Gov. John deJongh Jr. called a special session of the Legislature for Wednesday, asking it to authorize bonding for work on the Paul E. Joseph Stadium in Frederiksted and to make it possible for the government to get a bank loan authorized by the Legislature recently, according to Government House.
Government House submitted bonding legislation in June to address the government’s budget shortfall and help the territory’s hospitals that included the Paul E. Joseph Stadium funding. In the wee hours of the morning, during session June 19, the V.I. Legislature tabled deJongh’s $100 million long-term bond bill, replacing it with legislation instead authorizing a very short-term bank loan of $50 million.
DeJongh’s proposal would have used long-term, low-interest debt, secured by rum cover over revenues or gross receipts tax payments, or both, to borrow about $30 million to fill the current year budget deficit. Another $30 million of borrowing would have been for working capital for the Juan F. Luis Hospital on St. Croix and Schneider Regional Medical Center on St. Thomas. Another $10 million would pay past-due hospital electric and water bills, and a final $1.5 million would pay utilities for the Bureau of Corrections.
The legislation would also have authorized $23.8 million to help with closing the territory’s landfills.
The Legislature’s bill, sponsored by seven senators, instead authorizes the government "to reissue a working capital loan in the amount of $50 million prior to the end of (Fiscal Year) 2014." It says the "notes must mature no later than 270 days after issuance," meaning the full loan must be repaid in less than one year.
It authorizes $12 million in new funding for JFL Hospital; $10.5 million to Schneider Regional Medical Center; and $12 million to pay the two hospitals’ and the Bureau of Corrections’ past-due utility bills. It also funds several small appropriations, including $125,000 for a new Department of Justice anti-gun violence program.
It makes no mention of the territory’s landfills or work on Melvin Evans Highway or Veterans Drive.
The bill was special-ordered onto the agenda and passed without debate or discussion after midnight, leaving some unanswered questions, such as how the territory would pay the loan in 270 days and why the Legislature preferred a short-term loan to long-term bond debt.
All but one senator voted in favor of the short-term working capital loan legislation. Sen. Tregenza Roach voted no. (See Related Links below)
In his letter to the Legislature, deJongh said the government is unlikely to be able to renew the bank loan without having a credible way to pay it off – such as the sort of bonding originally proposed.
"Local financial institutions are unlikely to provide short-term financing to the government without suitable provision for the eventual repayment of such financing upon maturity," deJongh said, adding that their budget projections "indicate limited resources would be available" to pay it back.
DeJongh’s legislation amends that act, authorizing either bonds, bond anticipation notes, or one or more longer-term loans up to 20 years to replace the loans the Legislature authorized, when they mature in 270 days.
While the Legislature has approved authorizations for the territorial hospitals, payments to the V.I. Water and Power Authority and the Sea View Nursing Home, those are all contingent on the government getting the funding, deJongh said.
DeJongh’s bonding proposal also authorizes funding of a design/build contract for the Paul E. Joseph Stadium project, he said. Plans include a little league field and festival village. Contractor negotiations are under way now, deJongh said.
