General Government

The enactment of the Guam Elective Governor Bill, the increase of funding authorization under the Rehabilitation Act, the authorization of a $5 million appropriation for economic development, and the reorganization of the executive branch by creating four new departments highlighted fiscal year 1969.

The Elective Governor Act, signed by President Johnson late last year, ushers in a new political era on Guam.

For the first time since the establishment of civil government 19 years ago, the local electorate is given the right to choose by popular ballot their Gov• ernor and Lieutenant Governor. Previously, the territory's chief executive has been appointed by the President and confirmed by the Senate.

In November of 1970, Guam will achieve a long-standing aspirationthat of having full self-governmentfor on this date, the first gubernatorial election will be held.

The Elected Governor Act limits any one Governor from serving more than two consecutive 4-year terms. Among other things, it also calls for the appointment of a U.S. Comptroller for

Guam. Named for this post was Floyd

W. Fagg, a long-time career Federal employee who was scheduled to begin operation of his office by July 1969.

The U.S. Congress also enacted a measure increasing by $30 million, from $45 to $75 million, the authorization of funds under the Guam Rehabilitation Act. This action provided a big boost to the territory's rehabilitation program which began shortly after the island suffered extensive destruc• tion by Typhoon Karen in November 1962. Since then Congress has appropriated approximately $43 million of the original $45 million authorization in loans and grants. To date, 36 projects have been completed ~nd still many others have yet to be accomplished.

The island's economic development also received a boost when Congress enacted a law authprizing the appropriation of $5 million to accelerate the economic growth of the territory. A portion of this amount has been earmarked for agricultural development projects and the establishment of industrial parks.

At the request of the administration, the Guam Legislature approved several measures relative to reorganizing the executive branch. As a result, four new departments were created while twoexisting ones were revamped and part of their functions transferred to the entities.

To effect a more efficient operation, the former Department of Labor and Personnel was reorganized into the Department of Labor and the Pepartment of Administration. All aspects of labor management functions, including the Guam Employment Service, were assumed by the new Labor department. The new Administration department now handles all personnel and administrative functions as well as management, finance, and accounting.

The latter two functions were formerly held by the Department of Finance which itself has also been reorganized and redesignated as the Department of Revenue and Taxation. Revenue. and Taxation now primarily handles tax regulatory enforcement; development of an effective tax audit, appraisal, assessment, and collection programs; as well as handling registration, licensing, examination, investigation of business establishments and other allied activities.

The fourth newly created department is the Department of Corrections. This new department assumes the administration of the Penal Division ( Guam Penitentiary) which was transferred from the Department of Public Safety and the Youth Correctional Facility which was formerly under the Department of Public Health and Social Services.

Other reorganization included the establishment of Government of Guam's Civil Service Commission and the consolidation of the Budget and Management sections under the Governor's office into a Bureau of Budget and Management Research.

The Civil Service Commission, comprising seven members appointed by the Governor and confirmed by the Legislature, assumed all functions of the personnel board. Its day-to-day operation is headed by an executive director. •

During the year, the director and deputy commissioner of Revenue and Taxation traveled to Washington, D.C., and met with representatives from American Samoa, Virgin Islands, Treasury, Interior, and Internal Revenue Service to discuss income tax problems which affected the various U.S. possessions. Known as a "Tax Task Force," they considered problems arising from the application of the Internal Revenue Code to U.S. territories on a dual law basis and the possible resolutions of these problems on administrative or legislative basis.

Guam recommended that individual permanent resident taxpayers be required to file only one return with the taxing jurisdiction in which he was a resident on the last day of that year. This would require a reciprocal acceptance of W-2 forms by Guam and

IRS.

This proposal would require rewriting section 932 of the Internal Revenue Code. It would eliminate the treatment of Organic Act citizens as aliens for Federal income tax purposes and conversely U.S. citizens for Guam income tax purposes. There was a unanimous support for amending the Organic Act to permit U.S. citizens who are permanent residents of Guam to fulfill their U.S. tax obligation by filing a Guam income tax return reporting their entire worldwide income.

