Focusing on the U.S. Virgin Islands’ finances, Gov. Albert Bryan Jr. said on Monday that his team had closed on a $60 million line of credit authorized last year by the Legislature, and, despite senators’ recent concerns over a proposal to refinance the territory’s Matching Fund revenue debt, he will call them into Special Session on Dec. 29 to consider it once more.
During a news conference on Monday, Bryan said the territory had not yet drawn down on the $60 million line of credit. But as a lighter-than-usual tax year is expected come April, having extra money in the bank could help shore up operating expenses, if necessary.
Meanwhile, he continues to press for the securitization proposal to provide immediate cash for the Government Employees’ Retirement System ahead of a large annuity cut next month, which has been proposed by GERS management.
If approved and signed into law, the proposed legislation would create a semi-autonomous government-owned corporation, to which the government would sell the rights of as much as $200 million per year in federal alcohol excise tax revenues Congress remits to the territory each year. Bryan has said taking the control of this stream out of the government’s hands will create the cash infusion needed to save the Government Employees’ Retirement System and an ongoing cache of funds for future projects.
When the Senate considered the bill earlier this month, some lawmakers compared it to homeowners refinancing their homes at a lower interest rate. Others, however, did not like that analogy for the complicated government financial procedure. Some also said there was nothing in the measure specifying that the savings would go to GERS and that it would not save the system, but rather fend off insolvency for a couple more years. The Senate turned down the proposal.
Speaking Monday, Bryan said the success of Puerto Rico’s recent bond refinancing – in which he said the territory “got almost $3 billion in offerings for a $1 billion offering – pushed the government to take another chance on the proposal.
“It would almost be foolish of us not to take the opportunity to refinance the bonds at a lower interest rate,” Bryan said. “Now seeing the appetite of the Legislature, we are sending this back on Dec. 29 and calling on them to refinance the money.”
The governor added that while there is “talk” about Congress issuing money that would help, the most recent $900 billion stimulus package passed Sunday night does not contain money for state governments, and there has been no conversation about saving retirement systems on the table for at least the past six months.
“There is no one coming to save us,” Bryan said. “Instead, this refinancing proposal reduces the payment we would have to make on an annual basis, and what we do with the $15-$20 million savings a year is up to the Legislature.”