The V.I. Territorial Committee will be meeting from 10 a.m. to noon on Saturday, June 14. The meeting will take place at the University of Virgin Islands video conferencing facilities, on St. Croix in room 713, on St. Thomas in room T101.
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V.I. TERRITORIAL COMMITTEE MEETING
The V.I. Territorial Committee will be meeting from 10 a.m. to noon on Saturday, June 14. The meeting will take place at the University of Virgin Islands video conferencing facilities, on St. Croix in room 713, on St. Thomas in room T101.
Publisher's note : Like the St. Thomas Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
Publisher's note : Like the St. Thomas Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
TURNBULL DEFENDS HIS FISCAL PLAN, RAPS SENATE
June 6, 2003 – Gov. Charles W. Turnbull struck back at the Senate Friday afternoon in a lively press conference at Government House on St. Thomas where he made clear his displeasure with the first branch of government.
The lawmakers got under the governor's skin Thursday in more ways than one.
First, the Senate Finance Committee sent his financial team packing early in the afternoon, refusing to hear more testimony until he answered a letter the full Senate had sent him on Monday demanding that he rescind hefty raises given last year to exempt and unclassified employees.
Thursday evening, the committee eviscerated the governor's package to address the territory's fiscal deficit, killing more than $80 million of his $95 million in proposals.
Having accomplished that, the committee then voted not to send the governor's $235 million bond issue bill to the floor for Monday's full Senate session, but to hold it in committee for further study. Senate President David Jones said Thursday the body would not authorize the bond issue until Turnbull answered their letter.
The governor did on Friday.
He wrote Jones, in part, that while appreciating the senators' concerns, "I, however, must take umbrage at the Legislature attempting to give the executive branch an ultimatum complete with date and hour." Nowhere in the Organic Act, Turnbull said, is the Legislature given that authority.
Turnbull said the Legislature's call for him to roll back the raises he approved last year by executive order "falls far short of the mark." He said it would result in savings of no more than $2.2 million through Sept. 30, the end of the 2003 fiscal year.
Nonetheless, Turnbull said, he would take the letter "under advisement." He stopped short, in responding to media questions later, of saying when and how he would respond.
The governor offered some ideas of his own on cost-cutting measures the Legislature "may consider." Among them:
"- A part-time Legislature, which he said is the case with most states and other jurisdictions and municipalities.
– Cutting the Legislature's budget by an additional 15 percent beyond the 14 percent reduction already instituted.
– A mirroring of the executive branch initiative to control the abuse of government vehicles, cellular phones and unnecessary travel.
– Curtailment of the Legislature's practice of over-appropriating funds — via amendments attached to so-called "Christmas tree" bills — and "the subsequent override of the vetoes of these bills."
Legislature's call: If not taxes, then what?
With the air all but taken out of his tax plans, leaving an $80 million dollar or so hole, Turnbull said the Senate would have to find other ways to shore up the deficit, if not by taxes. "It is now the duty" of the Legislature, he said, "to formulate the legislative plan so that as a territorial government of checks and balances, we can move ahead and serve the people."
In his letter, he told Jones: "If the Legislature does not act promptly, massive layoffs of workers, payless paydays and the curtailment of vital services and other serious consequences lie ahead."
In answer to questions from reporters about his relationship with the Legislature, the governor stressed that the two branches of government must work together to solve the financial dilemma. He noted that friction between the two entities is not uncommon.
Asked if he would submit legislation to create a part-time lawmaking body, Turnbull smiled. "I wouldn't draft that," he said. "It was just a suggestion." He said he reserved his personal feelings about the 24th Legislature's refusal to reduce its own makeup to nine members from 15, a proposal approved by voters in a 2000 referendum but voted down by the senators.
If the Senate doesn't allow the $235 million bond issue, Turnbull and several members of his financial team with him at the press conference said, the territory will be in dire fiscal straits, facing a projected $29 million shortfall by the end of June and a projected $144 million deficit less than four months from now at the end of FY 2003.
The Finance Committee's decision to remove $80 million in anticipated revenues by gutting measures to add or increase taxes leaves the government in "serious imbalance," Turnbull said. Unless the Legislature restores the taxes or comes up with similar measures, he said, "the government will have to take the Draconian actions we have attempted to avoid, including employee layoffs, salary reductions, payless paydays and the elimination of vital services."
