'Guam is good' while crisis looms

“Guam is good, but we will not stop until it is better,” Gov. Lou Leon Guerrero said in her annual State of the Island Address Wednesday night, while also acknowledging a looming financial crisis if federal funding is significantly cut.

The governor warned that Guam cannot be the linchpin of American security in the Asia-Pacific if tens of thousands of its residents become homeless or lose access to Medicaid and Medicare as a result of decisions made in Washington, D.C.

Leon Guerrero said officials in D.C. told her during a recent trip that the region would become the new “center of gravity” and Guam would stay at the forefront of national defense in the Indo-Pacific.

The Department of Defense has been making big investments in everything from missile defense and biological threat detection to cybersecurity.

“Whether or not these investments stay on track depends on the clarity of that message and, most of all, on the strength of our Delegate to Congress, Jim Moylan,” she said.

The governor has put the onus on Guam’s delegate to Congress, James Moylan, to use his position and close relationships in D.C. to protect the island’s interests.

“You stand on the floor of Congress. You are in the room during Republican budget caucuses. You have close relationships with the speaker of the House and the House majority caucus chair. These relationships matter,” the governor said. “And we hope you can count on them because Guam is counting on you.”

Leon Guerrero also looks to Moylan to push for Guam in Congress now that everything from education to Medicaid to the Supplemental Nutrition Assistance Program, SNAP, are left uncertain.

The government of Guam relies on at least $500 million in federal funds per year, and there are nearly 1,000 partially and fully federal funded GovGuam workers.

“If federal funds are cut significantly, we will face one of the toughest budget sessions in our history,” she said in her address delivered at the Guam Congress Building.

She said she shares the concerns of many in the Guam community and beyond.

“Across this country, in statehouses and city halls, governors and mayors are waking up every morning asking the same question: What will Washington do next?” she said.

She also asked the new Republican-led Guam Legislature to work with her and Guam’s delegate to push for the island amid federal uncertainty, and Attorney General Douglas Moylan to stop opposing the Mangilao hospital project.

Inflation, housing crisis

In her 45-minute speech, Leon Guerrero also looked to issues of inflation, the housing crisis, depressed tourism economy, and the continued battle over the Guam Memorial Hospital.

“Tonight, we gather at a pivotal moment in our history. A time when the winds of change are shifting—not just in Washington, D.C. or across the Pacific, but in free markets and boardrooms around the globe,” Leon Guerrero said.

It had been 23 years since a Democrat governor addressed a Republican Legislature on Guam, and the island had come a long way since, surviving crises and escaping a deficit, she said.

“Make no mistake: I am proud of how far we have come, and I acknowledge all the hard work it took to get here,” she said. “But while our progress is real, it is not complete.”

The governor spoke at length about the state of the economy and the hardships faced by families and businesses.

“Too many working families are being crushed by inflation and the rising cost of living. Many know they are one missed paycheck away from economic disaster, one bad accident away from bankruptcy,” the governor said.

Prices for everything from eggs to construction were on the rise, she said.

She touted the extra $500 million in Typhoon Mawar relief funds the Guam Housing and Urban Renewal Authority would be rolling out as one fix to the shortage of affordable housing.

But Leon Guerrero asked Del. Moylan to help address the issue at the federal level, with federal projects continuing to pull labor away from local construction including building homes.

She said right now, H-2B workers are tied exclusively to federally contracted work.

“Congressman, we need you to amend the federal law to include civilian projects,” the governor said.

She also wanted military housing allowances to be readjusted for the market so that high stipends would not make it harder for families to get a place to live.

A set-aside for affordable housing from the feds was another ask from the governor.

“Billions are flowing into military construction, but none of it is federally set aside for affordable housing. That has to change,” she said. “We will seek a dedicated portion of those federal dollars to be used to build homes for working families.”

Hospital now

A new hospital, a long time promise of her administration, featured prominently in the address. The governor said a new facility is needed now.

No “legal stunt” could stop that construction, she said.

