June 6, 2003 Businesses in the Virgin Islands can draw a breath of relief as the Senate Finance Committee late Thursday night killed the governor's proposed 18.75 percent gross receipts tax increase, along with other taxes the committee found untenable, including an "environmental tax" later changed to a "use fee" on oil imported by Hovensa.
And, in a continuing power struggle, they held in committee the governor's proposal to borrow $235 million in bonds to eliminate the projected $144 million budget deficit. Senate President David Jones had said earlier that the body wouldn't authorize any borrowing until Turnbull responded to the Senate's request to rescind the raises the governor granted last year to exempt employees.
In an exhaustive meeting that began at 10:30 a.m. and ended almost 12 hours later, breaking for caucuses, the Senate heard testimony from public and private sector officials, kicked the public sector officers out at one point, and joined together ultimately to replace proposals with some of their own.
Finance Chairman Adlah "Foncie" Donastorg addressed the committee after returning from a last caucus after 10 p.m. "I do believe for the first time in history, you would see that all 15 senators would have supported an initiative to bring back some kind of integrity to this institution and to address the financial situation of the Virgin Islands," he said with a broad smile.
Calling Turnbull's tax initiatives "brutal," Donastorg said the senators had been "considerate and compassionate" in creating their own cost saving proposals to reduce the projected $144 million budget deficit this fiscal year.
They essentially threw out Turnbull's massive $90 million tax increases, retaining only a few, which include:
– A hike in gasoline tax from 14 cents to 17 cents per gallon.
– A tire tax of $1 per tire 18 inches or less, and $2 more than 18 inches.
– A personal use tax on all personally imported items over $1,000.
They retained several measures, including:
– A $9.5 million appropriation for court ordered sewer repairs.
– A $750,000 appropriation for emergency sewer repairs.
– A $600,000 appropriation to create a new cemetery on St. Thomas.
– Reducing the number of government paydays from 26 to 24 starting Jan. 2004.
– A measure to include Water and Power hazardous duty workers for early retirement, which drew criticism from Hugo Dennis, chairman of the Advocates for the Preservation of our Retirement System. "They are creating a new body of workers we cannot support," he said outside of the meeting Thursday.
They also tossed out the $5 per day tax on car rentals, an increase in stamp tax rates, an increase in hotel room tax from 8 to 10 percent, which hoteliers and others had vehemently opposed, an environmental two cents per pound excise tax, and a 2 percent tax on certain foodstuffs. And they killed the governor's proposal to increase government employees' share of health insurance premiums from 27 percent to 40 percent.
The senators' plan incorporates some of the 25 suggestions the minority caucus had proposed last month, and is the culmination of closed door meetings the senators have held for the past week.
Highlights of the senator's amendment include:
– A 14 percent cut in all budget allotments for the balance of Fiscal Year 2003. The Legislature's budget has been cut 14 percent.
– A hiring freeze for the balance of FY 2003, except for teacher, hospital and health care workers, firefighters, peace officers, and Health and Human Services personnel.
– A $2 million payment by the West Indian Co. annually in lieu of taxes payable by law to the government.
– Mandatory direct deposit for all government employees into a financial institution of the employee's choice.
– An increase in unemployment benefits equal to 80 percent of the V. I. average weekly wage in insured work in effect the first day of the benefit year.
– An increase in banking fees, a move strongly opposed by the V. I. Bankers Association.
– Increasing marriage license fees from $25 to $50.
– Allowing all government departments and agencies to increase administrative fees up to 10 percent.
– Increasing business license fees up to $500.
– Increasing moving violation vehicle fines from $500 to $1,000.
– A reduction in time limits for Coastal Zone Management permit processing.
– Reducing government overtime compensation by 50 percent for FY 2004.
All senators attended the meeting except Sen. Douglas Canton who was off-island, and Sen. Emmett Hansen II, who had to attend a court case on St. Croix.
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