Approximately $43 million in general fund revenue was realized by the government in fiscal year 1969. This is approximately $9 million more than last year's total of approximately $34 million. The increase is largely seen in the local income _tax revenue which jumped from $12.1 million in fiscal year 1968 to $17 .2 million in fiscal year 1969, an increase of $5.1 million. Revenue increases were also realized in other areas, including $1.7 million in U.S. income tsi.x and $1.3 million in the gross receipt tax.

Income tax deficiencies resulting from audit examination were $9,544.32 more than the previous year, for a total of $917,339. A total of 2,952 returns were audited and completed, a decrease of 760 returns compared to last year's.

Collection of delinquent accounts totaled a record high of $2,142,603. This is $196,133 more than was collected the previous year. Over 1,500 delinquent returns representing $198,474 in unreported tax, interests and penal-

ties were also secured through the es• tablished delinquent returns program.

The Real Property Tax Division reported increases in assessment values and number of land parcels and buildings entered in its tax rolls during the year under review. There were 14,552 land parcels assessed, 943 more than the previous year's total representing an approximately 6 percent increase. This is largely attributed to the establishment of additional subdivisions and the sale or exchange of government land to private individuals.

Total assessment on land parcels amounted to $19,663,130, an increase of 5 percent or $927,200 over the previous year, thus increasing land taxes by $27,816. The total land tax for the year was $589,322.

A total of 11,612 buildings was assessed during the year, 1,741 more than the previous year. This represents an increase of 19 percent in the number of buildings assessed and $106,248 in tax amount over the preceding year. The total building taxeri for the year amounted to $662,116.

The combined taxes for land and buildings totalled $1,251,439, or $134,426 more than the previous year's total.

The Department of Administration's Division of Accounts initiated during the-year a complete fiscal management system review. This study was conducted by the local branch office of Peat, Marwick & Mitchell of Los Angeles, a nationally recognized fiscal management firm. It was geared toward the development of a comprehensive fiscal management system that would: ( 1) Provide adequate fiscal control, (2) provide departments and agencies with accurate and timely fiscal information that will ensure fiscal control at the appropriation or other required levels, and (3) support the needs of departments and agencies for detailed statistical data for use in intradepartmental repofts and reports to outside organizaitions.

During the year, the Division also maintained an estimated $51.4 million in receipts and $50.3 million in disbursements.

The department's Supply Management Division made arrangements for direct purchases from the Naval Supply Depot, Guam, on common stock items. This procedure is expected to produce savings on stock investment and space utilization in the division's storage warehouse. During the year, purchase commitment amounted to $5,602,794 and 7,307 requisitions were received and processed.

Of the total purchases in fiscal year 1969, 81 percent were made through local vendors.

Major legislation enacted by the Legislature: -Restores jurisdiction of the Island Court over criminal offenses committed by military personnel. -Permits representation by legal counsel in Juvenile Cour.t hearing. -Redesignates the College of Guam as the University of Guam. -Creates the Public EmployeeManagement Relations Act. -Authorizes special election to ascertain public views on district representation in the Legislature. -Creates the First Constitutional Convention of the territory of Guam. -Establishes the uniform Consumer Credit Code. -Creates the Guam Employee Relations Act. -Increases the jurisdiction of the Island Court, provides trial by jury, changes local jury selection system to conform with the Federal system, and provides grand jury indictment in felony cases.

The Constitutional Convention comprises 43 delegates from various districts elected during a special elec-

tion in May 196~. The Convention was created to review and recommend necessary revisions or changes in the Organic Act of Guam, which serves as the territory's Constitution. The Convention will submit a report of its findings and recommendations to the Legislature by next year.

An islandwide census conducted by the district commissioners showed a civilian population of 61,283 as of December 31, 1968. This represents an increase of approximately 2,500 compared to the census made in April 1968. Including military personnel and civil service employees and .their dependents plus Government of Guam contract workers and alien workers, the island's overall population is approximately 100,000.