HAGÅTÑA, Guam — Gov. Lourdes Leon Guerrero delivered her final State of the Island Address on Tuesday, defending her administration’s fiscal record and urging lawmakers to reject further tax cuts she says would imperil essential government services.
In a sweeping speech that touched on economic recovery, healthcare infrastructure, and federal relations, Guam’s first female governor reflected on seven years of leadership marked by pandemic response, natural disasters, and what she characterized as hard-won financial stability.
“I am proud to report Guam is stronger today than it was seven years ago with a government that truly serves the people,” Leon Guerrero told the 38th Guam Legislature, citing unemployment at a near-record low of 3.2% and a cumulative $297 million surplus achieved without bond market borrowing.
Budget Battle Looms
The governor’s most pointed remarks centered on the Business Privilege Tax, asking lawmakers to maintain the current 4.5% rate rather than allow a scheduled reduction to 4%.
Cutting the tax further would cost more than $40 million in annual revenue, Leon Guerrero argued, primarily benefiting large off-island corporations rather than working families. She noted that nearly 90% of Guam’s businesses already pay less than 4% under earlier reforms her administration implemented.
“Did it lower your prices at the store? Did you get a raise?” she asked rhetorically of recent tax breaks. “Or were millions taken from health care, when we have one public hospital and a limited margin for error?”
The rebuke appeared aimed at the Legislature, which (with the exception of Senators Tina Muna Barnes and Will Parkinson) she said “passed on” opportunities to advance healthcare infrastructure.
Hospital Funding at Risk
Leon Guerrero issued an urgent warning that Guam stands to lose $104 million in American Rescue Plan funding this December if it fails to act on hospital modernization.
“The people of Guam deserve better,” she said, describing her vision for a state-of-the-art facility that would reduce the need to send patients off-island for treatment. “I see the modern, state-of-the-art hospital our people deserve. A place worthy of the doctors and nurses we ask to serve here.”
She criticized Attorney General Doug Moylan for what she termed “obstruction and denial” in blocking progress on the project, though she did not elaborate on the specific legal disputes.
The governor said the funds could either build a new hospital or, if a full facility cannot yet be constructed, create the electrical and wastewater infrastructure necessary for future development.
Economic Diversification Push
Leon Guerrero highlighted Guam’s tourism recovery, with December marking “the strongest post-pandemic momentum to date” despite global headwinds including weak foreign currencies, federal visa policy uncertainty, and tariff impacts on consumer confidence.
She credited the Guam Visitors Bureau’s airline partnerships and workforce training programs for restoring visitor arrivals, while acknowledging the industry’s inherent fragility. That fragility was underscored by a recent violent crime against South Korean tourists that resulted in swift arrests.
To reduce dependence on tourism, the administration has pushed economic diversification through the Guam Economic Development Authority, launching the Guam Additive Materials and Manufacturing Accelerator to connect defense needs with local manufacturing capacity.
Following her delegation to Taiwan and meetings with President Lai Ching-te and senior ministers, Leon Guerrero said Guam is advancing partnerships in semiconductors, pharmaceuticals, data centers, and aquaculture with investors from Taiwan, Japan, and Korea.
Federal Relations
The governor framed Guam’s role in U.S. Indo-Pacific strategy as requiring reciprocal federal investment beyond military construction.
“Runways do not function without roads. Bases do not operate without housing. Missions do not succeed without teachers, nurses, engineers, tradespeople, and families who can afford to live here and build a life,” she said.
She touted increased annual federal Medicaid funding from $18 million to more than $145 million, with the federal share rising from 55% to 83%, as evidence that sustained advocacy produces results.
The administration pressed for convening the Economic Adjustment Committee by the Department of Defense, which she described as “a rare forum where the federal government plans with Guam, not simply for Guam,” to ensure civilian infrastructure keeps pace with military buildup.
Public Safety and Drug Interdiction
Leon Guerrero defended her administration’s drug interdiction strategy, which has kept more than 1,000 pounds of methamphetamine off Guam’s streets since 2019 through postal facility operations conducted jointly with federal partners.
She dismissed critics who claimed drugs were entering through seaports, saying a focused operation at the Port of Guam “examined those assertions directly. The results were clear. No drugs. No contraband.”
The governor noted that Guam nearly lost more than $6 million in federal drug treatment funding weeks ago, support reversed only after national outcry, illustrating the fragility of federal commitments.
Education and Procurement
On education, Leon Guerrero cited 90% graduation rates and sub-1% dropout rates as evidence of progress, while calling for sustained funding to support teacher raises that “restored respect and stability to the profession.”
She criticized legislative inaction on procurement reform, specifically the automatic stay provision that recently halted the long-delayed reconstruction of Simon Sanchez High School just days before groundbreaking. The Department of Public Works has since determined that further delays would “materially harm” government interests, a finding concurred with by the Department of Education and Attorney General Moylan.
Political Context
The address comes in an election year, and Leon Guerrero acknowledged the partisan backdrop.
“In an election year, press releases are written, and reactions are decided well before these words are spoken,” she said. “And for some, the only comfort in tonight’s State of the Island Address is knowing I won’t be delivering another one.”
Leon Guerrero, who made history as Guam’s first female governor when elected in 2018, will complete her second term in January 2027. She did not announce future political plans.
“Serving you has been the greatest honor of my life,” she concluded. “As long as the people of Guam keep choosing each other, the work will go on.”
Watch the full State of the Island Address here: https://www.youtube.com/watch?v=YEiPQdgc0To
Read the full State of the Island Address below.
