Gov. John deJongh Jr. submitted his administration’s Fiscal Year 2015 operating budget to the V.I. Legislature on Monday, trimming $50 million off last year’s budget totals and proposing new bonding to bridge a nearly $160 million projected budget shortfall, according to Government House.
DeJongh announced in late May the budget would not be ready for submittal by the May 30 statutory deadline, citing budget uncertainty due in part to a lack of legislative action to address a $40 million shortfall in the current budget year. He said it would instead be submitted by June 16, which was Monday.
DeJongh emphasized the territory still faces serious financial challenges.
"I am making this submission in the absence of a clear path to fill the gaps we currently have in Fiscal Year 2014 and am hopeful this will be clearer in your next session," deJongh said Monday. "The challenges that we faced in Fiscal Year 2014 continue – the Fiscal Year 2015 Executive Budget submission proposes a financial plan to address a budgetary gap of approximately $159.6 million – but with the actions proposed we believe that the next fiscal year will start with a sturdier foundation,” he continued.
The territory is still adjusting to the "new normal" in the wake of Hovensa’s closure, he said.
"(T)here are no simple solutions to the profound challenges that confront us. We must continue to grapple with the difficult decisions that will each affect our financial viability and economic stability as a community in the coming years and that are necessary as we seek to continue to provide a high quality of life and range of opportunities for all Virgin Islanders,” deJongh said.
One major challenge in 2015, he said, will be the reduction in the Internal Revenue Matching Fund’s contribution to the General Fund if Congress does not approve the extension of the Internal Revenue Matching Fund to the cover over rate of $13.25.
While the territory expects Congress to extend it, if it does not, "we would have to repay … the additional advance" the territory got from the Department of the Interior this year, making the fiscal situation worse, he said.
The General Fund operating budget for FY15 is $709.5 million, $51.7 million less than the current FY14 appropriation level of $761.2 million, and $21.5 million less than the current fiscal year’s projected allotment level of $731 million.
Revenue projections are based on a 1.6 percent increase in net total taxes to $578.6 million and essentially flat total revenues at $594.3 million.
This budget includes assumed spending of $709.5 million, a level of appropriations that is $51.7 million below the current year’s appropriation. To pay for it all, the budget will need both spending cuts and more revenue, deJongh said.
“During the budget development process we have continued the policy of not filling General Fund supported positions unless deemed absolutely critical, reduced the appropriations to departments and agencies and eliminated programs and services that could no longer be sustained, streamlined processes whenever possible, and shifted costs to achieve more equity and efficiency. I still maintain the priorities to law enforcement, healthcare and education positions within these parameters,” deJongh told the Senate in his letter Monday.
The budget includes:
– $244.8 million in personnel services;
– $98.1 million in fringe benefits;
– $12.0 million in supplies;
– $185.7 million in other services and charges;
– $24.0 million in utilities;
– $2.4 million in capital outlays;
– and $153.5 million in miscellaneous.
The miscellaneous budget category includes proposed appropriations of $54.4 million for the Legislature and the Judiciary, $29.6 million for the University of the Virgin Islands; $22.3 million for the V.I. Waste Management Authority; $22.5 million for the Schneider Regional Medical Center; $20.1 million for the Gov. Juan F. Luis Hospital; $1.7 million for the Board of Education; $1.4 million for the V.I. Inspector General’s Office; and $1.4 million for the Supervisor and Boards of Election.
The Department of Education, by far the largest department with the largest budget, has proposed 2015 General Fund funding of $159.5 million, up slightly from $157.9 million in FY14. Total projected funding, including federal funding, is $208.3 million, down slightly from 210 million in FY14.