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Government Revenues Falling Short this Fiscal Year

From left, Joel Lee, Jenifer O’Neal, and Kevin McCurdy testifying at Thursday’s hearing. (Photo courtesy V.I. Legislature)

The government’s financial team, led by Jenifer O’Neal, director of the Office of Management and Budget, reported to the Senate Committee on Budget, Appropriations and Finance Thursday that revenues this fiscal year were down and that budget adjustments may be necessary in the final quarter.

O’Neal testified, “For the first seven months of the fiscal year 2024, through April 30th, revenue collections, including hotel and non-hotel taxes, totaled $537,081,652. This trend reflects a decrease of just over 4 percent compared to revenue collections for the same period in fiscal year 2023.”

She added that the team expected revenues to be $91 million less than projected revenues. However, she said no budget cuts had been considered yet. According to O’Neal, those cuts could be considered in the last quarter of the fiscal year (starting next month).

Testifiers at the hearing included Kevin McCurdy, commissioner of the Finance Department; Joel Lee, director of the Bureau of Internal Revenue; Ira Mills, tax assessor; Brent Leerdam, tax collector; Cindy Richardson, director of the Division of Personnel; and Joss Springette, chief negotiator Office of Collective Bargaining.

Most testifiers agreed that money must be pumped into local projects to increase tax revenues.

Lee said there were many construction projects in the years immediately following the 2017 hurricanes, but construction tapered off this year. However, he said some projects were coming online that would boost tax collection. The projects include tearing down and rebuilding Charlotte Amalie High School, rebuilding Arthur E. Richards School, and reconstructing the Vincent Mason Pool and Central High School.

“All major revenue categories, except real property tax, trade and excise, and gross receipts, are experiencing lower collections year over 2024 year than in fiscal year 2023, with the largest decrease occurring in corporate income tax collections at 32 percent. Property tax collections, however, have increased from the same time last year from $7.8 million to $12.6 million or 61 percent,” O’Neal said.

Sen. Donna Frett-Gregory, who chaired the committee, said this was the first time the Senate had a mid-year review of the government budget, which was mandated by recent legislation.

Two areas senators questioned the team about were employee insurance and union negotiations.

Since 2019, the government has absorbed insurance premium increases for employees and retirees, shifting the cost share from 65/35 to 73/27 government and employees. The health insurance plan covers 7,212 active government enrolled and 7,133 retirees. The Office of Collective Bargaining is negotiating with 11 bargaining units and has offered tentative dates to 80 percent of the employees with expired contracts.

Sen. Kenneth Gittens questioned when $47 million appropriated to pay retroactive pay to government employees would be paid. O’Neal said all disbursements are contingent on available funds.

Lee said the government was owed between $100 and $150 million in delinquent income tax.

Leerdam said the government was also owed more than $100 million in back property taxes. Frett-Gregory suggested that those who owe back taxes be sent a bill monthly until they catch up.

Richardson testified that over 1,000 employees are eligible now to start receiving retirement benefits.

O’Neal testified that the division has processed 682 hires and 243 separations during this fiscal year.

McCurdy said the government presently has $68 million in invoices it owes.

Sens. Donna A. Frett-Gregory, Novelle E. Francis Jr., Marvin A. Blyden, Angel L. Bolques Jr., Samuel Carriόn, Diane T. Capehart, Dwayne M. DeGraff, Ray Fonseca, Kenneth L. Gittens, Javan E. James Sr, Carla J. Joseph, and Milton E. Potter. attended the hearing.

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