July 10, 2007 — Two government departments may have jumped the gun in adjusting their budgets for a partial merger not yet approved by the Legislature, senators said Tuesday.
While a partial merger between the Department of Housing, Parks and Recreation and the V.I. Housing Finance Authority (VIHFA) has not yet been finalized, both agencies have already factored the changes into their fiscal year 2008 budget appropriations, causing much concern for senators during two rounds of budget hearings.
After hearing testimony from Housing/Parks Commissioner St. Claire N. Williams, senators particularly questioned whether the two agencies would have to come back to the Legislature for more money to subsidize their operations if the proposed restructuring doesn’t get approved.
Enabling legislation included in the FY 2008 budget allows for the creation of a new Department of Sports, Parks and Recreation, and calls for the transfer to VIHFA of a majority of the territory's housing programs, along with the community development block grant program. A Committee of the Whole hearing was recently called to discuss the bill, and senators explained that a similar measure sponsored by Sen. Louis P. Hill would soon begin winding its way through the Legislature's standard committee process.
During Tuesday's hearings, however, Williams said the department's proposed $7.4 million budget already reflects the transfer, and will only cover expenses incurred by the new Department of Sports, Parks and Recreation.
"Unless legislation is enacted prior to the … approval of the 2008 fiscal-year budget, this appropriation would not include funding for four the approximately eight employees that are slated to be transferred to VIHFA," he explained. "Therefore, we would have to amend this budget to accommodate the employees under the Department of Housing, Parks and Recreation."
The department would need an extra $1.2 million to cover the rest of its expenses — such as employee salaries and costs associated with running the territory's emergency-housing program — if the Legislature fails to pass the bill within the next few months, Williams added.
If the bill gets approved, Housing/Parks would still need about six months to a year in which to fully transition the emergency-housing program over to VIHFA, he added after the meeting, saying that the department would need funds to cover expenses incurred within that period of time.
During the meeting, Williams described the state of the department's emergency-housing units as "deplorable," with many in need of complete remodeling. Though the territory is currently approaching the height of the hurricane season, only eight units are habitable in both districts and available for residents in case of an emergency, he said.
The transfer cost was also factored into the VIHFA budget, according to Executive Clifford Graham. It has jumped from $1.7 million in FY 2007 to $2.4 million for FY 2008. The increase would cover accounting for salaries associated with eight new employees from Housing/Parks and four employees from the CDBG office, Graham said.
Another provision in the budget bill allows VIHFA to subsidize its increased costs with 30 percent of all revenues garnered from the local stamp tax, but the agency has historically had problems collecting the funds from the Department of Finance, he added.
Local law already entitles VIHFA to a portion of the stamp-tax proceeds. However, Finance has not remitted the revenues since FY 2005 and currently owes the agency about $11.5 million, Graham said.
If the trend continues, VIHFA will have problems managing its new responsibilities and covering the costs of building more moderate-income housing units throughout the territory, he said.
Continued funding is particularly important as the cost of housing, land and construction costs continue to rise, Graham added. Since a majority of the local population does not qualify for federal subsidies, he said, it is "critical" that VIHFA get the money needed to cover a portion of the housing costs incurred by local residents.
Present during Tuesday's meeting were Sens. Liston Davis, Carlton "Ital" Dowe, Juan Figueroa-Serville, Louis P. Hill, Neville James, Terrence "Positive" Nelson, Ronald E. Russell, James Weber III, Celestino A. White Sr. and Alvin L. Williams.
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