Aug. 6, 2007 — Hoping to decrease the cost of living for the territory's residents, senators pressed representatives from the Lieutenant Governor's Office for solutions to rising property taxes and insurance premiums during the second round of budget hearings Monday.
Few solutions were given, however, as testifiers said that some of the concerns were out of their hands, regulated instead by outside elements such as court orders or events that have occurred on the mainland.
For example, John McDonald, director of the Division of Banking and Insurance, concurred that insurance premiums are on the rise. However, he also explained that disasters such as Hurricane Katrina have contributed to the hike, propelling many states toward self-insurance policies aimed at high-risk areas such as the Florida coastline.
"And while we may have not had anything occur down here in awhile, there have been disasters in other places,” McDonald said. “That's what's helping to drive the rates up.”
While senators agreed that few natural disasters have wracked the territory over the past few years, they also argued that premiums have continued to climb since Hurricane Hugo struck in 1989.
"Because of this, many residents can't afford to completely insure their homes," said Sen. Liston Davis. "That means, ultimately, if their homes are damaged in some kind of disaster, they will be getting less money for repairs."
Seeking a means of reducing premium rates, senators pushed for a more diverse local insurance industry. However, McDonald explained that it would be a conflict of interest for Banking and Insurance to solicit new competitors, since it is also tasked with regulating companies within the territory.
Hoping to get a better grasp on the real-property system, senators also questioned testifiers as to what residents can expect when property-tax bills are mailed out at the end of this year. The question went unanswered, however, as Tax Assessor Roy L. Martin explained that he does not yet know what the property-tax rate will be.
While the Lieutenant Governor's Office expects to pull in some $96 million in property-tax collections during fiscal year 2008, Martin said that this does not mean that the tax rate will increase.
"We've solicited an independent study to determine what the rate will be, including tax credits and possible deductions residential owners could be entitled to," he explained. "But it has not been determined whether the proposed rate will be higher than before. In fact, it's more likely to be lower as a result of the increase in property-tax values."
Once the study is completed, a recommended property-tax rate will be submitted to the Legislature for approval, Martin said.
Picking up on Martin's statements, Sen. Ronald E. Russell said residents have become increasingly concerned about the rise in values, which could result in the loss of homes or a further drop in local economic conditions.
"If you come down with this rate, and election year comes around, it's going to be about what the people want," he added. "The professional recommendation can just go right out the door."
Sticking close to the purpose of Monday's hearing, senators spent some time going through the agency's budget, including projected revenue collections and funding sources.
The Lieutenant Governor's Office, a major entity of the government, has five internal divisions and three subdivisions. In addition to the Office of the Tax Assessor and Banking and Insurance, other entities include Recorder of Deeds, Corporations and Trademarks, V.I. Passport Acceptance Facility, Business and Financial Management, Management and Information Systems and the V.I. SHIP/Medicare subdivision.
Testimony submitted by agency officials peg collections from these entities at $139.7 million during FY 2008.
In contrast, the recommended General Fund budget for the Lieutenant Governor's Office is approximately $6.5 million, which includes $4.7 million for personnel costs, $1.5 million for corresponding fringe benefits and $350,000 for remaining operating costs.
Added to the budget is:
— $500,000 from the tax revolving fund;
— $200,000 from the Recorder of Deeds revolving fund;
— $2.6 million from the Commissioner of Insurance Administration fund;
— $1.3 million from the Financial Services revolving fund;
— $500,000 from the corporation revolving fund; and
— $59,500 in federal funds.
The additional money puts the agency's total budget at about $11.7 million for FY 2008, an almost $36,000 decrease from this year's appropriation.
Present during Monday's hearing was Davis, along with Sens. Juan Figueroa-Serville, Terrence "Positive" Nelson, Russell and James Weber III.
Back Talk Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.
