July 16, 2003 – Senate President David Jones called it "facing the tiger," while his vice president, Lorraine Berry, called it "not dealing with reality." Either way, the Senate on Tuesday approved a significantly altered version of Gov. Charles W. Turnbull's $235 million bond-issue borrowing measure.
Berry had said all along in the months of debate over what to do about the territory's fiscal crisis that she would not support any borrowing, and on Tuesday she stuck to her words. "We borrowed in 1999 [a $300 million bond issue shortly after Turnbull took office] to keep the community afloat and pay vendors and income tax refunds," she said, "but the fiscal controls weren't kept in place. We had a Memorandum of Understanding we ignored, and a five-year plan we ignored."
She continued: "This budget crisis is no shock to the administration; they knew it from May a year ago, but nobody did anything about it. They compounded it by giving exempt employees their raises in the face of advice from the administration's financial advisers. Why do we pay them almost a million dollars in fees, and we ignore them?"
Berry said the remedy is to cut government spending. "We have to reduce government costs," she said. "We are in for a long, hot summer unless you eventually vote for the financial control board; otherwise God help us."
Berry has proposed that the territory itself form such a board with federal financial and technical support; the idea has not been taken up by the Senate.
Jones felt differently, as did enough senators to approve the bill on a 9-6 vote, not strictly along majority/minority lines. (See "Bond issue in; working capital, 2-cent tax out".)
Perhaps influenced by the governor's dire warnings on Monday of employee layoffs and huge cuts in government services if the bond issue was voted down, Jones said: "To run away from the situation, not facing the tiger, I don't call that courageous. Every country in the Caribbean and Europe is facing serious fiscal challenges. It's easy to blame the administration. The Legislature is equally responsible. It's easy to sit back and say 'I don't support borrowing; I don't want to increase the debt.'"
Jones was tenacious in getting the bill onto the floor, which wasn't easy. On Tuesday's original agenda he had placed the borrowing bill the Rules Committee voted down last week. On a new agenda issued in the afternoon, he listed a new Bill No. 25-0052 for the borrowing, with substantial differences from Turnbull's bill and amendments to it that had been made in the Rules Committee.
Deficit reduction not addressed
Prime among them was provision for $100 million of the bond proceeds to go for income-tax refunds and vendor payments. Turnbull's bill had called for the same amount to finance the government's working capital obligations, which could include the tax refunds and vendor bills but also much more. Administration officials said recently that the government has been able to make payroll only by putting a hold on both income-tax refunds and vendor payments. Sen. Usie R. Richards noted that the bill approved does nothing to address closing the government's Fiscal Year 2003 deficit — mostly recently projected by administration officials at $152 million — and concerns about meeting payroll. "We talk about payless paydays, and there is absolutely nothing in this bill to address the working capital of the government," he said.
The new bill also eliminated the allocation of $80 million for a new hotel on St. Croix. This provision also had been removed from Turnbull's bill by the Rules Committee last Friday.
Richards successfully challenged Jones's authority to place that bill on the agenda, as it had not gone through the committee process and as its addition had not been approved by vote of the Senate membership. Jones then had the measure removed from the agenda — but not for long.
It was a foregone conclusion that Jones would special order the bill to the floor, which he did about 8 p.m., after the rest of the revised agenda was completed.
Jones said the Legislature had no other choice but to prevent government layoffs. "I cannot sit here and bury my head in the sand when the very future of the economy and the government of the Virgin Islands is about to collapse," he said.
Sens. Louis Hill, Almando "Rocky" Liburd — who had asked that his name be removed as a sponsor — and Carlton Dowe voted for the measure, pushing it over the top. Hill had voted against the governor's borrowing bill in Friday's Rules session, where Dowe abstained, to the surprise of his colleagues, causing the measure to die in committee on a 3-3 vote. (See "Rules deadlocks, fails to approve bond bill".)
No senators expressed enthusiasm on Tuesday about voting for the borrowing. Hill said the Senate once again "must use line-item budgets to control government spending." The 25th Legislature earlier this year backed off on its insistence on line-item budgets for the previous two years; lump-sum budgets allow departments and agencies to shift money around within their overall allocations without Senate approval.
"I recognize the government has not managed its funds as it should have," Hill said. "There has been mismanagement in government. But I do not believe that the people of the Virgin Islands have to suffer because of that."
Provision for seeking bids on an office complex
Dowe, an avid proponent of capital projects, tied his vote to approval of his amendment calling for a government complex on St. Thomas which would put most agencies under one roof and save millions of dollars a year in rent that the government now pays. His amendment, approved without a dollar amount, states: "The government must issue a request for proposals (RFP), for a 'turn key' arrangement to build the complex in the St. Thomas/ St. John district within 180 days of passage of this act."
