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Cruz Bay
Saturday, July 20, 2024


June 23, 2003 – The Senate Finance Committee is meeting Thursday on St. Thomas to consider the $235 million bond issue Gov. Charles W. Turnbull is seeking to bridge the territory's Fiscal Year 2003 budget deficit, currently projected at $152 million, and have some spending money left over.
The 15 senators acting in unison wrote Turnbull last month telling him they would not consider the borrowing bill until he rescinded the hefty raises he granted exempt employees last year.
Since then, the brief marriage between the majority and minority blocs has gone asunder and other rifts have appeared. Two of the majority's veteran senators have chosen opposite sides of the fence: Sen. Lorraine Berry once again asserted on her Monday radio program that she will not approve any borrowing. Sen. Roosevelt David has said repeatedly he will support the bond measure, that it's the only way out.
Other senators have not been so forthcoming in their views, but observers say the Senate will probably capitulate and approve some borrowing. A big question is how the bonds will be repaid. Turnbull proposed using an 18.75 percent increase in the gross receipts tax, but the Senate shot that down.
The governor's comeback to the ultimatum on pay raises was an offer to trim salaries exceeding $40,000 by 2 percent to 10 percent on a sliding scale, for six months. Last year's proposed pay hikes averaged 24 percent for upper-level personnel and 20 percent for mid-level personnel. The Senate has not formally responded to the offer.
As background for the Finance Committee's hearing on Thursday, here is a summary of the governor's six fiscal crisis-related bills and the amendments thereto that have come down the pike in the last month.
Bill No. 25-0035: amended and passed.
– Add hazardous duty Water and Power Authority workers to those allowed by law to take early retirement at full benefits.
– Appropriate $600,000 from the Land Bank Fund to the Public Works Department for a new public cemetery on St. Thomas.
– Appropriate $2.3 million from the Union Arbitration Award and Government Employees Increment Fund to the General Fund. – Appropriate $50,000 from the General Fund to the Legal Judgments Special Fund.
– Eliminate the $50,000 appropriation for the Legal Judgments Special Fund.
Vote: 13-1-1. For: Sens. Norman Jn Baptiste, Lorraine Berry, Douglas Canton, Roosevelt David, Adlah "Foncie" Donastorg, Carlton Dowe, Emmett Hansen II, Louis Hill, David Jones, Almando "Rocky" Liburd, Shawn-Michael Malone, Luther Renee and Ronald Russell. Against: Sen. Celestino A. White. Absent: Sen. Raymond "Usie" Richards.
Bill No. 25-0036: amended and passed.
– Appropriate $9.4 million ($5.4 million by July 31 and another $4 million by Sept. 30) from the General Fund to the Public Works Department for wastewater collection and treatment system repair and maintenance territorywide as mandated by District Court orders, consent orders and the government's memorandum of understanding with the U.S. Environmental Protection Agency.
– Appropriate $750,000 from the General Fund to Public Works for emergency repairs to the wastewater collection system territorywide.
– Appropriate $7 million from the General Fund to cover the government's share of increased health insurance premium costs.
– Appropriate $750,000 from the General Fund to the Property and Procurement Department for "plans and other related costs" of a Workforce Development Center.
– Change date provisions of the V.I. Tax Study Commission (citations of Sept. 30, 2001 become Nov. 30, 2003; citations of Sept. 30, 2002 become June 20, 2005).
– Increase allocations to the Finance Department to cover the cost of audits (replacing the figure $1,348,198 with $2,544,800, and replacing the figure $2,686,451 with $3,883,053).
– Increase an appropriation from the Transportation Trust Fund "as a contribution" to the General Fund from $10 million to $11.5 million. – Set the contributions to the cost of health insurance premiums at 60 percent by the government and 40 percent by employees.
– Funding for the Workforce Development Center deleted. In its place, the funding will go for wastewater treatment.
– Health insurance premium changed to 65 percent by the government and 40 percent by the employees.
Vote: 12-2-1. For: Sens. Berry, Canton, David, Donastorg, Dowe, Hansen, Hill, Jones, Liburd, Malone, Renee and Russell. Again: Sens. Baptiste and White. Absent: Sen. Richards.
Bill No. 25-0037: amended and passed.
