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HomeNewsArchivesSenate Rejects Limits on Spending Power

Senate Rejects Limits on Spending Power

The Senate Committee on Rules and Judiciary rejected a bill that would have reigned in the Senate’s use of funds for property procurement at a contentious hearing on Thursday. The bill also would have codified a process for awarding bonuses to legislative employees.

The hearing turned heated as several senators expressed outrage at a story that appeared in the Daily News on Thursday, which construed a portion of the bill as a “bonus bonanza” that would give Senate President Ronald Russell the power to award bonuses retroactively to legislative employees for work dating back to 2000.

“It is an absolute gross and criminal misrepresentation of what this bill does,” said Sen. Louis Patrick Hill, who sponsored the bill. “It is so obvious that the entire intent of the Daily News is to malign Sen. Russell in the eyes of the public.”

The story in question ran alongside another piece detailing the paper’s continued struggle with Russell over the release of legislative records pertaining to travel expenses and cash advances paid to senators.

The Daily News said it has been requesting the records since December of last year and still has not received them, and that the newspaper was now considering legal action to resolve the matter.

Hill said the true intention of the bill was to address concerns raised by the inspector general in his 2011 audit, which found $6.9 million of “questionable” spending by the Senate.

Two the chief areas of concern stated in the audit were the award of contracts without a competitive bidding process and the payment of bonuses to legislative employees without written justification for their size or why they were warranted.

The bill would have required the Senate to conduct a competitive bidding process for contracts in excess of $75,000.

It also would have given the Senate president the power to “determine the nature and extent” of bonuses, which essentially amounts to the ability to set a maximum limit on the amount senators could award as a bonus to each of their employees.

The confusion in the Daily News story seems to have arisen from the final sentence of the bill, which states that the section concerning bonuses “is effective retroactively to January 1, 2000.”

Hill called on legislative legal counsel Yvonne Tharpe to explain the meaning of the sentence. Tharpe said she inserted the language into the bill to make it “a curative statute.”

“The intent was to address a flaw that was pointed out to the legislature that there was no law governing or giving any standards for the granting of awards,” she said.

By making the law retroactive, it would extend continuity and legitimacy to the bonuses previously awarded and that there was no intention of awarding bonuses retroactively.

Sen. Usie R. Richards objected to Tharpe’s use of the word “flaw,” saying there was nothing wrong with the way bonuses were awarded before the audit.

Richards said that the process governing bonuses used while he was president of the 27th legislature was the same as the one being proposed in the bill, and that the rule did not need to be codified into law because the power to award bonuses was implied by the Organic Act.

Sen. Celestino White took this argument further, saying he opposed the entirety of the bill. He said that the legislature had not broken any law through its handling of bonuses and contracts, and that it was not obligated to act on the suggestions made in the audit.

White said he would not vote for the bill because to do so would imply that the previous legislatures had done something wrong.

Sen. Samuel Sanes also opposed the section of the bill governing bonuses, but for the opposite reason. He said bill did not go far enough and that it left the bonus process ambiguous and arbitrary.

Sanes said he would like to see a bill that would tie set payments to prescribed levels of performance so senators could easily justify the size of the bonuses they award. Sen. Carlton Dowe later endorsed this idea as well.

In the end, the bill did not receive a single vote of support.

Sens. Dowe, Alicia Hansen, Russell, Sanes, White, Richards and Patrick Simeon Sprauve voted to table the bill indefinitely.

The committee also voted down a measure that would limit the amount of real property a person or company could purchase at judiciary foreclosure auctions. The bill would limit purchasers to four small parcels or one parcel of 100 acres or more per calendar year.

Sprauve said he wrote the bill in order to prevent individuals or companies, especially those from off-island, from amassing large land holdings through foreclosure sales.

Attorney General Vincent Frazier and Claude Walker, legal counsel for the Bank of Nova Scotia, both testified in opposition to the bill, saying they feared it could violate the Commerce Clause of the Constitution as well as the 14th Amendment, which guarantees equal protection under the law for all citizens.

Walker further argued that the bill would hurt the territory’s real estate market by further complicating the foreclosure sale process. He said local landowners are already protected from predatory practices by the redemption law, which gives them six months after the loss of their land at auction to come up with the money to pay the judgment against them and reclaim their property.

He also argued that it was not the place of the government to tell citizens what they could or could not buy with their money.

“As an American, instinctively we recoil at things that are rationed,” he said. “You are limited by your dreams and your skills and you should be free to say ‘I want to be the West Indian Donald Trump. I want to own 100 houses.’ That’s fine, provided you do so legally and you play by the rules,” Walker said.

Dowe, Sanes, White and Richards voted to table the bill, with Sprauve voting in support of the measure. Hansen and Russell were absent for the vote.

The committee voted in favor of a measure that would allow private attorneys to sue on behalf of the Virgin Islands government in fraud cases and receive a share of the recovered sum, sending it to the floor for further consideration.

Frazier categorized the measure as a whistle blower law that would encourage individuals with knowledge of fraud being committed against the government to come forward. By allowing private attorneys to sue on the government’s behalf, it would also free the attorney general’s office from the burden of prosecuting every fraud case it was presented.

Frazier said this was a common law throughout the country and that it was an effective tool for fighting fraud.

The measure passed with little discussion. Dowe, Sanes, Sprauve, White, Richards and Russell voted in favor of the bill. Hansen was absent for the vote.

The committee ended the hearing by taking testimony from the Government Employees Retirement System on amendments to its governing legislation that would allow it to raise rates paid by employees and employers and to put money in a broader array of investments.

Austin Nibbs, GERS administrator, said the changes were absolutely necessary for the system to survive. He said GERS had been paying out more money than it was taking in for several years, and that this year they were on track to lose $124 million.

If nothing is done, he said, GERS would go bankrupt in 2022.

Amongst the proposed changes, GERS is seeking:
-to increase payments by regular employees to 9.5 percent of their salary in FY 2014, 10.5 percent in FY15 and 11.5 percent in FY16. Thereafter rates would be established by the board of trustees (currently rates are set by law and most changes require action by the Senate);
-to increase payments by employees in hazardous jobs to 11.625 percent of their salary in FY14, 12.625 percent in FY15 and 13.625 percent in FY16. Thereafter rates would be established by the board of trustees;
-to increase employer contributions to 20.5 percent of an employee’s compensation in FY14, 23.5 percent in FY15, 26.5 percent in FY16, 29.5 percent in FY17, 32.5 percent in FY18, 35.5 percent in FY19 and 38.5 percent in FY20. Thereafter the rates would be established by the board of trustees;
-to lower the minimum rating required for the system to invest in various securities from BBB to B;
-and to allow the system to invest up to 15 percent of the portfolio in below investment grade securities.

Sen. Hill spoke in favor of the measure, but cautioned GERS that they may be asking for too much.

“The suggestions you have in this amendment are the type of changes that the public is not going to like,” he said. “The changes you need and the system requires for its survival may have very little chance of passing in the Senate.”

No votes were taken on the measure at the hearing. Discussion on the matter will continue at the committee’s hearing on Oct. 22 at 2 p.m.

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