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Senate Majority Leader Addresses Financial Crisis Issue
On Behalf of the 25th Legislatures Majority Caucus
A Financial Crisis: When you have a mortgage to pay and your cash situation is such that you will have to pay it late, you have a cash flow problem. The source of the cash and the payment deadline are not in sync with each other. However, when you have a mortgage to pay and no income to be able to project payment, much less promise a late payment, then you clearly have a financial crisis.
The VI Government, according to documents and figures recently provided by the Executive Branch, is on a course of spending that is projected to result in a shortfall of 115 million dollars. This is money owed and no apparent means for bringing in the cash to pay it off.
Upon learning of the fiscal state of our government and the potential impact on all residents of the VI, it became immediately apparent that a unified approach by all members of the Legislature would be the most effective way to proceed toward identifying workable short term, mid-range and long term strategies for addressing the challenges facing us all. The Democratic Majority caucus is committed to the high road of an inclusive unified approach to the challenge facing us all.
The need for unity of purpose and the cooperation to produce effective strategies is clear. For while any group or faction can identify courses of action, we must always do the necessary analysis to ensure that the one-upmanship that has plagued the Legislature in the past does not compromise our ability to be sensitive to the impact on the innocent.
The Majority Caucus is mindful of the fact that the exempt and unclassified ranks of employees are comprised of much more than commissioners, directors or higher salaried employees. In fact, there are hundreds of government employees that are exempt or unclassified whose income brackets are not even close to director or commissioner salary levels. They perform necessary functions in their respective agencies but are not protected by a union. These are "real people" with concerns for paying their mortgage, supporting their children or just plain putting food on the table.
There is also the complicated issue of federally funded local government positions that have received increases to preserve parity with their 100 percent locally funded counterparts. In a number of cases, the local government has failed to fill federally funded positions or has failed to comply with the terms of funding. As a result, the VI has lost the federal funds and is now subsidizing this mismanagement by having to absorb the federal funded employees into the local government payroll. A Grant Management Authority, as proposed, would serve to track these federal funds and compliance with the funding terms to make sure that such significant losses are not repeated.
We must also acknowledge that the VI private sector and the public sector are not independent of each other. There is a symbiotic relationship between private sector economic activity and tax revenues collected from business activity, which is ultimately used to fund the operation and payroll of the Government. A depressed private sector results in a reduction of tax receipts. Reduced tax receipts means less money available to devote to government spending. In crafting strategies for recovery, we must be mindful that any measures seeking to further tax and burden the private sector present a heightened risk of reduced economic activity and business closures. The private sector has weathered the storm of increased fees and license costs during a protracted economic downturn. We cannot further burden private sector businesses as a source for funding our economic recovery. To do so would be counterproductive.
The Majority Caucus salient point of these scenarios is that leadership must move with deliberation and sensitivity. The race is won by solutions that endure, solutions that show sensitivity to the innocent who are the backbone of Virgin Islands economic activity.
Truth In Advertising: The Democratic Majority Caucus also recognizes that the apparently abrupt change in financial standing of the VI Government raises questions as to the timeliness and accuracy of information flowing between the executive and legislative branches of government. This is vitally necessary for the Legislature to devise an effective budget strategy. The seeming inconsistencies of information presented to the Legislature over the last 12 months leading up to the current state of affairs and our current condition, as recently documented, does not build public confidence.
As a government, we must move toward automated generation of financial reports. It is clear that the way it works now is problematic for any legislature seeking to make accurate and informed fiscal budget decisions. Fiscal accountability policies and procedures standardized across agencies is also necessary to ensure timely reporting and performance measurement. The Majority Caucus will seek broad support for measures that promote fiscal accountability and, in turn, rebuild public confidence in government institutions.
The September 11, 2001 terrorist attacks in the United States and the advent of the war in Iraq have had a pronounced effect on the world. The Majority Caucus does not ascribe to the thinking that these events explain the challenge facing us today. Tourism numbers indicate that travel-related income from hotel occupancy is on a significant upswing, although our income projections for this period were much less optimistic because of these events. This area of our economy, when used as a credible barometer of the effects of 9-1-1 and of the effects of he war in Iraq, seem to indicate that the VI Government must reassess what the causes and contributors are to the current state of our coffers.
It is fair to say that all members of the legislature have a renewed resolve to promote transparency in government. The Majority Caucus believes that such a broadly held commitment to transparency will result in consistency and efficiency in government operations. Consistency in service delivery, fiscal management, accountability, and territory-wide administrative policy is the key to our economic revitalization. As we embark down this road to recovery, we must take the necessary steps to safeguard against having to face another economic crisis a few years hence. The Democratic Majority is prepared and ready to work together with all legislators and other stakeholders to devise an economic recovery strategy that is visionary and sustainable; divided, the process will only take longer to accomplish, while the people suffer. Unity of purpose and cooperation is the way.
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