83.2 F
Cruz Bay
Tuesday, July 5, 2022
HomeNewsArchivesBUSINESS AS USUAL WILL DOUBLE DEBT IN 10 YEARS

BUSINESS AS USUAL WILL DOUBLE DEBT IN 10 YEARS

If the V.I. government continues in its "business-as-usual" mode, it will have a $954 million spending deficit within 10 years, about 16 times what it is now. The 1999 general fund deficit stands at $58 million, according to the numbers that were put together by Gov. Charles W. Turnbull's financial team.
The deficit is the difference between what comes in and what goes out. The government also has a debt of $1 billion. So at this rate, the debt would double in 10 years.
"These numbers indicate a serious problem and it's not going to go away without everyone working together to come up with a proper fiscal plan," said Margaret Guarino, managing director of the Public Finance Division of First Union Capital Markets, one of the government's advisory groups.
Guarino said Friday that the figures represent what the Virgin Islands has to look forward to if spending remains the same and revenues do not increase.
"The government's fiscal position is precarious and requires immediate action," she said. "Eliminating these deficits will require tremendous effort and significant changes in the way the government delivers its services."
The dire projections do not even include payback of loans to the Federal Emergency Management Agency.
Rudolph Krigger Sr., assistant to the governor on fiscal policy and economic affairs, said, "Everyone has to buy in — they are all stakeholders. If nothing is done, then it is not only the government that fails but the entire territory.
"Hard decisions have to be made. The government needs to be right-sized. And despite the measures the governor is taking, we are still going to need help from the federal government."
The figures were prepared for presentation to Sen. Frank Murkowski, R-Alaska, chairman of the Senate Energy and Natural Resources Committee.
A U.S. Senate subcommittee this week approved a $5.4 million construction grant for the Virgin Islands based on an amendment presented by Murkowski. However, the grant money has strings attached that require the territory to take steps to put its fiscal house in order.
The governor's financial team includes First Union Capital Markets, Core International Inc., the law firms of Winston & Strawn and Harris, Beech & Wilcox and officials of his administration.
The governor charged the team with analyzing the government's fiscal condition and its true financial position, according to Guarino.
"He could not have made decisions back in February," she said. "He didn't want to be working in a vacuum. He needed a thorough analysis of the situation so we can make good decisions for the islands. It is based on this report that the governor is now working with his advisers to come up with the necessary cost reduction and restructuring that is needed."
Guarino said the plans include implementing strong financial controls, restructuring and getting the government into a healthy cash-flow position. She referred questions on specifics to Krigger, who said it was premature to elaborate.
Guarino did say the healthy cash flow might include some borrowing, such as the $35 million the governor has arranged to borrow to cover payroll in upcoming months if necessary.
"But with the proper, well-thought-out financial plan, it can be done," she said. "New York City did it. Washington did it. Guam did it."
A source close to Government House said if the governor's plans are not implemented and if the "unions don't face the fact that the money's not there," the government will end up with more payless paydays and workers being furloughed.
Guarino said the governor is working on a three-fold plan involving cash flow, long-term planning and economic development.
"The governor and the team are doing much more than I think people realize" to find and implement solutions, according to Guarino.
"It is clear the feds will not help us unless we develop performance standards that are agreeable to them," Krigger said from Washington, D.C., where he has met all week with federal officials. He met today with Interior Department officials.
"If we do not demonstrate that we have the will to implement the changes necessary to help ourselves, that is when the feds would step in," Krigger said. "But I believe we do have the will. But we must demonstrate that."
Krigger echoed Guarino on the governor's three-fold approach, which includes investment, saying, "The governor is actively meeting with potential investors. He is awaiting proposals from them. Only when plans become more definite will he make any public announcements."
Outside investment is crucial, Krigger said, adding, "We need to get people into jobs other than government."
Both Krigger and Guarino indicated the governor has a plan that is acceptable to the feds and that he intends to implement it.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.




Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.



STAY CONNECTED

20,771FansLike
4,753FollowersFollow

FROM FACEBOOK

Comments Box SVG iconsUsed for the like, share, comment, and reaction icons
Load more