Since the writing on the wall had been clear that the Senate would likely vote down the tax additions and increases, Turnbull was asked if he had any other fallback plan besides "massive layoffs."
Administration's fallback: There are other plans
Nathan Simmonds, director of the governor's Office of Fiscal Recovery and Economic Implementation, answered. He said the administration does, indeed, have contingency plans, but it will not reveal them until the appropriate time — after Monday's full Senate session.
The governor said the irony was not lost on him of the Finance Committee's action in increasing unemployment insurance benefits to 80 percent of the V.I. average weekly wage from the current 50 percent. "While the federal government is trying to move workers from welfare to work, the Finance Committee appears to want to move our workers from work to welfare," he said.
Turnbull also said the Finance Committee's decision to cut 14 percent of the government's total budget for personal services and fringe benefits "does not fix the problem." Ira Mills, director of the Office of Management and Budget, reiterated what he had said on Thursday at the Finance meeting: "The personal services cost has not changed substantially. In FY 1999 it was $271.4 million. In FY 2002 it was $277.7 million."
On Thursday, however, Mills had pointed out that the cost had been reduced substantially in FY 2000 and FY 2001, down to about $243 million.
Turnbull defended the administration's plan repeatedly, saying it would balance the budget. He reiterated information Simmonds had presented to the senators on Thursday. (See "Little sign of support for governor's bills".)
Responding to questions, the governor also defended recent hirings which were publicized. He said most of them were to fill vacancies in existing positions. He said the one new position filled, that of protocol officer, was "necessary" in order to care properly for visiting dignitaries. Karen Andrews, the governor's chief negotiator, said the salary for the position is $50,000, not $80,000, which she said had been reported in the press.
Turnbull did not overlook the Finance Committee's dismissal of his financial team Thursday. "I am disappointed that, at a time when we should all be working together … some member of the Legislature prefer to grandstand or issue meaningless ultimatums," he said, terming the dismissal "an apparent show of one-upmanship."
The governor cautioned the Legislature: "Piecemeal solutions are unacceptable. It is the responsibility of the Legislature either to pass my plan intact or to modify my plan, provided that it fully closes the projected $144 million deficit."
The governor and Simmonds urged the Legislature to act "post haste" to avoid a payless payday at the end of June.
Turnbull concluded his letter to Jones: "Mr. President, as you and all the other members of the 25th Legislature know full well, we are all together in this tempest-tossed boat. If we work together, we can make it to the sunny shore of fiscal recovery. If we choose to fight among ourselves, the boat will hit the rugged rocks of financial insolvency."
The "tempest-tossed boat" will dock at the Earle B. Ottley Legislative Hall at 10 a.m. Monday when the Senate convenes in full session to act on the governor's bills, except for the bond-issue measure, and its own. How sunny the "shore of fiscal recovery" will be by the end of the session remains to be seen.
Publisher's note : Like the St. Croix Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
The lawmakers got under the governor's skin Thursday in more ways than one.
First, the Senate Finance Committee sent his financial team packing early in the afternoon, refusing to hear more testimony until he answered a letter the full Senate had sent him on Monday demanding that he rescind hefty raises given last year to exempt and unclassified employees.
Thursday evening, the committee eviscerated the governor's package to address the territory's fiscal deficit, killing more than $80 million of his $95 million in proposals.
Having accomplished that, the committee then voted not to send the governor's $235 million bond issue bill to the floor for Monday's full Senate session, but to hold it in committee for further study. Senate President David Jones said Thursday the body would not authorize the bond issue until Turnbull answered their letter.
The governor did on Friday.
He wrote Jones, in part, that while appreciating the senators' concerns, "I, however, must take umbrage at the Legislature attempting to give the executive branch an ultimatum complete with date and hour." Nowhere in the Organic Act, Turnbull said, is the Legislature given that authority.
Turnbull said the Legislature's call for him to roll back the raises he approved last year by executive order "falls far short of the mark." He said it would result in savings of no more than $2.2 million through Sept. 30, the end of the 2003 fiscal year.
Nonetheless, Turnbull said, he would take the letter "under advisement." He stopped short, in responding to media questions later, of saying when and how he would respond.
The governor offered some ideas of his own on cost-cutting measures the Legislature "may consider." Among them:
"- A part-time Legislature, which he said is the case with most states and other jurisdictions and municipalities.
– Cutting the Legislature's budget by an additional 15 percent beyond the 14 percent reduction already instituted.
