Facebook post encourages public to support governor's tax refund plan

Jerick Sablan

The governor’s Facebook post about how to get refunds faster is an attempt to get support from the community in moving his plan forward.

For those who shared the post, a fact sheet about the Tax and Revenue Anticipation Note, or TRAN, was sent explaining the process.

Gov. Eddie Calvo spoke about the temporary financial solution – another loan – during his State of the Island Address in March.

During a press conference late Friday afternoon at his office, Calvo said TRAN works like a line of credit and would allow the government to pay refunds much faster than they're being paid now.

He said the government has come a long way of reducing the wait time for tax refunds, but TRAN would help get the refunds out much faster. He introduced a bill Friday to send to the Legislature to approve moving forward with the initiative.

“It is a financial tool that works like a line of credit. The banks recognize that governments, just like any other organization, collect taxes and fees year-round. What the bank cares about is what the government can provide, and what the government needs is what the bank supplies: up front cash,” he said during his address.

Calvo also said that the government can request proposals from banks to supply the government of Guam with $75 million every January in exchange for a TRAN, guaranteeing the payment of the $75 million by September of the same year.

He said the government usually pays about $130 million in tax refunds a year, but they won't need to borrow the full amount because they're able to pay off the rest with the cash that comes into the government early in the year including when taxes are due in April.

Calvo estimates that if the bill is approved in a timely matter the government could pay out the rest of the refunds by late May or early June.

“Doing this will pay our people their money right away, save money because of the consolidation into a lower interest rate, and give us the cash relief to begin deposits into the income tax savings account,” he said.

He said people have been calling Adelup asking when their refunds would be released because they're facing hardships.

"They want to get them quick," he said.

Sen. Michael San Nicolas, D-Dededo, said Friday he wants to evaluate the proposal with the administration.

As of early Friday afternoon, he only had a general idea of the proposal, but not the details and he and his colleagues would need before they can move forward on the matter.

According to the fact sheet sent to people who shared the post, TRAN would help pay tax refunds within weeks instead of months.

The sheet states that the government will only use TRAN for the next three years to give GovGuam time to squirrel away money into a savings account.

The administration believes they can fill the account to more than $100 million over the next three years, the sheet states.

Once the bill gets approved by the Legislature the governor will sign it and then his fiscal team will begin a nonstop process to get a bond rating and then meet with investors in the mainland before pricing the TRAN for its final interest rate, the sheet states.

The team will come home once the money is in the bank, the sheet states.

The Department of Revenue and Taxation will be able to mail all error-free Status-A tax refunds as soon as money hits the bank, it adds.

“Please voice your support for my plan on social media, to your friends, to all senators, and even on the talk shows. Let them know that his makes sense to you. Let’s encourage them together,” the sheet states.

Document courtesy of Sen. Michael San Nicolas