Sen. Ronald Russell, who voted against the bond bill on Tuesday, stuck to his often-voiced objections to the borrowing: "The government has continued to overspend. How are we going to repay this, with exorbitant payments, as we continue to overspend? It's extremely problematic."
The governor's original proposal called for an 18.75 percent increase in the gross receipts tax to generate revenue to repay the bonds. That increase was shot down in the bill's first hearing, before the Finance Committee. The proposal passed on Tuesday also lists gross receipts taxes as the revenue source for repayment, but at the current rate of 4 percent, not 4.75, as Turnbull wanted.
"We haven't even provided revenue generators to repay this debt," Russell said. "We should consider a 36-hour work week and reductions in salaries. I don't support it one bit."
Sen. Norman Jn Baptiste, not known for mincing his words, called Jones's bill "a legislative ambush." He told his colleagues: "All of you who said 'I'll never approve the borrowing,' and doing it now, you are like low-lying, gutless creatures."
Jn Baptiste came up with repeated outbursts in the long day, at one time accusing his colleagues of "back-room deals in smoke-filled rooms." He wondered if it would have made more sense "if we had written to American Express and asked for a credit card to run this government."
Crucian criticism of Carifest
Jn Baptiste, a St. Croix senator, also was infuriated about the bill's $10 million to provide credit enhancement for the financing of Carifest, the long-proposed St. Thomas theme park. "You hear all this malarkey about bei
ng concerned about St. Croix," he said, but the Carifest project "will seriously shortchange the island of St. Croix. It will guarantee that St. Croix will continue to walk in the shadow of St. Thomas."
Richards, although adamantly against the borrowing, managed to get in some licks for St. Croix in a successful amendment to Jones's measure, even though he voted against the bill itself. The amendment stipulates a 50-50 split between the two districts of appropriations:
– $5 million to the Housing Authority for infrastructure development on FHA-owned land to allow for houses to be built.
– $6 million for an urban revitalization program.
– $1 million for a farming and fishing micro-loan program.
Sen. Adlah "Foncie" Donastorg decried the bill as a vehicle for some senators to push their pet projects. And he wondered how it came into being so quickly after the defeat of the earlier version on Friday.
"You had only four votes [in favor of the borrowing] and now you have eight," Donastorg told Jones. "What transpired? What you have demonstrated to the people is that you could actually care less."
Liburd defended his approval of the measure. "Although borrowing is a bitter pill to swallow," he said, "laying off government workers will only hurt the economy." With the prospect of massive government layoffs, he said, "We must ensure that Virgin Islanders are taken care of. If we are sending a lot of people home, there will be a lot of families affected."
The bill is notable for its lack of detail. There was virtually no discussion on the nuts and bolts of the extensive spending. For instance, little mention was made of which government agencies will administer the projects, or what contracts will be put out for bid.
The spending plan
In addition to the $100 million earmarked for income-tax refunds and vendor payments, the bill provides for the following capital allocations:
– $45 million for the Economic Development Fund, administered by the Economic Development Agency, for St. Croix projects.
– $20 million to go toward the Government Employees Retirement System's unfunded liability of $713 million. GERS board member Raymond James watched this measure carefully all day, hopeful of its passage. "It's not enough, but it's a good start," he said.
– $10 million for a guarantee reserve fund to provide credit enhancement for financing of the Carifest theme park.
– $8.5 million for the planned cardiac care center on St. Croix.
– $6 million for an urban housing revitalization program.
– $5 million for the planned cancer care center on St. Thomas.
– $5 million to fund Housing Finance Authority projects.
– $5 million for a multi-purpose center on St. John.
– $2 million for renovations of the Fort Christian Museum on St. Thomas.
– $1.5 million for the reconstruction of Vendors Plaza on St. Thomas.
-$1 million to fund historical and cultural preservation in Estate Bethlehem on St. Croix.
-$1 million to support fishing and farming programs.
The bill also appropriates up to $25 million for closing costs and other bond issuance expenses.
After months of relative quiet compared to preceding Legislatures, the 25th was gathering steam Tuesday in the lack-of-decorum department. Jones normally has no hesitation about banging his gavel to bring the noise level down, but the gavel was barely used Tuesday. Senators wandered around the well chatting with colleagues as others were trying to make themselves heard. Some left the well to talk with members of Turnbull's inner circle including Nathan Simmonds, director of the Office of Fiscal and Economic Recovery Implementation, and James O'Bryan, government house spokesperson and St. Thomas-Water Island administrator.
Sen. Celestino A. White steadfastly maintained his role as court jester, frequently bringing down the house with his antics. At one point, while Berry had the floor, he loudly chastised a Legislature employee, bringing guffaws from the audience, even including a bemused Berry, and earning the a laugh from Jones, as well.
The last section of the bill calls for the Public Finance Authority, which will issue the bonds, to provide the Legislature with a monthly status report on the expenditure of the proceeds
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