June 24, 2003 – Sen. Lorraine Berry is working on a plan to help the territory get out of its fiscal quagmire that doesn't involve borrowing or tapping funds better left in place.
Berry has asked the federal government for technical and financial help in setting up a Financial Control Board similar to the federal board that temporarily took control of the Washington, D.C., local government in 1995, when that city was in fiscal chaos, and oversaw the reform of its financial operations.
One of the major players in that initiative, Herbert R. Tillery, currently a deputy mayor of D.C., was in the territory earlier this month and spoke about the experience at a forum on government leadership and management. (See "Man who helped rescue D.C. to keynote forum".)
Berry wrote to David Cohen, the deputy assistant Interior Department secretary who heads its Office of Insular Affairs, saying that the control board she advocates would be in existence for three years, would need to have at least seven members and could operate with a minimum budget of $2.5 million.
"As you are aware, the current Charles Turnbull-Vargrave Richards administration has submitted an unwise fiscal package that encourages more borrowing, spending and increased taxation," Berry wrote in the June 19 letter. "Presently, another bond issue is before the 25th Legislature, and our current debts are already overwhelming."
In the letter, Berry referred to "our informal discussion," apparently with Cohen, "relative to my proposal that would create a Financial Control Board."
Berry has been a harsh critic of Turnbull's borrowing proposals; she has stated repeatedly on the Senate floor that she will not approve any more borrowing. The governor's proposal to float a $235 million bond issue will be taken up Thursday by the Senate Finance Committee. The bill, submitted by the governor last month, was held for further study at the Finance Committee's June 5 meeting. (See "Finance axes gross receipts tax increase".)
In the interim, all 15 senators signed a letter to Turnbull saying they wouldn't consider the bond issue bill unless and until he rolled back the sizable salary increases he granted hundreds of unclassified government employees last year. The governor's comeback was an offer to reduce the salaries of those making more than $40,000 a year by 2 percent to 10 percent, depending on salary level, for the last half of this year. His proposed increases last year averaged 24 percent for upper-level personnel and 20 percent for mid-level employees. So far, the Senate has not responded publicly to that offer.
Berry told Cohen that the Virgin Islands "is experiencing a financial crisis" that predates the Sept. 11, 2001, terrorist attacks and their economic fallout. "Our economic difficulties have been the result of concomitant poor public policies and questionable fiscal strategies," she wrote.
Berry knows whereof she speaks. Currently vice president of the 25th Legislature, she was president of the 22nd Legislature and has chaired the Finance Committee three times. She has had a front-row-seat view of the territory's finances for the last 21 years.
She said she is aware that the Interior Department offers technical grants for institutional development and governance. The territory needs "immediate assistance," she said, asking that the federal department provide:
– Fiscal support or funding.
– Technical support through external collaboration with local experts.
– Political support through the enactment of relevant laws and rules to enable the autonomy of a non-political entity.
The 25th Legislature, Berry said, has mobilized a consensus body to "confront our fiscal challenges." She is working on organizing an effort to develop a board that would have the requisite institutional support from Congress, Interior and the Internal Revenue Service.
Berry, who will doubtless face opposition to the idea at home, is trying to organize support for the control board through the Senate. "I know that our local conditions will militate against any automatic adoption of mainland models," she said, "but we are willing to adapt political models onto local politics."
The senator also said she "welcomed the renewed interest of the Department of Interior concerning the small territories."
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