Oct 1, 2001 – One of the administration's top financial officers warned Monday that just because funds have been appropriated to departments and agencies doesn't necessarily mean they'll be there for the spending.
"We can't release allotments for which we have no resources," Ira Mills, director of the Office of Management and Budget, said. And, he added, "We can't be said to be holding back money if there's no money to hold back."
Mills was one of three administration financial officers speaking on the "Topp Talk" show on WVWI Radio Monday morning. Joining him were Louis Willis, Internal Revenue Bureau director, and Kent Bernier, Gov. Charles W. Turnbull's economic adviser.
The government's budget is based on revenue projections, Mills said, and since the Sept. 11 terrorist attacks, those projections have changed. For Fiscal Year 2001, which ended Sunday, the Legislature recently passed two supplemental appropriation bills, he noted. "And what we are going to have to do is delay as long as possible many of those items — to make sure the mandatory items are covered. As the revenues shrink, we have to be more cautious."
Similar concerns were expressed by several senators about the Fiscal Year 2002 budget, but that budget was passed by the Legislature last week and sent to Government House with no changes to reflect the recent and projected losses in revenue due to tourist cancellations since Sept. 11. Sens. Lorraine Berry, Emmett Hansen II and Vargrave Richards had written to the governor about these concerns but had received no response as of last Friday.
Government House announced on Sunday that Turnbull had signed two measures into law that were passed by the Senate last week — allocating federal community development funds and contracting for medical and dental insurance for government workers. But there was no information concerning his response to the FY 2002 budget.
Mills said some departments, starting with Police Department, "will get their full allocation." The governor's other priorities – education and health care – come next, he said.
"Everyone will see his item as a priority," he acknowledged, "but that doesn't give us any authority to release allotments for which we have no resources."
Mills also cautioned nonprofit agencies who have allotments coming, "Don't make any commitments until you have the money in hand."
Private sector can 'sustain themselves'
Talk show host Sam Topp asked Bernier what the government could do to aid the territory's hotels, which currently are reporting less than 15 percent occupancy. The St. Thomas-St. John Hotel and Tourism Association president, Richard Doumeng, said last week that several hotels won't be able to stay open if they don't get some immediate relief. The business sector has proposed, among other things, a four-month deferral in paying gross receipts taxes and electric and water bills.
Bernier had no answer, except to say, "They'll be able to sustain themselves." He referred to recent meetings between administration officials and leaders of the territory's two hotel associations and two chambers of commerce. "We have discussed a gross receipts tax break or something from WAPA," he said, "but there's no need to react until we see how great the impact is further down the road, until we get more data."
Bernier added, "We've been trying to bring something to the table to help," he said. But Mills said even a temporary tax break isn't an option, because the government's tax revenues are pledged to bond issues. "We will see which members are adversely affected, and see if we could make some accommodations without upsetting the bond holders," he said.
Bernier described a new tourism initiative the private and public sectors are launching. The government, he said, is "putting $3.5 million toward advertising the V.I. destination." He described the project to offer New York and Washington, D.C., relief workers a week's free vacation in the Virgin Islands that was proposed by the hotel associations and chambers of commerce last week. "The government is supplying 1,000 airline tickets, and the hotels are supplying 500 rooms free of charge for the rescue workers for a seven-day stay," he said.
Bernier said Tourism Commissioner Pamela Richards would be on a radio show later in the week to explain another tourism campaign which includes a free airplane ticket for every one purchased for travelers across the nation, as well as 25-percent-discounted hotel rates and a money-back guarantee on cancellations.
Bernier said he is going to Aruba this week to attend a two- or three-day meeting with cruise line officials. "We are projecting excess cruise ship calls," he said, given public concern about travel in the Middle East and Asia. Already, Norwegian Cruise Lines/Star Cruises have announced they will return the Norway to the Caribbean at the end of this year after it is refurbished, instead of pursuing earlier plans to reposition it in Asian waters.
Focus on getting capital projects going
Both Mills and Bernier said getting capital projects on line is the immediate answer to the territory's economic ills. Bernier said, "We're not trying to stay in the box with just the hotel association." He said a technical park proposed by the Port Authority on St. Croix is under way, and that expansion of the Divi Carina Bay Resort and development of a new 300-room hotel and casino by Golden Gaming, both on St. Croix, and the Red Hook marine terminal on St. Thomas and the Enighed Pond cargo port on St. John will be started by the end of the year.
"We are mobilizing all of our forces to diversify the economy," Bernier said.
Mills said, "We are working in Washington, D.C., with the Tourism Department and the House of Representatives to be part of the multimillion-dollar recent nationwide package developed to take care of tourism."
Willis said the impact on the territory from the terrorist attacks was less severe than if it had come in a month when the agency collects high gross receipts and hotel room taxes. "September and October are always the slowest months" for tourist arrivals, he noted.
Hotel room-tax revenues are typically about $300,000 in September and October, Willis said, compared with $1.1 million in February and March. He said he would have to wait until the tax revenues come in to see exactly how much the bureau has been affected.
Willis said he see "a light" coming on for St. Croix. "So far this year, we've had $120 million in St. Croix tax revenues, and that's just through August," he said. Previous years' taxes had totaled around $118 million for the whole year, he said.