– A mirroring of the executive branch initiative to control the abuse of government vehicles, cellular phones and unnecessary travel.
– Curtailment of the Legislature's practice of over-appropriating funds — via amendments attached to so-called "Christmas tree" bills — and "the subsequent override of the vetoes of these bills."
Legislature's call: If not taxes, then what?
With the air all but taken out of his tax plans, leaving an $80 million dollar or so hole, Turnbull said the Senate would have to find other ways to shore up the deficit, if not by taxes. "It is now the duty" of the Legislature, he said, "to formulate the legislative plan so that as a territorial government of checks and balances, we can move ahead and serve the people."
In his letter, he told Jones: "If the Legislature does not act promptly, massive layoffs of workers, payless paydays and the curtailment of vital services and other serious consequences lie ahead."
In answer to questions from reporters about his relationship with the Legislature, the governor stressed that the two branches of government must work together to solve the financial dilemma. He noted that friction between the two entities is not uncommon.
Asked if he would submit legislation to create a part-time lawmaking body, Turnbull smiled. "I wouldn't draft that," he said. "It was just a suggestion." He said he reserved his personal feelings about the 24th Legislature's refusal to reduce its own makeup to nine members from 15, a proposal approved by voters in a 2000 referendum but voted down by the senators.
If the Senate doesn't allow the $235 million bond issue, Turnbull and several members of his financial team with him at the press conference said, the territory will be in dire fiscal straits, facing a projected $29 million shortfall by the end of June and a projected $144 million deficit less than four months from now at the end of FY 2003.
The Finance Committee's decision to remove $80 million in anticipated revenues by gutting measures to add or increase taxes leaves the government in "serious imbalance," Turnbull said. Unless the Legislature restores the taxes or comes up with similar measures, he said, "the government will have to take the Draconian actions we have attempted to avoid, including employee layoffs, salary reductions, payless paydays and the elimination of vital services."
Since the writing on the wall had been clear that the Senate would likely vote down the tax additions and increases, Turnbull was asked if he had any other fallback plan besides "massive layoffs."
Administration's fallback: There are other plans
Nathan Simmonds, director of the governor's Office of Fiscal Recovery and Economic Implementation, answered. He said the administration does, indeed, have contingency plans, but it will not reveal them until the appropriate time — after Monday's full Senate session.
The governor said the irony was not lost on him of the Finance Committee's action in increasing unemployment insurance benefits to 80 percent of the V.I. average weekly wage from the current 50 percent. "While the federal government is trying to move workers from welfare to work, the Finance Committee appears to want to move our workers from work to welfare," he said.
Turnbull also said the Finance Committee's decision to cut 14 percent of the government's total budget for personal services and fringe benefits "does not fix the problem." Ira Mills, director of the Office of Management and Budget, reiterated what he had said on Thursday at the Finance meeting: "The personal services cost has not changed substantially. In FY 1999 it was $271.4 million. In FY 2002 it was $277.7 million."
On Thursday, however, Mills had pointed out that the cost had been reduced substantially in FY 2000 and FY 2001, down to about $243 million.
Turnbull defended the administration's plan repeatedly, saying it would balance the budget. He reiterated information Simmonds had presented to the senators on Thursday. (See "Little sign of support for governor's bills".)
Responding to questions, the governor also defended recent hirings which were publicized. He said most of them were to fill vacancies in existing positions. He said the one new position filled, that of protocol officer, was "necessary" in order to care properly for visiting dignitaries. Karen Andrews, the governor's chief negotiator, said the salary for the position is $50,000, not $80,000, which she said had been reported in the press.
Turnbull did not overlook the Finance Committee's dismissal of his financial team Thursday. "I am disappointed that, at a time when we should all be working together … some member of the Legislature prefer to grandstand or issue meaningless ultimatums," he said, terming the dismissal "an apparent show of one-upmanship."
The governor cautioned the Legislature: "Piecemeal solutions are unacceptable. It is the responsibility of the Legislature either to pass my plan intact or to modify my plan, provided that it fully closes the projected $144 million deficit."
The governor and Simmonds urged the Legislature to act "post haste" to avoid a payless payday at the end of June.
Turnbull concluded his letter to Jones: "Mr. President, as you and all the other members of the 25th Legislature know full well, we are all together in this tempest-tossed boat. If we work together, we can make it to the sunny shore of fiscal recovery. If we choose to fight among ourselves, the boat will hit the rugged rocks of financial insolvency."
