Government Vows in Court to Erase GERS Debt

St. Thomas District Courthouse
St. Thomas District Courthouse

Officials representing the Government of the Virgin Islands told a federal judge the government should have its debt to the Government Employees Retirement System paid up by July.

Grace Fahie-Lindo, payroll director for the Department of Finance, made the statement Wednesday at an evidentiary hearing to determine if the debt threatened to scuttle the pension system.

But the declarations from government officials fell on skeptical ears of the judge presiding over the hearing.

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As of March, the central government owed $35.8 million in employer pension contributions to the system. Payroll Director Grace Fahie-Lindo said since then the debt had been reduced to $8.1 million.

Lindo told the court the massive arrearage was a “hiccup” in a usually efficient system and that it was the intent of Finance Commissioner Valdamir Collens to get employer contributions to GERS current. But District Court Judge Curtis Gomez sought assurances that the government would not fall behind again.

“There is no doubt that the arrearage has gone from $35 million to $8 million in a short period of time. What can I hold onto, that would give me comfort, that this is not a short term priority?” Gomez said.

In a post hearing attempt to appease the judge, the government filed a copy of a May 31 letter from Gov. Kenneth Mapp. The letter, written to Senate President Myron Jackson, lays out a proposal to increase employee contributions to the system and impose graduated payroll deductions for high salary government workers.

“GERS faces a crisis that has been decades in the making and is of wide-spread community concern,” the governor said in the letter. “Unless we act and make tough decisions, the GERS will be insolvent by 2024, if not sooner. This cannot happen, and, as governor I will not sit back and allow it to happen.”

It was a message emphasized by Assistant Attorney General Carol Thomas-Jacobs as she summarized the government’s position. The lawyer from Justice told the court the $35.6 million arrearage was the result of a liquidity problem between 2016 and 2017.

The judge was not persuaded. Up until the time the payments began flowing and at previous hearings, Justice came into court saying the government was unable to pay because of liquidity problems.

He also pointed out that liquidity problems have plagued the retirement system on and off since at least 1989.

“Was the GERS a priority prior to our hearing when the liquidity issues were to the tune of approximately $32 million?” Gomez asked. “My concern is this: In an environment where there are many competing interests, what comfort can you give to the court that this thing will not again be pushed back to the back burner?”

Gomez asked Lindo who in government could state for the record that past problems would not be repeated. The payroll director gave four names; the Finance commissioner and assistant commissioner, the director and assistant director of the V.I. Treasury.

When the judge asked if Lindo could see any of the people she named sitting in the courtroom, she said no.

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