The governor said the attorney general was wrong on the legality of the new Mangilao hospital project, now the subject of a lawsuit against her and GHURA in federal court.

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“We will not lose $104 million in ARP funds committed to this new hospital. No one will be considered a criminal for following federal law,” she said, adding that she has been working with the U.S. Treasury since day one while the AG, she said, “has worked to sabotage this effort.”

She addressed Moylan directly: “Mr. Attorney General, the people of Guam want a new hospital, and the Treasury guidelines support its construction. History will judge why you do not.”

The governor also addressed shortcomings at the existing hospital, where she said struggles have remained the same from one administration to the next, “because no institution can survive under the conditions GMH has been forced to operate in—without constant, extraordinary government intervention.”

GMH is “underfunded, under-reimbursed, and overburdened,” she said.

“The cost of a hospital bed far exceeds what federal reimbursements cover. Every year, GMH provides millions in uncompensated care to patients who simply cannot afford to pay. And that financial strain grows heavier and heavier,” the governor pointed out.

The governor announced the hiring of a new independent consultant to assess GMH’s operations — from management to housekeeping, and make specific recommendations for improvement.

Business taxes

Leon Guerrero asked senators to raise the cap for the lower tax rate of 3% for businesses currently making $500,000 annually to $1 million annually.

She said nearly 90% of Guam’s businesses are already paying no more than 3% in business privilege tax.

But she stopped short of a broader rollback that the Republican Party has been wanting to do, to bring the BPT from 5% to 4%.

“I will not support another tax break for big businesses or federal contractors making millions on Guam. Not when one of the largest corporate tax cuts in recent memory is likely to pass in Washington, D.C.,” the governor said.

She asked lawmakers to pass an exemption on business privilege taxes applied to health care providers that accept Medicaid in a bid to encourage more local providers to accept the program for low-income patients.

“By doing so, we commit new resources to actual treatment, and it may increase the number of medical professionals willing to treat those who need it,” Leon Guerrero said.

A bill providing for the exemption was sent to lawmakers less than an hour before the governor took the podium.

Tourism

To deal with the lagging tourism arrivals, Leon Guerrero said senators should consider authorizing another borrowing on the bond market against taxes on booked hotel rooms to help revitalize the tourism industry

Flights to Guam were booked well, she said, “but we must be honest about our challenges.”

“Our tourism product is outdated. If we want to compete, we must modernize Tumon, shift our emphasis to cultural experiences, enhance safety and cleanliness, and elevate Guam to an unforgettable destination,” she said.

She also called for Del. Moylan to demand a better hotel and meal per-diem rates for federal officials staying over and spending while on Guam, who still get rates “from years ago.”

Crime

On the crime front, the governor said more federal assistance is needed to stop drugs from entering the island, including through the postal system, where 90% of drugs came to Guam.

“We need greater screening, faster interdiction, and the ability to obtain search warrants when trafficking is suspected. Until these gaps are closed, we are fighting this battle with one hand tied behind our back,” she said.

Recruitment and retention remained a challenge with law enforcement, she conceded, but she also took a shot at AG Moylan.

“Despite the tireless efforts of law enforcement officers, our people feel like too many criminal cases are being lost at trial, that too often charges are being dismissed, and that under this attorney general, more offenders are walking free,” she said.

Education

The governor promised a bid for the construction of a new Simon Sanchez High School would come out “later this month.”

But for old schools, she asked senators to continue to invest in maintenance for schools, noting about $8.5 million for school upkeep set aside in the fiscal 2026 budget.

“I ask this Legislature to hold the line on that investment. Because if we’re serious about education, then we need to be just as serious about the places where education happens,” she added.

Called together

Leon Guerrero closed by asking senators to work together with her, professionally.

“We are called together for a common cause,” the governor said. “To build a Guam where families thrive with the dignity of a good living. Where homes and streets are safe. Where every person has the chance to chase their dreams and help others find theirs.”

“That is the promise of this island,” Leon Guerrero said. “In the spirit of Mes CHamoru: Manetnon hit, ta na’guahåyi, ‘we have gathered, so let us provide.’”