The "tempest-tossed boat" will dock at the Earle B. Ottley Legislative Hall at 10 a.m. Monday when the Senate convenes in full session to act on the governor's bills, except for the bond-issue measure, and its own. How sunny the "shore of fiscal recovery" will be by the end of the session remains to be seen.
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FISCAL CRISIS IS GOVERNOR'S FAULT, BERRY CHARGES
June 6, 2003 – Sen. Lorraine Berry was the first legislator to fire back at Gov. Charles W. Turnbull publicly in writing Friday evening after reading the letter he sent the lawmakers on Friday in response to theirs of Monday.
And she had little sympathy for the "umbrage" the governor expressed at the Senate's call for him to rescind millions of dollars in pay raises to unclassified employees as a condition of considering his bill to float another $235 million in bonds to keep the government from sinking in a sea of red ink.
Borrowing another $235 million, she said, "would push our debts to over $1.2 billion … not to mention the growing unfunded liability that is over $500 million (and some suggest it is closer to $800 million!)."
Berry, the ranking Democrat in the Legislature and a former president of the body and chair of its Finance Committee, took the Democratic governor to task from the first paragraph of her response:
"Usually he procrastinates and avoids making tough decisions; he has become notorious in not responding to my queries. I had to read his letter several times to make sure I did not misunderstand anything he suggested."
Tapping into Turnbull's imagery of the territory as a "tempest-tossed ship," Berry said that he "is the captain who must rise to the occasion." The members of the 25th Legislature have "put aside our internal differences in the effort to develop the necessary political consensus and will to keep the ship afloat," she said.
Midway into her eight-page response, addressing the federal court moratorium imposed last month on the collection of property taxes, Berry accused Turnbull of "ignoring necessary reforms to make the collection of property taxes equitable and efficient" after such reforms were mandated in a 2000 court case settlement.
"He could have fixed a constant revenue stream," she said, but instead "the governor took the adversary approach against a group of commercial landowners and amazingly gambled the entire property tax revenue stream on a single legal dispute."
She also said cost cutting has got to entail job cutting, politically popular or not, something Turnbull avoided altogether in his package of bills to address the fiscal deficit. Cutting back on personnel costs is "the most important means of reducing deficits" in some 38 states right now, she said, challenging the governor to "tell us your plan for personnel reduction now!"
And, she added, the place to begin is by setting an example "within the senior, highly paid layers of government."
At the same time, she rejected Turnbull's suggestion for reducing costs by cutting the Legislature's budget by another 15 percent on top of a 14 percent reduction for all branches of government already in place.
The executive branch, she said, "consumes well over 85 percent of the government's resources, and thus "it is the branch of government that must make the most sacrifices."
A member of the minority in the 24th Legislature, Berry also took her majority colleagues in that body to task. Two years ago, she wrote, "in a very bizarre political move, Gov. Turnbull and a group of senators in the 24th Legislature took the so-called $100 million surplus, and in the blink of an eye they spent it on pay increases and other pet projects."
She agreed with Turnbull's call for the Senate to stop over-appropriating funds but added that he "must practice what he is preaching."
She called the administration's proposal to impose a tax of 20 cents a barrel on crude oil imported by Hovensa not only illegal but "suicidal if not simply absurdity." And she charged that imposing or increasing taxes on food, shipping containers and gross receipts would "cause the Virgin Islands to explode."
And as for further borrowing, Berry recalled that she supported a $300 million bond issue in 1999 "on the condition that fiscal controls would be put in place to develop an austerity budget." But she said Turnbull "has not implemented" many of the fiscal measures that the 23rd Legislature passed or many of the recommendations of the Five-Year Operating and Strategic Financial Plan developed at his request.
Finally, she told the governor that the Legislature expects him "to speak to us as your allies not enemies, for surely you know who remains on any ship when it sinks — the captain. Everyone else is expected and will get on the lifeboat."
Publisher's note : Like the St. Croix Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
And she had little sympathy for the "umbrage" the governor expressed at the Senate's call for him to rescind millions of dollars in pay raises to unclassified employees as a condition of considering his bill to float another $235 million in bonds to keep the government from sinking in a sea of red ink.
Borrowing another $235 million, she said, "would push our debts to over $1.2 billion … not to mention the growing unfunded liability that is over $500 million (and some suggest it is closer to $800 million!)."
