Plans to sell the territory’s projected fiscal year 2007 real property tax receipts have been taken off the table, and the governor made it official Tuesday by submitting an amendment that cuts language authorizing the sale from a new borrowing bill still being considered by the Senate.
During a recent Committee of the Whole hearing, members of the governor’s financial team explained that the plan is now to float up to $250 million in new bonds to help plug the current budget deficit, which will be paid off using the increase in rum revenues — also known as matching funds — expected to come in once the Captain Morgan’s Rum and expanded Cruzan facilities are in full swing.
"Simply stated, we can borrow at a lower cost of funding utilizing the matching funds, and we prefer to have future property tax revenues available as they come in for budgetary purposes," Finance Commissioner Angel Dawson said during the meeting held earlier this month.
The government recently submitted three financing proposals meant to help cover the current $170 million budget shortfall and free up more funds for fiscal year 2011. Senators have already moved on two—one, which reprograms funds to pad the budgets of struggling departments/agencies; and the second, which allows property tax bills to go out at the 1998 levels—but have since held back on the borrowing bill, which many said they are hesitant to pass.
During this month’s Committee of the Whole hearing, many said they didn’t doubt the territory is in a financial crisis but would be more inclined to support the bill if they thought the government had a comprehensive plan in place for cutting costs.
Others have said they don’t support piling more debt "onto future generations," while a few, such as Sen. Louis P. Hill, have said they are considering voting against the bill so people can see that the government is really broke and will have no other options come June.
The bill bumps the government’s current borrowing authorization up to an overall $500 million, which will also help pay down on the $250 million line of credit the government has with the banking syndicate formed by Banco Popular and FirstBank.
The bill is scheduled for a vote during a full session scheduled for 10 a.m. Monday.
