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TURNBULL SIGNS, CALLS SESSION TO AMEND BOND BILL

July 25, 2003 – Gov. Charles W. Turnbull has called a special session of the Legislature for Monday to amend the bonding legislation approved in the Senate's July 15 session.
The governor, who almost always sends bills down to the Senate at the 11th hour, signed and sent down the controversial, long and anxiously awaited measure many days before it was due off his desk. After his return to work on Monday from a week's stay at Roy L. Schneider Hospital, where he was being treated for a bleeding ulcer, he lost little time acting on the legislation authorizing the government to borrow another $235 million.
Because the bill includes no appropriations, the governor could not line-item veto individual provisions, as is his common practice. Therefore, the numerous capital projects the senators approved are now law, including the governor's own request for $10 million to provide credit enhancement for the financing of the Carifest theme park and funding for a cancer center on St. Thomas and a cardiac center on St. Croix. (See "Approval of bond bill ends long day's debate".)
Turnbull added amendments which he said are "necessary in order for this act to accomplish its intended purpose."
The governor minced no words. "Act No. 6587 contemplates long-term bonding to pay vendors and tax refunds. The government need the money immediately to make these payments," he told Senate President David Jones in his cover letter dated Thursday.
Turnbull also submitted a bill dissolving the V.I. Housing Authority governing board. (See separate story.)
Obviously pleased at long last to have the bonding authority in his hands, the governor nonetheless is proposing fine tuning. He added amendments to:
– Issue bond anticipation notes to provide for interim, or "bridge," financing, to be taken out with the long-term bonds authorized by the act.
– Utilize bond proceeds to fund capitalized interest. The Senate's bill pledges gross receipts tax revenues to repay the bonds. "When borrowing for capital projects, it is more advantageous to borrow amounts sufficient to pay interest during the construction period," Turnbull wrote Jones. "By using bond proceeds to pay interest on the bonds during the construction period, we will not have to use tax revenues."
In the proposed legislation that Turnbull initially submitted, he had called for an increase of 18.75 percent in the gross receipts tax, to 4.75 percent from the current 4 percent, to repay the bonds. That idea was shot down in the Finance Committee.
– Subordinate any future Federal Emergency Management Agency loans to the bonds authorized by the act.
Turnbull said when bonds were issued in 1999 and secured by gross receipts taxes, a question arose as to whether the U.S. government, as the FEMA lender, had a priority lien on the tax revenues over the bondholders. It would be beneficial to the local government, the governor said, to clarify that any future FEMA loans would be subordinate to the bonds authorized by Act. No. 6587.
Turnbull also objected to language in the act dictating the manner in which the $100 million would be disbursed to pay vendors and tax refunds. It specifies "50 percent of this amount to be used for payments in the district of St. Croix." The governor told Jones that "neither vendor payments nor tax refunds can be legislated. The amounts paid are those which are due and owing. For instance, vendor and tax refund payments for St. Croix may be more than 50 percent. On the other hand, they may be less."
Therefore, Turnbull said, he is recommending that the language be omitted and that the payments made "according to what is actually owed."
To accommodate Monday's special session of the full Senate, the Finance Committee budget hearing scheduled for Monday has been rescheduled for Aug. 19, according to an aide to Sen. Adlah "Foncie" Donastorg, committee chair.

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