May 18, 2001 – Washington gives the Virgin Islands $120 million in grant awards every year, and federal officials are not happy with the way the V.I. has of accounting or not accounting for it.
A requirement of the granting is that the territorial government have itself audited every year, said audit to be performed by the government's outside auditors.
The V.I. government, according to Gov. Charles W. Turnbull, had until his administration took office supplied the federal government with only one such audit since 1984. That one covered fiscal year 1984 and was four years late in coming, Turnbull said at a news conference held Friday morning at Government House on St. Thomas to report on his recent trip to Washington.
"No one's going to give or lend us money without accountability," he said. He called the territory's blatant failure to comply with the Single Audit Act a "sore point in our relations with the federal government."
The act states that "each … non-federal entity that expends federal awards under more than one federal program shall undergo a single audit" annually.
However, Turnbull said, due to his commitment to make compliance a "top priority," federal officials have agreed to lift "burdensome conditions" that had been placed on granting funds to the V.I. As an illustration, he said the U.S. Department of Education had released $9 million in funds for Special Education that had been withheld due to federal concerns about lack of accountability.
And Turnbull had more good news to announce for Education: A recent audit, he said, turned up $14 million in unexpended grant funds for the department. However, Education Commissioner Ruby Simmonds, after the news conference, cautioned that much of the money is already committed for outstanding bills. Simmonds said she expected the process of unraveling the finances to take months and that in the end there would be far less than $14 million available.
She said she hoped some of the money could be used to fund summer enrichment programs to make up for time lost last fall due to construction work that was not completed by the start of the academic year at some schools.
Turnbull said his commitment to the federal government involves having audits for fiscal years 1994, 1995, 1998 and 1999 completed by June 30. The next phase will be completing audits for 2000 by January of 2002 and for 2001 by November 2002. He added, "We are negotiating with these agencies to conduct simplified audits for fiscal years 1996 and 1997."
The governor also reiterated his conviction expressed in last Friday's radio address from Washington that he has made headway in getting the cap lifted on the federal rum tax rebate and on getting the $50 million Hurricane Hugo loan from the Federal Emergency Management Agency canceled.
Federal officials and congressional leaders are very aware of the problems facing the territory due to the "Internet" and are committed to helping the territory solve its fiscal problems, he said.
The temporary lifting of the cap on the rum tax rebate, increasing the return to the V.I. from $10.50 per proof gallon to $13.25, expires the end of this year. Turnbull said there is considerable support in Congress to extend the increased rebate or even to lift the cap completely. He ran off a list of senators, including members of the Senate Finance Committee, who he said had given him "strong support" in his quest to get the increase extended.
He also said he had received "strong support from key members of the House Ways and Means Committee," including longtime V.I. supporter Charles Rangel (D, N.Y.).
As for the Hugo loan, he said, there is one step left in a two-step process to have it canceled: Congress must appropriate $3.5 million to cover the cost of the stepped-down value of the loan. Last fall, under the Federal Credit Reform Act, the loan was devalued to $1 million from its original $50 million value.
When asked how the appropriation would be handled so close to the summer recess, Turnbull replied that his friends in Congress said they "will attach it to any bill that comes up" which is likely to be passed. "They told me 'Don't worry, governor,'" he said.
Turnbull finalized his prepared remarks by noting what he described as another sign of progress in his administration. On Friday, he said, the Internal Revenue Bureau was to send the paperwork for 3,278 tax refunds, amounting to $5 million, to the Finance Department for payment. Out of them, 2,732 were for tax year 2000, he said, with the balance for prior year returns.
Turnbull said he was committed to "have this process completed by June 30." According to a Government House spokesperson, he meant that all fiscal year 2000 tax refunds will have gone out by then.