Berry, the ranking Democrat in the Legislature and a former president of the body and chair of its Finance Committee, took the Democratic governor to task from the first paragraph of her response:
"Usually he procrastinates and avoids making tough decisions; he has become notorious in not responding to my queries. I had to read his letter several times to make sure I did not misunderstand anything he suggested."
Tapping into Turnbull's imagery of the territory as a "tempest-tossed ship," Berry said that he "is the captain who must rise to the occasion." The members of the 25th Legislature have "put aside our internal differences in the effort to develop the necessary political consensus and will to keep the ship afloat," she said.
Midway into her eight-page response, addressing the federal court moratorium imposed last month on the collection of property taxes, Berry accused Turnbull of "ignoring necessary reforms to make the collection of property taxes equitable and efficient" after such reforms were mandated in a 2000 court case settlement.
"He could have fixed a constant revenue stream," she said, but instead "the governor took the adversary approach against a group of commercial landowners and amazingly gambled the entire property tax revenue stream on a single legal dispute."
She also said cost cutting has got to entail job cutting, politically popular or not, something Turnbull avoided altogether in his package of bills to address the fiscal deficit. Cutting back on personnel costs is "the most important means of reducing deficits" in some 38 states right now, she said, challenging the governor to "tell us your plan for personnel reduction now!"
And, she added, the place to begin is by setting an example "within the senior, highly paid layers of government."
At the same time, she rejected Turnbull's suggestion for reducing costs by cutting the Legislature's budget by another 15 percent on top of a 14 percent reduction for all branches of government already in place.
The executive branch, she said, "consumes well over 85 percent of the government's resources, and thus "it is the branch of government that must make the most sacrifices."
A member of the minority in the 24th Legislature, Berry also took her majority colleagues in that body to task. Two years ago, she wrote, "in a very bizarre political move, Gov. Turnbull and a group of senators in the 24th Legislature took the so-called $100 million surplus, and in the blink of an eye they spent it on pay increases and other pet projects."
She agreed with Turnbull's call for the Senate to stop over-appropriating funds but added that he "must practice what he is preaching."
She called the administration's proposal to impose a tax of 20 cents a barrel on crude oil imported by Hovensa not only illegal but "suicidal if not simply absurdity." And she charged that imposing or increasing taxes on food, shipping containers and gross receipts would "cause the Virgin Islands to explode."
And as for further borrowing, Berry recalled that she supported a $300 million bond issue in 1999 "on the condition that fiscal controls would be put in place to develop an austerity budget." But she said Turnbull "has not implemented" many of the fiscal measures that the 23rd Legislature passed or many of the recommendations of the Five-Year Operating and Strategic Financial Plan developed at his request.
Finally, she told the governor that the Legislature expects him "to speak to us as your allies not enemies, for surely you know who remains on any ship when it sinks — the captain. Everyone else is expected and will get on the lifeboat."
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END 'CRISIS MANAGEMENT,' LEAGUE AGAIN URGES
June 6, 2003 – The League of Women Voters will see some bright spots in amendments the Senate Finance Committee made Thursday to Gov. Charles W. Turnbull's proposed fiscal recovery package.
The senators threw out virtually all of the governor's proposed business tax increases. And they approved his funding plan for waste collection and disposal and sewer projects. And they held in committee the $235 million bond issue he proposed as an immediate cure-all for the territory's financial deficit. (See "Finance axes gross receipts tax increase".)
Rosalie Simmonds Ballentine, league president, addressed the Finance Committee Thursday during its meeting to consider Turnbull's proposals. She began by reiterating the league's statement on the 2003 Omnibus Bill: "When will the government of the Virgin Islands shelve its crisis-to-crisis management style?"
"We ask that question again," she said.
Ballentine noted that "barely four months before the end of this fiscal year, the executive proposed a plan to cover a projected $144 million deficit, not even an exact figure." She wondered: "Is it true that closing this gap will only meet this year's operating expenses?" Prior years' obligations — such as amounts owed to the Water and Power Authority — have not been included, she said.
She also said that, with the recently enacted federal income tax reduction and the territory's mirror tax system, the deficit "will increase as personal income-tax revenues decrease."
Ballentine minced no words regarding the stiff new and increased taxes that Turnbull proposed. "It is the league's position that new or increased taxes must not be imposed until such time as there has been a vigorous program to reduce the cost of operations and an aggressive tax collection program," she said.
