash crunch” is causing the government to use the income tax revenues to pay other obligations.

For fiscal year 2016, the administration is required by law to deposit 25.6 percent of income tax revenues into the Efficient Payment account.

Between October and December 2015, the government collected nearly $110 million in income taxes, requiring roughly $28 million to be transferred into the Efficient account. The administration only deposited $14.25 million.

Based on Rev and Tax’s Tax Refund Status Reports, the administration paid $7.01 million in tax refunds between October and December 2015.


 Adelup pay raises were illegal
Letter to the Editor
from Joaquin P. Perez
The Pacific Daily News

When improprieties in government, at the highest levels, are exposed, the attendant issues develop lives of their own which don’t easily go away. What may initially be considered oversights live on, are given the status of major transgressions through feeble attempts to justify the action or deflect attention elsewhere.

No matter how elaborate the attempts to camouflage the questionable actions, no matter how many sound bites or TV interviews are granted to deflect or deodorize the atmosphere, the stink lingers.
Someone once said: “If you can’t dazzle the people with brilliance; baffle them with BS.” Appropriate in this instance?

That the bonuses — or retroactive pay increases, however labeled — were deemed illegal by Attorney General Elizabeth Barrett-Anderson cannot be changed. No matter how many Freedom of Information Act requests are thrown at the Legislature by the governor’s staff, that AG’s opinion will not go away.

Likewise, whether the FOIA requests provide any evidence that the Legislature is guilty of improprieties, it doesn’t change the fact that Adelup messed up royally.

If those FOIA requests do turn up improprieties by the boys and girls on Hesler Street, they too should be subject to the same scrutiny — not by the boys and girls at Adelup, but by the attorney general.

As chair of the Appropriations Committee, Vice Speaker Benjamin Cruz reads everything, word for word, that comes across his desk. In reviewing budget expenditures, he found glaring and questionable discrepancies.

Experienced with the legal system, the vice speaker appropriately referred the matter to the AG for her review and legal opinion.

What she found and officially memorialized is on record and won’t go away. No matter the rationale, justification or rationalizations, the record will show that the raises were clandestine, surreptitious, sneaky and just plain illegal.

In this case, Adelup was a bit more than just a little bit pregnant.

The call for accountability — and where appropriate, prosecution — shouldn’t even be needed. Once the AG found that the bonuses violated local laws, there should be no need for a public outcry for prosecution; that is a primary duty of the attorney general and one of the reasons the office was made elective. To suggest a political solution begs the question and will not change the fact that what was done was illegal.

But then other questions quickly rise to the surface. The governor’s most senior and most trusted advisers are all very smart and intellectual legal eagles and bean counters. In this case, what was their advice to the governor?

When someone hatched this brilliant idea of rewarding the Adelup staff from the beginning of a campaign year, did these advisers advise the governor to seek the AG’s legal opinion? Or did they simply play their usual sycophantic melody?

An old Chamorro adage states: “Lastima todo y minalåte yangin ti ma’ templa yan ma’ na’ chilong ni tinemtom.” Very appropriate in this case.
Joaquin P. Perez is a resident of Santa Rita.

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