Jan. 20, 2004 – The 25th Legislature and the administration met Tuesday in full battle mode for the first of what will likely be a series of skirmishes over the fiscal year 2003-into-2004 budget.
The forum was a Senate Finance Committee meeting, which the entire Senate membership attended at one time or another. So did the top guns of the governor's financial team except for his chief of staff, Juel Molloy, who was ill, and Lawrence Soule, vice president of Banc of America.
It was the first meeting of the two branches of government since Gov. Charles W. Turnbull vetoed the Legislature's $627 million FY 2004 budget last month, and it was a long and confusing day.
The governor said in vetoing the budget that, as a result, the FY 2003 budget by law would remain in place through the FY 2004 year.
Nathan Simmonds, director of the governor's Office of Fiscal and Economic Recovery Implementation and head of the administration's financial team, was on the hot seat all day, along with Ira Mills, director of the Office of Management and Budget, and Finance Commissioner Bernice Turnbull.
The fiscal officers maintained that the government will operate for the remainder of fiscal year 2004 — through next Sept. 30 — on a $580 million net budget, excluding fund transfers, income tax refunds and bond debt service. Again and again they repeated the governor's reasons for vetoing the Legislature's budget.
Sen. Adlah "Foncie" Donastorg, the committee chair, wanted to know what Simmonds meant on a TV2 program when he called the Senate's budget "out of whack."
"It could not be sustained without future financial disaster," Simmonds said. "There were no checks and balances."
The fiscal officers stated again and again that the expenditures of the Senate's budget exceeded revenue projections, and that the revenue streams the Senate had identified were non-recurring.
Referring to the many meetings the administration had held with the Senate majority — on one occasion delaying a Senate session — Sen. Norman Jn Baptiste addressed Simmonds: "After all those meetings, where did the process go wrong?"
"You'll have to ask your colleagues," Simmonds replied.
Bernice Turnbull said the administration so far has not needed to tap into a $30 million letter of credit backed by the Insurance Guaranty Fund, as revenues have been sufficient to cover expenditures.
She also said that the administration is projecting $50 million in property tax collections this fiscal year. And, she said, the Finance Department will publish a list of delinquent taxpayers three or more years in arrears, and "more aggressive means will be employed to collect the taxes with the use of a collection agency."
The senators were taken aback at Mills' reduction of the Senate's own budget of $16 million and challenged his authority to do that. Mills said the V.I. Code grants him that authority, a claim Donastorg and Sen. Louis Hill disputed.
After a lunch break, Hill read aloud a section of the code which he said precludes the OMB director from touching the budgets of co-equal agencies — the Legislature and Territorial Court. "You do not have the authority to dictate [our budgets]," he told Mills. "I submit that we take this to court and have a judge decide."
Senators questioned the administration officials about their statements that the budget has gotten in trouble in the past because departments and agencies have overspent their appropriations. Simmonds said that the law provides for fines and imprisonment as the consequences for overspending.
"Who is responsible when they violate their allotments?" Hill asked. "If all the agencies overspend, we will never have control."
Hill asked Mills for a list of FY 2003 allotments to all government agencies, how much they actually spent, and which ones spent above their allotted levels. He also asked for a list of employees who have left government service so far in FY2004, which began last Oct. 1, and how many have been hired to date.
Hill asked Attorney General Iver Stridiron what he has done about department heads who violate spending appropriations, adding that he thought they should be prosecuted.
"That's your opinion," Stridiron replied.
"It's not my opinion; it's the law," Hill countered.
Senators asked Kenneth Mapp, director of finance and administration of the Public Finance Authority, what had become of a $65 million bond appropriation for St. Croix the Legislature approved last summer. In a lengthy response, Mapp said the appropriation lacked a specific purpose. It was for "the St. Croix economy," he said, "but that is not enough. You can't go to the bond market and ask for $65 million and say you'll come back later to specify what it is for. You must be specific."
However, Mapp added, "There is $80 million coming out of the bonds we just sold Dec. 17 destined for specific St. Croix projects."
"Has any of that been expended?" Donastorg asked.
Keith Richards, the governor's capital projects coordinator, said the Christiansted Boardwalk, the Frederiksted Danish School renovation and islandwide paving are some of the projects covered by the $80 million that are in contract procedures and are rapidly being completed.
Donastorg quizzed Simmonds about his reaction to a Senate Post-Audit analysis highly critical of the FY 2004 budget proposed by the administration. Simmonds said he couldn't answer the questions raised by the analysis because he had just received it. The analysis was not supplied to other senators and the news media until Tuesday, although a print newspaper carried a story about the matter in its Tuesday issue. Donastorg said he didn't know how the paper had obtained the document, which he said "is not complete" and for that reason had not been circulated earlier.
As the Finance Committee meeting concluded around 7:30 p.m., Donastorg told the administration officials that they would not need to return for a continuation of the hearing scheduled for 1 p.m. Friday, as the committee had gathered enough information.
Donastorg declined to comment on whether the Senate will seek to override the governor's veto of its FY 2004 budget, which it could do by a two-thirds majority, or 10 votes. "Let's not start rumors that the Legislature plans to pass another budget before it's a fact," he said toward the end of the meeting.
Administrative officials attending the meeting in addition to Mapp, Mills, Richards, Simmonds, Stridiron and Bernice Turnbull were Louis Willis, Internal Revenue Bureau director; Tax Assessor Roy Martin; Kevin Rodriquez, acting director, Personnel Division; Karen Andrews; chief negotiator, Office of Collective Bargaining; Lauritz Mills, Economic Research Bureau director; and Kent Bernier, assistant to the governor for economic affairs.
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