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Legislature Zeroing Out Customs Duties

Legislation to reduce the territory’s customs duties to zero was sent on to the Senate floor Thursday by the Rules and Judiciary Committee. The Senate is considering the change because U.S. Customs and Border Protection confiscates nearly 100 percent of the local duties to pay for its operations in the territory.

The Rules Committee also sent forward bills changing a variety of insurance rules; loosening restrictions on who can serve on hospital boards; and changing to whom the government gives a parcel of land in Anna’s Hope.

Customs duties in the USVI generate around $12 million per year. For years, Customs and Border Protection collected the duties, taking a portion for its costs. But after the creation of the Department of Homeland Security in 2003, it began keeping nearly all the funds.

Introducing the measure to the Rules and Judiciary Committee on Thursday, Sen. Novelle Francis said that in that time since 2003, Customs had collected revenues of $117 million but only remitted $10 million to the territory.

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Former Gov. John deJongh Jr.’s administration negotiated and signed a memorandum of agreement in December 2014 that aimed to resolve the problem. Customs and Border Protection agreed to fund air passenger pre-departure clearance with federal funds and to otherwise limit reimbursements from local customs duties to only the specific costs of collecting those duties. But since then, Customs has only remitted $1 million and apparently plans to remit less in the future.

Finance Commissioner Valdamier Collens proposed eliminating the duties back in 2015, but said more recently that a "federal legislative solution that returns Virgin Islands customs duty revenue to the Virgin Islands would avoid the necessity of rescinding the customs duties," and asked that the bill be amended to take effect only if and after the V.I. government exits the MOU.

Francis said that negotiations were still pending but there had not been any movement to date.

In a written statement, St. Croix Chamber of Commerce President Kimberly McCollum testified against the proposed change to V.I. Customs duties, arguing that members were concerned about losing the local custom clearance services federal officials perform now.

The only senator to oppose the bill was Sen. Janette Millin Young, who cited the same concerns McCollum raised. Millin Young said she was concerned the federal government might cease carrying out some of its operations at the territory’s airports, affecting tourism.

Senate President Neville James said the territory has been taken advantage of at times. "Promises have been made over the years and the promises have not been kept," James said.

Voting to send the bill on to the full Senate were Francis, James, Sens. Jean Forde, Justin Harrigan and Kenneth Gittens. Millin Young voted no. Sen. Nereida "Nellie" Rivera-O’Reilly was absent.

The other bills sent on Thursday had no opposition.

One measure will allow nurses and physicians employed by the hospital to serve on the territory’s hospital boards. The change affects the St. Croix, St. Thomas and joint hospital boards.

During earlier committee hearings, Gov. Juan F. Luis Hospital board member Troy de Chabert Schuster said it has been difficult to find physicians and nurses who are not employed directly or indirectly by the hospital to serve. Currently there are only five board members and one member’s term expires in January 2017, at which point the board will no longer have a quorum, he said.

Government land on St. Croix that formerly held a detention center and that the Legislature gave to the American Legion for a clubhouse in 2014 will instead be deeded to the Department of Health for a future mental health facility, if another bill sent on to the Senate floor Thursday becomes law.

In 2014, the V.I. Legislature took time out from passing budget bills filled with severe budget cuts to give away 10 acres of government land on St. Croix to American Legion Post 102 and let it use a government building in Peter’s Rest rent-free indefinitely.

That bill sponsored by former Sen. Alicia "Chucky" Hansen conveyed a 9.9 acre parcel at Plot No. 184 Estate Anna’s Hope to the Enrique Romero Nieves American Legion Post 102 for a new clubhouse. It was introduced during session and approved without testimony or discussion, bypassing the committee process. Earlier that year it also appropriated $300,000 of taxpayer money as a gift to that veterans’ fraternity to help it build the private clubhouse in question.

Senators were very supportive of the measure in 2014, using the word "veteran" often. The bill approved Friday switches the parcel of land, instead giving the American Legion 3.37 acres at Plot No. 29 Estate Anna’s Hope.

Officials from the Departments of Health, Justice, and Property and Procurement testified in support when the bill was first heard in committee Dec. 2.

"Having a facility on St. Croix will allow us to provide family support services, which will be beneficial to the overall success of the patient’s implemented treatment plan," Taetia Phillips-Dorsett, assistant commissioner of Health, said Dec. 2. The department would need help from other agencies and funding for renovation, but keeping patients on-island instead of paying to care for them off-island would save about $4 million per year, she said.

On Thursday, several senators said the original legislation to give the land to the American Legion should have been vetted more thoroughly and that the American Legion did not need the old detention facility or nearly 10 acres of land.

The committee also approved a measure sponsored by Harrigan and Sen. Kurt Vialet, to create a "Silver Alert" system to alert local authorities when a senior citizen with Alzheimer’s disease or another cognitive disability goes missing. An amendment seeks to address privacy concerns raised by AARP and clarify responsibility for implementing the alert is to be offered when the bill is considered by the full Senate.

A portion of rental income from 121 former Hovensa houses will go toward the roughly $3.1 billion GERS unfunded liability, if a bill sponsored by Sen. Kenneth Gittens is enacted into law.

Gittens said the measure its to "help us with the unfunded liability" and, while it is not enough to fix it, "every little bit helps and we need to start addressing this."

The government owns 121 houses, acquired through the 2014 purchase of the former Hovensa refinery by Limetree Bay. During earlier hearings, Budget Director Nellon Bowry said the government is renting 80 of the houses back to Limetree Bay for about $1.15 million per year.

An amendment to allow some of the money to be used to maintain the houses may be introduced during session, Gittens said.

Senators spoke of the need to shore up the GERS.

"If we do multiple numbers of these small measures I think it will help the GERS unfunded mandate. … We have got to do everything that we can to support them," Forde said. He said the next Legislature will enact more such measures.

The Legislature has pushed several small measures to help GERS while at the same time not implementing measures it already approved and not taking other measures that might not be popular. The Gov. Kenneth Mapp administration and Legislature have allowed $7 million in rum revenues to go to the General Fund, ignoring a legislative mandate from 2011. In 2010 the Legislature enacted a measure giving more than a million dollars per year as cash gifts to retirees, that involves roughly the same dollar amount as the measure approved Thursday, prior to amendments to take care of maintenance of the units. The Legislature has not shown any interest in eliminating the cash gifts as a way of reducing the unfunded liability.

The Rules Committee held a bill to increase the emergency service surcharge on telephone bills from the current $1 per month up to $2. It also sent on several measures affecting financial services in the territory that will be discussed separately in the Source on Friday.

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