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Governor Holding on to Budget to Take Hard Look at Expenses

Gov. John deJongh Jr. talks more budget cutbacks during Tuesday's press conference (Photo courtesy of Government House).Gov. John deJongh Jr. will be submitting the fiscal year 2011 budget two weeks later than expected so he and his financial team can work on some serious cutbacks to stem what’s now an anticipated $250 million shortfall.
DeJongh, who made the announcement during a press conference held at Government House Tuesday, said that "nothing is off the table" when it comes to the government’s efforts to stabilize the economy. So far, cost-cutting measures such as consolidating schools, freezing salaries for exempt government employees for a year and holding back on government rent payments are on top of the list, he said.
Each year money is transferred in and out of several government accounts, including the General Fund, to sustain the budget and other expenses. DeJongh said a moratorium on such transfers out of the General Fund are likely, and officials will be examining whether some of the other money — used in the past for a variety of projects and like — can also stay where it is. A paring-back of federal grant applications, for which the government usually has to provide a local match, was also mentioned.
And, if the Senate makes good on its call for a 10-percent cut in the salaries of top government officials, deJongh said he would sign into law any such bill that makes its way to his desk.
"All in the Senate know, and have known, that the budget process is the next stop, and for those who have been quick to proclaim that they are ready to stand up and make the tough choices that they claim we have avoided, they will soon have the chance to stop talking and instead let their actions do the talking," the governor said, adding that senators will soon be presented with some "hard choices."
But how much the budget — which is generally due to the Senate at the end of May — will be cut by is still not known at this point, he said, adding that the extra two weeks will really give officials time to "rationalize" each initiative and evaluate its effectiveness while balancing out the revenue projections, which are climbing in some categories — such as Tourism — but falling in others.
In the meantime, the Senate has bought the government a little more time with its recent approval of a borrowing bill that has cleared the way for the issuance of up to $250 million in bonds, which the government hopes to close on by the second week in June.
The bonds will be repaid in 20 years, using the projected increases in matching fund revenues expected to flow into the territory once the Captain Morgan Rum and expanded Cruzan Rum facilities on St. Croix are in full swing. The proceeds would go toward paying $150 million of the $170 million deficit expected for FY 2010, and pay $100 million down on an existing line of credit, which the government hopes to use — pending renegotiations with FirstBank and Banco Popular — to cover the anticipated $250 million shortfall projected for FY 2011.
The cost of running government for FY 2010 was about $1.3 billion, officials have said, to include the fund contributions and the payment of tax refunds, which deJongh described Tuesday as a "necessary expense." Thanks to the borrowing bill, tax refunds "have resumed" and the first wave of payments — expected to total about $95 million this year — have been put in the mail, the governor said.
Interestingly, when asked whether he’s worried about moves being made on the federal level to change how local rum revenues are used, deJongh said his concern really lies with what’s going on locally to possibly sink the program.
"I’m more concerned about local senators undercutting the program than the proposal in Congress," he responded, referring to the controversy that had clouded the approval of the government’s contract with beer, wine and spirits giant Diageo PLC.
"The mere fact that in our house there are people trying to burn it down is more of an issue for me," deJongh said.

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