July 30, 2002 – The Port Authority is facing a shortfall of up to $5 million for Fiscal Year 2002 and will have to raise airport landing fees to balance its budget, its executive director, Gordon Finch, told the Senate Finance Committee on Monday.
The committee heard overviews of the FY 2003 budgets of the Port Authority and the Water and Power Authority, both semi-autonomous agencies, along with comments on the administration's proposed budget for the Office of the Governor.
Finch had warned at the June VIPA board meeting of the possible need to increase landing fees. He said at that time, "If the economy does not turn around soon, the Port Authority will have no choice but to raise some of its aviation fees in 2003." On Monday, his assessment was: "I see no possibility whereby the landing fees will not be increased."
As a result of the Sept. 11 terrorists attacks on the U.S. mainland, air traffic to V.I. airports was off by 16 percent for the six-month period of October 2001 to April 2002, Finch said at the June meeting. He said the airlines were suffering huge financial losses in the immediate aftermath of the attacks — first because the federal government halted all flights for several days, and then because of fear of flying on the part of many persons.
The result: Airport revenues suffered a $5 million loss in the six-month period. Fees from marine-port operations also dropped in the reporting period — but nonetheless finished with a profit of $3.2 million, Finch said then.
"Simply put," Finch told the committee on Monday, "in FY 2002 operating expenses, VIPA-contributed capital expenses to capital improvements, and debt-service cost will exceed revenues raised by the authority by $3 million to $5 million."
He said with any attempt to remove any fees from VIPA, "it would go bankrupt to the extent I found it in 1991." He said the port charge of $4 per passenger that VIPA collects from the cruise lines "keeps the agency afloat," and any attempt to tamper with those fees would spell financial disaster.
Edward E. Thomas Sr., president of The West Indian Co., had suggested at a Senate meeting in early June that VIPA rebate a share of its port revenues to Carnival Cruise Lines to entice the company to resume calls at St. Croix. The idea left Finch aghast; in a release issued June 14, he said he was "flabbergasted" by Thomas's proposal.
"The Port Authority has waived all marine fees for ships entering St. Croix since 1999," Finch said then, "and the cruise ships still do not want to go to St. Croix. Now, Mr. Thomas is asking the Port Authority to give up ship dues, a major source of revenue for us … There is only so much we can do. We still have an agency to run."
The outlook for FY 2003 doesn't appear any more promising than FY 2002, Finch told the senators on Monday. He said he and his chief fiscal officer are analyzing the first draft of VIPA's FY 2003 budget. "A very unsettling revelation … is that the sum total of anticipated or requested expenditures exceeds the estimated projection of revenues by approximately $1 million," he said. "This unsettling condition becomes reason for extreme concern knowing that this very large expenses-over-revenues imbalance does not even include any VIPA revenues for capital projects or matching contribution for federal programs."
Finch vowed to present a balanced FY 2003 budget to the VIPA board at its Aug. 21 meeting. It said it is obvious that the Port Authority must make "huge reductions" in its expense budget and still take timely action to increase revenues. "These very tough decisions will be made within the next two weeks, because, rest assured, a balanced budget will be presented to the governing board," he said. As a semi-autonomous agency, VIPA, like WAPA, approves its own budget without Senate approval.
FY 2003 capital-improvement programs and projects will carry a price tag of $15 million to $20 million, Finch said, with VIPA funding up to half that amount and the remaining money coming from the Federal Aviation Administration's Airport Improvement Program and other federal funding sources.
Among the projects are construction of the long-awaited Enighed Pond commercial dock on St. John and a new Red Hook passenger and cargo dock on St. Thomas, both of which are federally funded; expansion of the Crown Bay dock and development of an adjacent commercial facility on St. Thomas; upgrading of the air traffic control tower and fire station at Henry E. Rohlsen Airport on St. Croix; and upgrading of the Gallows Bay dock on St. Croix.
Sen. Alicia "Chucky" Hansen, Finance Committee chair, repeatedly asked Finch for a copy of VIPA's draft FY 2003 budget. Finch held firm that he would make the budget available only in its final form, and to all senators "as is customary." He said, "I have no problem telling you or the world how VIPA makes and spends its money."
New heat on WAPA street lighting
Dominating the Water and Power Authority hearing was ongoing debate over who is to fund WAPA's new street-lighting business, and how. Also discussed, to a lesser degree, was the dilemma of what to do with the desalination barge the Legislature unceremoniously passed on to WAPA last year at the same time it transferred the territory's street lighting responsibility to the authority from the Public Works Department.
The Legislature appropriated $2.8 million to WAPA to cover start-up costs of the street lighting last year. Gov. Charles W. Turnbull vetoed the appropriation, but the Senate overrode his veto earlier this year. However, WAPA has yet to see any of the money. The authority has petitioned the Public Services Commission for permission to impose a surcharge of about $1.50 a month on residential customers' electric bills to finance the lighting. The petition is not scheduled to be heard until October.
The barge currently is moored at the Krum Bay dock, where WAPA officials have said it is uninsured and poses liability issues. The WAPA board has asked the governor to relieve the authority of ownership and has directed its legal counsel to continue efforts to have the vessel returned to the federal government, which donated it to the territory in the 1990s.
Glenn Rothgeb, WAPA acting executive director, said on Monday that the barge is about 10 percent operable, capable of producing about 30,000 gallons of potable water a day.
Hansen added new fuel to the ongoing street lighting controversy Monday. Rothgeb testified that the authority has continued to bill Public Works for street lighting maintenance, a service the utility has provided on a contract basis for years. Hansen said this is against the law, since WAPA itself and not Public Works now is responsible for the lights. "That's one discovery we've made here today — they're charging PWD for something they're not responsible for," she said.
Rothgeb said WAPA counsel Ishmael Meyers Jr. would have to research the matter.
He also said that Public Works owes WAPA $1.7 million, of which $784,000 is past due, and that most of that amount is for street lighting in the past.
'Austere measures' for Government House
In his presentation for the Office of the Governor, Alric Simmonds, Turnbull's chief of staff, said the governor's request for $7.2 million for his office in the coming fiscal year represents an increase of $287,212 or 4.2 percent over FY 2002. Simmonds said the increase covers $150,000 for the January 2003 inauguration, $100,000 for the transition after the November elections, and $37,212 for special receptions.
Simmonds stressed that "austere measures" have been put in place in the office, including a decrease in staff from 95 in 1999 to 87 currently.
According to a breakdown of current staff salaries for the office, of those 87 employees, three are "executive chauffeurs" wi
th a combined yearly salary of $144,000. On St. Thomas, Haran Penn makes $58,000 and Conrad Brathwaite makes $34,000. On St. Croix, Elroy Edwards makes $52,000.
Simmonds said the office keeps costs down by monitoring travel, controlling overtime and using cellular telephones to eliminate excess phone line charges.
Government House has been successful in obtaining federal grants, Simmonds said. These include:
– A state planning grant of $930,922 through the Bureau of Economic Research to help territories develop affordable health insurance plans. Simmonds said the grant wasn't reflected in the FY 2003 budget because the funding notice was received after the budget had been submitted.
– A $360,000 grant for economic adjustment planning.
– A $150,000 grant for primary health care.
– A $44,000 grant through the Bureau of Economic Research for economic assistance planning.
All seven committee members attended the hearing — Sens. Douglas Canton Jr., Donald "Ducks" Cole, Adlah "Foncie" Donastorg, Carlton Dowe, Norman Jn Baptiste, Hansen and Norma Pickard-Samuel. Also attending were two non-committee members, Sens. Almando "Rocky" Liburd and Celestino A. White Sr.
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