A move that proposes to suspend property tax hikes for two years for improvements worth $ 1 million or more, excluding single houses worth more than $ 1 million, would address the expected funding gaps in support of education and payment further reduce debt servicing, according to a tax bill from the Bureau of Budget and Management Research.
Bill 4-36 was introduced by Sens. James Moylan, Tony Ada, Christopher Duenas, and Frank Blas Jr. as part of three initial proposals to stimulate the economy while Guam recovers from the COVID-19 pandemic.
Bill 4 targets commercial real estate and will apply the suspension retrospectively between January 1, 2021 and December 31, 2022.
Legislators held a public hearing on the bill on Wednesday. Nobody signed up to testify despite Moylan reading out written testimony from a company.
Senator Amanda Shelton expressed concern.
"I would like to see how we can help businesses at this very difficult time for everyone during the pandemic. However, I am concerned that this type of support … will be at the expense of the Ministry of Education (Guam) and will be at the expense of loan payments come, "said Shelton.
Education fund has a wide range
Property taxes are paid into the Territorial Education Fund, which helps support GDOE's operations and services, as well as GDOE Tiyan's lease and debt service for John F. Kennedy High School and Okkodo High School.
TEFF also finances debt servicing for the University of Guam Capital Enhancement Fund and Guam Community College Capital Enhancement Fund, and supports operations for the Guam Educational Certification Commission, Guam Public Library System, and Guam Educational Telecommunications Corp., supported by the Department promoted for public works and public safety programs by the Guam Mayor's Council.
The Guam government has raised an average of $ 5.9 million in TEFF since the additional property tax law went into effect. However, the fund is forecasting to raise about $ 1.5 million less than what was passed in the Fiscal Year 2021 Budget Act, or just $ 36.5 million instead of about $ 38 million.
According to the BBMR, Bill 4 would add another $ 5.9 million to the shortfall.
"This is a comprehensive list of programs that may be affected, and I think we should understand the impact a reduction in the TEFF of $ 5.98 million could have," Shelton said.
Support for invoice 4
Moylan read a testimony in favor of Bill 4 from Nathan Denight, who owned his family business M.V.P. Enterprises Inc.
"Local companies have been forced to cut working hours, lay off employees or shut down entirely," said Moylan, reading the testimony. “If you own a building worth more than $ 1 million people will likely automatically assume that you are rich and that you can afford twice the increase in property tax. For a family business like ours, that has a cost … the increase was very difficult to manage even before COVID. "
Denight wrote that many of MVP's real estate leases are fixed and tax increases cannot be passed on. For leases that pass increases on, which are likely to be small businesses, Denight wrote that MVP "would hate to raise rents in this current business environment," according to Moylan's reading of his testimonial.
Renters are asking for relief due to the pandemic shutdown, Denight added. Commercial real estate companies like MVP also did not qualify for the federal paycheck protection program, and the company cut hours to keep most of its team, Denight said.
"We think Bill 4-36 is very sensible given the current situation … we respectfully ask this legislature to pass this bill and temporarily relieve local business like ours," Moylan read from Denight's statement.