Guam senators began debate on the fiscal 2026 executive budget Monday, with lawmakers presenting a substitute bill that rolls back the business privilege tax from 5% to 4.5%.
The governor’s office objects to that cut, especially with uncertainty surrounding future federal funding cuts.
The substitute bill presents a $1.350 billion budget, while the governor's proposed budget was $1.357 billion.
The executive branch began developing budgets early in the year, before the federal government rolled out tax and spending policies in the “Big Beautiful Bill.”
The legislature’s substitute budget bill cuts the tax refund set-aside by $20.8 million. Bureau of Budget and Management Research Director Lester Carlson said the federal budget bill will increase the standard income tax deduction, so the local government will need more money on hand when people start filing tax returns.
“The Big, Beautiful Bill is going to provide for an increase in the standard deduction for single filers and joint filers, married couples. We estimate that just that permanent standard deduction is going to require a minimum of $8 million more for provision of income tax funds,” Carlson said.
However, the Legislature’s Office of Budget Management Director Stephen Guerrero noted the amount set aside for refunds the last few years has been substantially higher than what was actually used to pay for refunds.
On Monday, the Guam Chamber of Commerce issued a statement calling for the business privilege tax to be reduced from 5% to 4%, a full percentage point.
“We are no longer going to accept decisions to increase our public sector expenditures on the backs of the private sector,” the statement said. “In the past seven fiscal years, we have seen the government's budget balloon from around $700 million to nearly $1.4 billion, while our hospital environment continues to crumble, conditions of public infrastructure are questionable at best, and businesses still must face ludicrous licensing and permitting processes, where technology is nearly nonexistent.”
Senators will resume the budget talks at 10 a.m. today.
