Dear Source,
The Source's Sept. 25, 2002, story on the bond indebtedness of the government of the Virgin Islands (V.I. bonded debt soars to more than $1 billion") is astounding and invites the question of who is paying attention. This is a most serious situation and, like other serious problems, it must be addressed immediately and not postponed until another day.
The indebtedness of this government threatens the future of the territory overall. There are serious implications for both the private and public sectors of the Virgin Islands, and all of the current and future politicians must not only speak about but also set forth plans to control the "runaway" spending.
All of the bonds (revenue and general obligation) have been floated based on the return of federal taxes on rum, but that same tax source also supports general operating expenses for the central government. As such, 100 percent of the federal rum taxes returned to the territory cannot be dedicated only to retiring the bond indebtedness. There is a great danger in the reliance on this single source of revenue to retire the huge debt which the government has incurred. If there is no control of the ever-increasing debt, the territorial government could experience an implosion of astounding proportions which would amount to a collapse of government operations. If the bondholders are dissatisfied with the debt retirement schedule or if there is a default, they could call the debt as due and owing. In other words, if they want to be paid because of a default, they would demand everything within a certain short period of time.
A debt of more than $1 billion for the size of the territory (population of 110,000) with its limited resources should cause anyone who understands public financing to stop and take notice. Among those running for various political offices (governor and the Legislature), few have addressed this huge problem, and it would be interesting to see how their comments and solutions shape the debate on public financing. Someone has to have the courage to say, "Stop," let us take an inventory of where we are heading. The question should be couched as, "What are our real needs, as opposed to the things which would be nice to have?" While it is good to have what we "want," we must address the dire "needs" of the territory (health, public safety and education). Building of "monuments" must be postponed until the current indebtedness is reduced to a manageable level.
The average citizen who is affected should seriously look at the implications of government paralysis and its inability to render the basic services which will result from the drying up of key financial resources. Usually, we don't take notice and call for action until the storm is upon us, and that could be too late.
Depending on the federal government for a bailout is out of the question, particularly since the federal government is now back in a heavy deficit situation itself and will cut spending in many areas of operations in fiscal 2004. Aside from the bond indebtedness, the local government has carried forward a deficit of various large amounts from one fiscal year to another for years. It is a snowballing exercise and getting larger; in reality, the government has been deficit financing for quite some time.
Overall, the debt of the government is being passed from one generation to the next. This current generation says spend; let the next generation worry about paying it back. My hope is that the people of the Virgin Islands will take serious notice of the government's indebtedness now and not sweep the matter under the rug.
Eric E. Dawson
Fairfax, Virginia
Editor's note: Eric Dawson is a former commissioner of the V.I. Economic Development and Agriculture Department.
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