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REVENUE MEASURES SURVIVE GOVERNOR'S VETOES

Dec. 24, 2003 – Although Gov. Charles W. Turnbull axed the great bulk of the Legislature's $627 million budget for fiscal year 2004, he did retain a few proposals from the Omnibus Bill, the only document that he line-item vetoed.
Most importantly, he approved a $30 million letter of credit to be backed by the Insurance Guaranty Fund. That proposal and a $40 million tax anticipation note backed by property taxes, which he roundly rejected, formed the backbone of the Legislature's fiscal structure.
Turnbull had been critical of using the Insurance Guaranty Fund in the past. "I didn't want to do it," he said at the press conference he held on Tuesday to announce his veto of the budget. But he said it was discussed in negotiations with the Legislature. One of the very few measures to have survived in the extensive talks between the Legislature and the administration, it will leave the government with an amount of fiscal flexibility.
Another measure passed by the Senate that the governor kept intact is a petroleum tax increase projected to generate about $8 million a year in new revenue, depending on the world price of oil. It will be between $3 and $6 per barrel of crude oil. The tax has been sharply criticized by Hovensa and gas wholesalers. (See "'No problem' with gas tax not so, Hovensa says".)
The governor also left in place a $2-per-day surcharge on car rentals, a measure he had submitted to the Legislature as $2.50 per day but which was amended. Earlier in the year, the Senate rejected his proposal to impose a surcharge of $5 a day as part of his fiscal recovery package.
He also approved a graduated stamp tax on real estate sales, something he also had proposed both in his fiscal recovery package, where it was rejected, and again in his FY 2004 budget.
Turnbull said the government is now "locked into" the $567.7 million FY 2003 budget continuing for FY 2004. This actually will provide some departments and agencies greater funding than they would have gotten under either the governor's proposed 2004 budget or the one passed by the Legislature. Turnbull's FY 2004 budget was $557.6 — $10 million less than FY 2003, he made a point of noting when he submitted it the end of August.
The University of the Virgin Islands, which stood to get $25.3 million in the budget passed by the Senate, will revert to the FY 2003 figure of $25.7 million. The Justice Department will also come out ahead, with the FY 2003 appropriation of $27 million instead of the Senate's $25.7 million.
One budget item cut by the governor is sure to rankle unionized employees: the $12 miscellaneous appropriation the Senate approved for previously negotiated raises for union employees, including firefighters and teachers. Turnbull said he vetoed the raises with reluctance, but "we don't have the money for all the things that we want money for."
Daryl George, president of the St. Thomas-St. John local of the International Association of Fire Fighters, put the governor on notice Monday that he would find that the fight "has just begun" if he vetoed the appropriation for the firemen. And he cited a pledge of support from the IAFF headquarters in Washington, D.C., to "do what is necessary to support them in their struggle for better wages." (See "Firefighters vow to fight for raises".)
Turnbull rejected the Legislature's plan to lower Economic Development Authority tax benefits to 85 percent from the current 90 percent. Doing so would "convey to businesses interested in investing in the territory that we are not stable with our economic policies," he said.
"Many applicants for economic development benefits have applied for those benefits in anticipation of receiving a 90 percent exemption on corporate income taxes," he said. "To change midstream gives the wrong impression to applicants." He said if such an amendment is to be considered, there should be "sufficient lead time" for the EDA to advise prospective applicants.
Included among the governor's myriad of line-item vetoes to the Omnibus Bill is his rejection of the creation of a Bureau of Information Technology, an agency intended to bring the territory into compatibility in the age of cyberspace and to increase overall government efficiency. The extremely detailed, comprehensive Technology Enterprise Act of 2003 takes up 24 pages of the Omnibus Bill. The governor dismissed it in two sentences which also cover a section seeking to consolidate certain government agencies.
"Sections 49 and 51 are vetoed because they violate the separation of powers doctrine," he said in his cover letter to Senate President David Jones. "While we are in agreement with certain aspects of the bill, it needs further study to ensure that consolidation works properly."
He also vetoed a section appropriating $3 million for road repairs, saying he did so in accordance with the veto of the General Fund budget.
Speaking after the governor's news conference on Tuesday, Finance Commissioner Bernice Turnbull said she was fully behind the governor's actions. "We can't spend what we don't have," she said. "It was a lot of work going over this; I am totally in support of the governor."
The governor said on Tuesday that he would be sending the Legislature supplemental amendments to the FY 2003 budget in the coming months. Last summer, during Senate Finance Committee budget hearings held before Turnbull submitted his proposed budget, almost all government department and agency heads complained bitterly of being underfunded for FY 2003.

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