Aug. 12, 2003 – Ira Mills, director of the Office of Management and Budget, presented senators with a new figure Monday on the government's looming deficit for this fiscal year. While testifying before the Finance Committee on the OMB's budget needs for FY 2004, he said the projected shortfall now is not $152 million, but $20 million.
However, Mills made it clear on Tuesday that were it not for borrowing, the deficit would still be well in excess of $100 million.
Administration financial officials' most recent public pronouncement on their number crunching, in May shortly after District Judge Thomas K. Moore ordered a moratorium on collecting property taxes until the government complies with his orders to reform the assessment process, was of the $152 million figure.
That's the number the governor and his aides cited in making their pitch for Senate approval, won last month, to float another $235 million in bonded indebtedness. Of that amount, $100 million — to be borrowed in the short term and paid back with bond issue proceeds — is earmarked to pay vendors and make income-tax refunds.
While the $100 million reduces the 2003 deficit, as Mills pointed out, it increases the territory's debt by the same amount, plus interest.
Tax collections apparently played a part in reducing the projected deficit, too. Louis M. Willis, director of the Internal Revenue Bureau, told the committee on Monday that revenue collections have been better this fiscal year than had originally been projected.
Mills also credited austerity measures, including a 10 percent across the board budget reduction imposed by the governor earlier this year, as playing a role in the deficit reduction.
During Monday's session, the committee heard FY 2004 budget presentations from the Internal Revenue Bureau, the Licensing and Consumer and Affairs Department and the Capital Improvement Projects division of the Office of the Governor, as well as the OMB.
Office of Management and Budget
The OMB budget request is for $81.2 million for FY 2004, an increase of $20 million over FY 2003.
Sen. Luther Renee objected to the removal in the budget's miscellaneous section of formerly funded educational projects such as the Language Arts Showcase and Math Counts, which were budgeted for $10,000 each in FY 2003. "We are sending the wrong message to young people," he said.
Mills said that OMB will not have the money to fund a number of items requested in FY 2003, but he added that funding for many of them may be provided under other sections of the budget.
In addition to Math Counts and the Language Arts Showcase, he said, OMB is not requesting money in FY 2004 for the following FY 2003 appropriations:
– The Science Quiz Bowl — $10,000.
– The Geography Bee — $10,000.
– School bus transportation for the territory's four senior high schools — Central, Charlotte Amalie, Education Complex and Ivanna Eudora Kean — and its five junior high schools — Addelita Cancryn, Arthur A. Richards, Bertha C. Boschulte Middle School, Elena Christian and John H. Woodson — $25,000 each
– School bus transportation insurance — $50,000.
– St. Croix No Tolerance Basketball League — $20,000.
– Education Department for high schools' athletic travel — $250,000.
– Housing Parks and Recreation Department for junior boxing — $50,000.
– Housing Parks and Recreation for the Frederiksted Youth Center rent and equipment — $80,000.
KidsCope program — $75,000.
Internal Revenue Bureau
"This agency needs a lump-sum budget from this Finance Committee," Louis Willis, IRB director, said. "I am begging you."
The bureau requested $9.1 million for FY 2004 from the General Fund, which is the same as for FY 2003. However, it's seeking an increase of 5.21 percent in supplemental funding.
Willis argued that with the IRB, it's impossible to know for sure what problems will occur, and a lump-sum budget will give the agency the flexibility necessary to meet its goals.
There was about $115 million in outstanding taxes spanning a 10-year period, Willis said in response to questions from Sen. Adlah "Foncie" Donastorg, the committee chair. The bureau has collected $23 million in delinquencies for FY 2003, he said.
And Willis said, the IRB has collected $84.6 million in gross receipts taxes so far this fiscal year and is expecting the total to reach $99 million by Sept. 30.
For FY 2004, Willis requested $140,000 to buy new computers and to upgrade the network to Windows 2003. This is $80,000 more than a similar request for FY 2003.
He put the cost of repairing and maintaining the IRB computer equipment, scanners, buildings, vehicles, air conditioners, copiers and postage machines at $215,152 for FY 2004, an increase of $15,152 from FY 2003.
"I think it is important to have updated equipment to collect revenue," Renee said in support of the budget.
One cost-cutting measure that Willis projected for the future of the IRB is moving its offices to government property. "We are paying too much in rent," he said.
He requested $562,236 for land and building rental in FY 2004, which is $25,536 more than in FY 2003.
"The amount we currently pay in rent and insurance is enough to make monthly installments on a mortgage of a government-owned facility," Willis said. "We plan to make it a priority to pursue this goal."
Licensing and Consumer Affairs
"Since 1999 our agency has complied with all mandatory budget cuts, and as a result operate with 35 percent fewer employees," Licensing and Consumer Affairs Commissioner Andrew Rutnik told the committee. "We reorganized, cross-trained, utilized technology and worked harder."
The DLCA requested $2.6 million For FY 2004 — 4.4 percent more than in FY 2003.
Rutnik touted the efficiency of his department's operation but said he expects to accomplish more: "Over the years, licensing has become the final hurdle for a business license," he said, because of a six-agency approval system which results in a frustrating process that can take weeks.
To eliminate that problem, Rutnik said, he plans to institute an online seven-day protocol system that will allow other agencies seven days to respond with approval or disapproval via e-mail to DLCA.
"I am glad to hear that you are moving forward electronically," Sen. Louis Hill said, "because I think that may be the answer to resolving those issues."
Capital Improvement Projects
Sens. Hill, Renee, Norman Jn Baptiste and Almando "Rocky" Liburd questioned Keith Richards, assistant to Turnbull and director of the governor's Capital Improvement Projects, on why capital projects are progressing so slowly.
Hill said he knows the territory needs a capital improvement plan that has a better system and is more effective. "There should be a capital improvement budget for all agencies," he said.
Richards listed many setbacks, including these:
– Delay in the renovation of the Health Department's Charles Harwood Complex in Christiansted because a contractor was not in good standing with the Lieutenant Governor's Office.
– Delays in construction of the Christiansted Bypass, which was started in 1994, where the holdup was trying to acquire private property.
– Delays in the Mon Bijou bridge project, for which there were problems with the federal funding.
But in spite of roadblocks, the government "has a very vibrant Capital Projects Program that continues to play a major role in the economy of the Virgin Islands," Richards said. "Overall, we can anticipate that there will be between $200 [million] and $300 million worth of projects in progress territorywide for FY 2004."
Sen. Ronald Russell warned Richards about giving the people unreasonable expectations. "The community is in dire need," he said. "You give people a sense of dissolution because
you keep promising things" and nothing happens.
Committee members present at Monday's session were Sens. Roosevelt David, Donastorg, Hill, Jn Baptiste, Shawn-Michael Malone, Renee and Russell. Also present were Sens. Carlton Dowe, Liburd and Usie Richards, who are not members of the committee.
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