– Create an "environmental excise tax" of 2 cents per pound on commodities imported into or produced in the territory for business purposes, to be collected until such time as the administration's proposed Waste Management Authority is enacted, to fund "immediate environmental changes." Leases and rentals of imported commodities would be included, unless obtained for use for 180 days or less. For crude oil refined in the territory and refined petroleum products imported into the territory there would instead be an environmental excise tax of 20 cents per barrel. Exemptions: molasses for rum production and agricultural purposes; animal feed and commercial fertilizers; cement, steel, lumber and sheetrock for construction; merchandise disposed of in the course of export trade by V.I. importers and manufacturers to buyers taking delivery outside the territory; and other goods declared exempt by the Public Services Commission.
– Impose a $5-a-day surcharge on vehicles rented from car rental agencies.
– Increase taxes on gasoline and diesel fuel to 17 cents per gallon from 14 cents.
– Increase the highway user tax, commonly call the "road tax," to 16 cents per pound from 11 cents and making the tax applicable to taxis, which currently are exempt.
– Designate road tax revenues from taxis for a new Road Fund to be used for road maintenance and repair.
– Impose fees on containers shipped into the territory at the rate of $30 per trip of containers 20 feet in length and of $50 per trip on containers 40 feet or more in length.
– Change the terminology "environmental excise tax" to "environmental user fee."
– When the Waste Management Authority is established, transfer collection and administration of the tax to the authority.
– Eliminate the fee of 20 cents a barrel on crude oil and petroleum products.
– Eliminate the $5-a-day surcharge on rental cars; the gas tax increase to 17 cents a gallon; and the highway user tax for taxis.
– Eliminate the V.I. Lottery executive director's authority, enacted earlier, to assume powers of the Lottery Commission when there are insufficient members to attain a quorum.
Vote: 9-4-2. For: Sens. Berry, Canton, David, Donastorg, Hansen, Jones, Malone, Renee and Russell. Against: Sens. Baptiste, Dowe, Liburd and White. Absent: Sens. Hill and Richards.
Bill No. 25-0038: amended and passed.
– Increase license fees for banking institutions to $75,000 from the current $50,000, to $150,000 from the current $100,000, and to $2,500 from the current $1,500.
– Impose a 2 percent surcharge on hotel room charges in addition to the current 8 percent hotel room tax, with revenues to go into the General Fund.
– Increase the gross receipts tax to 4.75 percent from the current 4 percent.
– Impose a 2 percent excise tax on food items; however, candy, chewing gum, sodas and other items "not consumed primarily for nutritive purposes" would be exempted.
– Impose a 4 percent tax on merchandise and commodities valued at more than $500 that are brought into the territory for personal use.
– Impose a sliding scale stamp tax on the sale of real property to replace the current 2 percent tax; rates would be: 2 percent for property valued up to $100,000, 2.5 percent for property valued $100,001 to $500,000, 3 percent for property valued $500,001 to $1 million and 3.5 percent for
property valued over $1 million.
– Change the payroll schedule to twice a month instead of every other week, thus eliminating two pay periods per year. (This would not affect the annual salaries of employees.)
– Eliminate the gross receipts tax increase; the excise tax on food items; and the 2 percent surcharge on hotel rooms.
– Reduce executive branch FY2003 appropriations by $55 million. (Turnbull had already implemented a $46 million reduction.)
– Require The West Indian Co. to pay $1 million annually to the General Fund, in lieu of taxes.
– Appropriate $2.5 million for the University of the Virgin Islands Technology Park on St. Croix from the Insurance Guaranty Fund.
– Make the threshold $1,000 for imposing the 4 percent personal use tax on merchandise and commodities brought into the territory for personal use.
– Add $25 to unemployment benefits for each beneficiary's dependent child.
– Impose a moratorium on fees for new business licenses on St. Croix, and reduce by 50 percent the fees for renewing existing business licenses on the island.
– Authorize inter-fund borrowing for the executive branch.
– Allow the government to increase fees by as much as $100 per year, instead of the 10 percent limit.
– Change the commencement date for reduction in overtime to the effective date of this act.
Vote: 10-4-1. For: Sens. Berry, Canton, David, Donastorg, Hansen, Hill, Jones, Malone, Renee and Russell. Against: Sens. Baptiste, Dowe, Liburd and White. Absent: Sen. Richards.
Bill No. 25-0039: amended and passed.
– Provide for property owners who pay their 1999 through 2004 commercial and personal property tax bills prior to the enactment of a District Court-ordered revised property assessment system to be entitled to a credit applied to their subsequent year's tax bill for any overpayment; and for any such taxpayers who underpay said taxes to be billed retroactively for prior-year tax obligations.
