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HomeNewsLocal newsMapp Vetoes Bill Eliminating Customs Duties

Mapp Vetoes Bill Eliminating Customs Duties

Gov. Kenneth Mapp vetoed legislation to zero out V.I. customs duties this week, saying the measure put federal pre-clearance services at V.I. ports at risk.

In a letter to Senate President Myron Jackson, Mapp said he supported the change, which was first suggested by Mapp administration officials, but that it needed "fine tuning," and some agreement by the U.S. government to fund the U.S. Homeland Security activities currently funded by those V.I. fees.

"While I understand the need for us to ensure that the territory receives its fair share of customs duties collected, which we have not received, I do not believe that now is the time to put our economy on the "chopping block," to determine whose interpretation of the statute is correct," Mapp said in his letter to Jackson.

"The Department of Homeland Security and the Division of Customs and Border Protection advises me that should the lost funds … made available through the collection of Customs Duties, are not immediately replaced by an appropriation from the U.S.Congress to cover the cost now being serviced by the (funds), CDP will be forced to reduce its services in the territory," he said, adding that "(a)t immediate risk would be the loss of pre-departure clearance of passengers destined to the U.S. mainland at our airports and inspection and clearance of international passengers such as those arriving on cruise ships."

He said he agreed with the content of the bill. but adopting it now, in its current form, may have detrimental effects on the V.I. economy.

Mapp said he will form a small task force to work on a strategy "whereby the U.S. Government pays for the costs of its operations in the territory as it is doing in every other region of the nation," but said meanwhile the territory must continue to collect the customs duties.

When the Legislature was considering the bill, senators amended the bill at the request of Mapp administration officials so that it only takes effect if the V.I. government cannot come to an agreement with U.S. Customs and terminates its current agreement with Customs, which would seem to indicate that the duties would have continued to be collected regardless, unless the administration terminated that agreement. Mapp’s veto message does not address this facet of the legislation.

The customs duties generate about $12 million per year but for more than a decade U.S. Customs and Border Protection has confiscated nearly all of it to pay for the cost of collecting them, so they do not go to the V.I. government’s available funds. It uses the funds for services that, in other jurisdictions, the federal government pays for.

For years, U.S. 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.

Former Gov. John deJongh Jr.’s administration 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, which senators did.

Mapp vetoed legislation reducing the territory’s ability to regulate home-schooling, saying it "does not align with the requirements established by the V.I. Board of Education."

He also vetoed legislation that would have appropriated 50 percent of rental income from 121 government-owned houses near the former Hovensa refinery to the government pension plan’s $3-billion-plus unfunded liability. Mapp said he wants the funds to go specifically to fund missing employer contributions of recently retired government employees who cannot get their pensions yet due to missing contributions. He also wants the remaining 50 percent of the funds – projected to be up to half a million dollars – be specifically earmarked for maintenance of the houses.

The governor also vetoed two small appropriations because the funds do not exist, and a third because the project is for next fiscal year. One of the appropriations was $300,000 for raises at the Waste Management Authority. The Legislature previously approved legislation appropriating the same funds to the General Fund to help reduce the Fiscal Year 2017 budget shortfall.

Mapp approved an array of legislation approved in the last Senate session of 2016.

He approved an increase to the monthly Emergency Services Surcharge on landline and cell phone bills to $2 per phone number, with the extra money going to help emergency services.

Mapp approved an appropriation of about $1 million to the Gov. Juan F. Luis Hospital for air conditioning work needed to help the hospital meet U.S. Centers for Medicare and Medicaid Services requirements. His letter did not mention another, $5 million appropriation passed by the Legislature in December to help with the same purpose.

CMS has threatened to termination JFL’s certification in February if deficiencies are not corrected to the satisfaction of the federal agency.

Mapp approved several zoning changes and signed legislation:

– to give the V.I. Legislature approval power over three members of the University of the Virgin Islands Research and Technology Park tax-break vehicle’s governing board,

– allowing the territory’s hospital governing boards to have members who work at the hospitals,

– reprogramming $1.36 million from a pilot program for frail seniors to the beleaguered Sea View Nursing Home on St. Thomas,

– changing guardianship rules for the incapacitated, prohibiting guardians from restricting personal contacts or communications,

– requiring credit unions in the territory be federally chartered and insured,

– updating the territory’s insurance laws to adopt the core standards and Model Laws and Regulations as established by the National Association of Insurance Commissioners, for purposes of obtaining accreditation with the NAIC,

– tightening capital requirements for insurers, tying the requirements to risk,

– making licensing requirements for insurance agents, brokers and adjusters the same as those in the states,

– asking the Human Service Department, police and other first responders in the territory to set up a "Silver Alert System" to get word out if a senior citizen with cognitive issues goes missing,

– switching land plots donated to the Enrique Romero Nieves American Legion Post 102. 

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