Altogether, she said, the league is "keenly aware" that the federal tax cut, a lack of adjustments to account for prior-year obligations and the projected outcome of current 90-day tax amnesty programs will all impact on the fiscal year 2003 deficit. She urged the governor to revisit his projections to "arrive at more realistic revenue and expenditure estimates."
Two amnesty programs are in progress: on pre-1999 property taxes, through Aug. 26, and on pre-April 2003 gross receipts taxes, through Sept. 2.
The league suggested a number of cost-reduction and revenue-enhancement options to address the fiscal crisis:
Short term cost-reduction options:
– Reduce by 50 percent the sizable salary increases granted last year to exempt employees, which reportedly have an annual price tag of $7.9 million.
– Defer Earned Income Credit payments, an annual expense estimated at $16 million to $20 million.
– Prorate the health insurance premium payments of retirees and active employees.
– Decrease government contributions to the Government Employees Retirement System by 3 percent and increase employee contributions by the same rate.
– Reduce the Legislature's operating costs by 15 percent starting July 1. The Legislature's budget has already been cut by 14 percent.
– Suspend provisions of Act 4440 relative to negotiating for economic issues for at least three fiscal years in order to mitigate the steady climb of executive salary increases.
Revenue-enhancement options:
– Initiate an aggressive program to collect the reported $150 million outstanding in accounts receivable, including individual and corporate income taxes.
– Enact legislation to require that all proposed tax measures be analyzed and recommended by the Tax Study Commission.
– Enact legislation to discontinue the practice of extending tax exemptions beyond the first benefit period.
Long-term cost-reduction options:
– Enact legislation setting a cap on the cost for personal services and fringe benefits that the General Fund may pay out in a given fiscal year.
– Establish a financial control board to monitor the implementation of programs or plans for elimination of the deficit.
– Adopt the policy of the federal government not to negotiate for wages. Instead, develop an effective merit system that provides for annual increments based on satisfactory performance.
– Pursue further privatization of government services.
– Limit Economic Development Authority tax exemptions to a single seven-year start-up period for new businesses.
– Increase the real property tax rolls and annual cash flow by selling government-owned real properties not in use, or for which plans do not exist.
Publisher's note : Like the St. Croix Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
The senators threw out virtually all of the governor's proposed business tax increases. And they approved his funding plan for waste collection and disposal and sewer projects. And they held in committee the $235 million bond issue he proposed as an immediate cure-all for the territory's financial deficit. (See "Finance axes gross receipts tax increase".)
Rosalie Simmonds Ballentine, league president, addressed the Finance Committee Thursday during its meeting to consider Turnbull's proposals. She began by reiterating the league's statement on the 2003 Omnibus Bill: "When will the government of the Virgin Islands shelve its crisis-to-crisis management style?"
"We ask that question again," she said.
Ballentine noted that "barely four months before the end of this fiscal year, the executive proposed a plan to cover a projected $144 million deficit, not even an exact figure." She wondered: "Is it true that closing this gap will only meet this year's operating expenses?" Prior years' obligations — such as amounts owed to the Water and Power Authority — have not been included, she said.
She also said that, with the recently enacted federal income tax reduction and the territory's mirror tax system, the deficit "will increase as personal income-tax revenues decrease."
Ballentine minced no words regarding the stiff new and increased taxes that Turnbull proposed. "It is the league's position that new or increased taxes must not be imposed until such time as there has been a vigorous program to reduce the cost of operations and an aggressive tax collection program," she said.
Altogether, she said, the league is "keenly aware" that the federal tax cut, a lack of adjustments to account for prior-year obligations and the projected outcome of current 90-day tax amnesty programs will all impact on the fiscal year 2003 deficit. She urged the governor to revisit his projections to "arrive at more realistic revenue and expenditure estimates."
Two amnesty programs are in progress: on pre-1999 property taxes, through Aug. 26, and on pre-April 2003 gross receipts taxes, through Sept. 2.
The league suggested a number of cost-reduction and revenue-enhancement options to address the fiscal crisis:
Short term cost-reduction options:
– Reduce by 50 percent the sizable salary increases granted last year to exempt employees, which reportedly have an annual price tag of $7.9 million.
– Defer Earned Income Credit payments, an annual expense estimated at $16 million to $20 million.
– Prorate the health insurance premium payments of retirees and active employees.
– Decrease government contributions to the Government Employees Retirement System by 3 percent and increase employee contributions by the same rate.