– Make the above provision null and void if a higher court reverses the District Court order and upholds the territory's present assessment system.
– Give the Board of Tax Review power to designate a hearing officer to conduct hearings to compile evidence and establish findings of fact in appeals or complaints, providing, however, that the final decision shall rest with the board itself.
– Establish a Tax Assessor's Revolving Fund which shall consist of 1 percent of real property taxes collected annually by the Finance Department, or an amount not to exceed $500,000, plus any legislative appropriations.
– Provide for the Tax Assessor's Revolving Fund money to go for equipment, staffing, training and professional services to maintain and improve the Office of the Tax Assessor.
– Change the basis of assessing real property for tax purposes to market value, not replacement value.
– Base property taxes on 1998 assessments until a new assessment method is in place.
– Allow for persons who may have underpaid to have up to 120 days, as opposed to 30 days, to pay the balance of their property taxes without interest and penalties.
– Credit taxpayers subsequently found to have overpaid their taxes with that amount for subsequent tax years after 60 days of that redetermination.
Vote: 9-4-2. For: Sens. Baptiste, Berry, Canton, David, Hansen, Jones, Malone, Renee and Russell. Against: Sens. Donastorg, Dowe, Liburd and White. Absent: Sens. Hill and Richards
Bill No. 25-0040: to be considered on Thursday by the Finance Committee.
– Authorize the Public Finance Authority to issue up to $235 million in bonds, with up to $100 million to finance the government's working capital obligations, up to $20 million to finance private economic development initiatives on St. Croix, up to $10 million for a Guaranty Reserve Fund to provide credit enhancement for financing of the Carifest theme park, and up to $80 million to finance the construction of a 250-room hotel on St. Croix.
– Authorize the government to pledge gross receipts taxes as security for repayment of the loan note.
– Provide for gross receipts taxes to be deposited in a Gross Receipts Taxes Special Escrow Account, other than the first $250,000 per annum, which by law is to be remitted to the Moderate Income Housing Fund.
– Provide for the government to continue granting gross receipts tax exemptions as an economic development incentive, so long as such exemptions do not cause any given year's estimated gross receipts taxes to be less than 150 percent of the maximum scheduled payments of principal and interest on all outstanding bonds, notes or other evidences of indebtedness secured by a pledge of the gross receipts taxes. (The governor's proposed gross receipts tax increase, as previously noted, was killed, in the Senate Finance Committee.)
Bill No. 25-0051: a resolution amended and passed.
This resolution, sent to Turnbull last week along with the five amended bills, petitions the governor to consider a number of fiscal recovery measures. A resolution doesn't carry the weight of a bill; it is not something to be enacted as law.
The resolution was proposed by Sens. Berry, Canton, David, Hansen, Hill, Jones, Malone, Renee and Russell.
Among other things, the resolution asks the governor to:
– Negotiate with Hovensa for the refinery to pay up to $14 million of its property taxes in advance of the date due.
– Request that the Finance commissioner within 45 days of passage of the resolution issue a request for proposals to a third party for collection of $80 million in delinquent property taxes.
– Submit the FY2004 budget as soon as practicable, the May 30 deadline by law for doing so having passed.
– To tap the Insurance Guaranty Fund for up to $30 million.
Vote: 9-4-2. For: Sens. Berry, Canton, David, Donastorg, Hansen, Jones, Malone, Renee and Russell. Against: Sens. Baptiste, Dowe, Liburd and White. Absent: Sens. Hill and Richards.
Turnbull said on Friday he would "not jeopardize the solvency of the Insurance Guaranty Fund" on the brink of hurricane season. His remark was in response to the Legislature's authorization for him to tap the fund for up to $30 million. (See "Senate allows tapping Insurance Guaranty Fund".)
The amendment allowing the action would help ward off a payless payday next week, senators said last week. It urges the governor to substitute up to the $30 million with a standby letter of credit, and to come to the Legislature should he decide to act on it.
As of Tuesday, the bills passed in last week's full Senate session were still in the legislative legal counsel's office for review before being sent up to Government House for Turnbull to sign, veto in whole or in part, or allow to become law without his signature.
Short of an unheralded miracle, the territory's immediate fiscal future is no closer to resolution than it was on April 24 – the day the governor announced that the territory was facing not just a shortfall but a crisis.

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