Governor Lou Leon Guerrero is warning of potential long-term financial harm following a recent report from Moody’s Investors Service that characterized the Guam Legislature’s decision to override her veto of the Fiscal Year 2026 budget as a “credit negative” action. The report, released September 30, noted that the phased rollback of the Business Privilege Tax (BPT) could undermine Guam’s fiscal stability and signal a risk to its credit rating.
While Moody’s has not yet downgraded Guam’s bond rating, the Governor described the agency’s analysis as a “yellow light” for the island’s financial future. “Moody’s rating agency comment confirms what we have said all along: approving the rollback of the BPT—even before it has actually decreased—sends a dangerous message to the markets,” Leon Guerrero said. “It risks weakening our long-term credit standing and drives up the cost of borrowing for every project that serves our people.”
According to Moody’s, the Legislature’s decision to reduce the BPT from 5% to 4.5% in Fiscal Year 2026 and 4.0% the following year could result in an $80 million annual loss in revenue. The Governor noted that this comes as Guam Memorial Hospital continues to post operating losses of around $65 million per year. Despite her veto and proposal to direct $40 million in BPT revenues toward the hospital, the Legislature’s Republican majority advanced the rollback, a move the Governor said “ignores a clear cautionary signal” from financial analysts.
“This was a chance to hit the brakes and protect Guam’s credit,” Leon Guerrero said. “Instead, the Republican leadership sped past the yellow light, racing toward another fiscal cliff with yet another BPT reduction next year.” She reaffirmed her administration’s commitment to fiscal stability, emphasizing that protecting Guam’s credit rating and essential services like GMH remain top priorities for her administration.