Government of Guam General Purpose
Financial Highlights Year Ended September 30, 2003
November 22, 2004GovGuam Begins To Recover In FY 2003
After the dramatic financial decline in FY 2002, the Government of Guam (GovGuam) began to recover in FY 2003. Although GovGuam incurred a loss (decrease in net assets) of $68.7 million in FY 2003, this was a significant improvement from FY 2002’s $157.6 million loss. The FY 2003 loss would have been further mitigated were it not for the Earned Income Tax Credit (EITC) liability of $60 million that was recognized entirely in FY 2003.
Primary Government revenues increased by $87 million, most of which was attributable to increases in Income and Gross Receipts Taxes. Income tax revenues increased from $136.3 million in FY 2002 to $202.7 million in FY 2003. As stated previously, however, the $66.4 million increase was diminished by the recognition of a $60 million Earned Income Tax Credit (EITC) liability, which represented GovGuam’s failure to provide for EITC since 1996. Approximately $10 million of the liability is attributed to FY 2003. The remaining $50 million was attributed to prior years. Had it not been for this liability, GovGuam’s loss would have been minimized to $8.7 million as opposed to $68.7 million.
Gross Receipts Tax (GRT) revenues increased by $36.8 million due to the temporary increase in GRT from 4% to 6% during April 2003 through April 2004.
* $142,726 is net of $60,000 in EITC liability.
Federal Grants and Contributions were also a major source of revenues for the Primary Government in FY 2003 increasing from $187.2 million in FY 2002 to $218.5 million in FY 2003.
Receivables Reserve And Write-Offs
As of 2003 fiscal year end, GovGuam has a net receivable from the federal government of $15.8 million. This is a significant reduction from FY 2002’s $41 million receivable balance. The reduction was in part due to aggressive collection efforts and a $13 million write-off of federal grants. GovGuam was unable to submit timely documentation to be reimbursed the $13 million, which therefore was written off.
Despite the lack of audited figures, the FY 2003 GovGuam financial statements are the most comprehensive version yet to have been released. These financial statements incorporate the audited/unaudited financial data of all major and most non-major component agencies of GovGuam, with the exception of the Guam Rental Corporation. The inclusion of GovGuam’s component units’ financial data in these financial statements allow for a more comprehensive view of GovGuam’s overall financial status. OPA, in conjunction with the autonomous agencies will continue to emphasize efforts to ensure the timely completion of all financial statement audits.
Other qualifications pertained to an undisclosed liability relevant to the closure of the landfill and the lack of adequate fixed asset records. GovGuam was required by GASB Statement No. 34 to include and report its fixed assets since FY 2002. The assessment and appraisal of GovGuam’s fixed asset inventory is an ongoing project. Therefore, this qualification will remain for several more years.
Late Issuance Of Audit Reports
For a more detailed discussion of GovGuam’s financial condition, see the Management Discussions and Analysis.