– Reduce the Legislature's operating costs by 15 percent starting July 1. The Legislature's budget has already been cut by 14 percent.
– Suspend provisions of Act 4440 relative to negotiating for economic issues for at least three fiscal years in order to mitigate the steady climb of executive salary increases.
Revenue-enhancement options:
– Initiate an aggressive program to collect the reported $150 million outstanding in accounts receivable, including individual and corporate income taxes.
– Enact legislation to require that all proposed tax measures be analyzed and recommended by the Tax Study Commission.
– Enact legislation to discontinue the practice of extending tax exemptions beyond the first benefit period.
Long-term cost-reduction options:
– Enact legislation setting a cap on the cost for personal services and fringe benefits that the General Fund may pay out in a given fiscal year.
– Establish a financial control board to monitor the implementation of programs or plans for elimination of the deficit.
– Adopt the policy of the federal government not to negotiate for wages. Instead, develop an effective merit system that provides for annual increments based on satisfactory performance.
– Pursue further privatization of government services.
– Limit Economic Development Authority tax exemptions to a single seven-year start-up period for new businesses.
– Increase the real property tax rolls and annual cash flow by selling government-owned real properties not in use, or for which plans do not exist.
Publisher's note : Like the St. Croix Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
TURNBULL DEFENDS HIS FISCAL PLAN, RAPS SENATE
June 6, 2003 – Gov. Charles W. Turnbull struck back at the Senate Friday afternoon in a lively press conference at Government House on St. Thomas where he made clear his displeasure with the first branch of government.
The lawmakers got under the governor's skin Thursday in more ways than one.
First, the Senate Finance Committee sent his financial team packing early in the afternoon, refusing to hear more testimony until he answered a letter the full Senate had sent him on Monday demanding that he rescind hefty raises given last year to exempt and unclassified employees.
Thursday evening, the committee eviscerated the governor's package to address the territory's fiscal deficit, killing more than $80 million of his $95 million in proposals.
Having accomplished that, the committee then voted not to send the governor's $235 million bond issue bill to the floor for Monday's full Senate session, but to hold it in committee for further study. Senate President David Jones said Thursday the body would not authorize the bond issue until Turnbull answered their letter.
The governor did on Friday.
He wrote Jones, in part, that while appreciating the senators' concerns, "I, however, must take umbrage at the Legislature attempting to give the executive branch an ultimatum complete with date and hour." Nowhere in the Organic Act, Turnbull said, is the Legislature given that authority.
Turnbull said the Legislature's call for him to roll back the raises he approved last year by executive order "falls far short of the mark." He said it would result in savings of no more than $2.2 million through Sept. 30, the end of the 2003 fiscal year.
Nonetheless, Turnbull said, he would take the letter "under advisement." He stopped short, in responding to media questions later, of saying when and how he would respond.
The governor offered some ideas of his own on cost-cutting measures the Legislature "may consider." Among them:
"- A part-time Legislature, which he said is the case with most states and other jurisdictions and municipalities.
– Cutting the Legislature's budget by an additional 15 percent beyond the 14 percent reduction already instituted.
– A mirroring of the executive branch initiative to control the abuse of government vehicles, cellular phones and unnecessary travel.
– Curtailment of the Legislature's practice of over-appropriating funds — via amendments attached to so-called "Christmas tree" bills — and "the subsequent override of the vetoes of these bills."
Legislature's call: If not taxes, then what?
With the air all but taken out of his tax plans, leaving an $80 million dollar or so hole, Turnbull said the Senate would have to find other ways to shore up the deficit, if not by taxes. "It is now the duty" of the Legislature, he said, "to formulate the legislative plan so that as a territorial government of checks and balances, we can move ahead and serve the people."
In his letter, he told Jones: "If the Legislature does not act promptly, massive layoffs of workers, payless paydays and the curtailment of vital services and other serious consequences lie ahead."
In answer to questions from reporters about his relationship with the Legislature, the governor stressed that the two branches of government must work together to solve the financial dilemma. He noted that friction between the two entities is not uncommon.
Asked if he would submit legislation to create a part-time lawmaking body, Turnbull smiled. "I wouldn't draft that," he said. "It was just a suggestion." He said he reserved his personal feelings about the 24th Legislature's refusal to reduce its own makeup to nine members from 15, a proposal approved by voters in a 2000 referendum but voted down by the senators.
If the Senate doesn't allow the $235 million bond issue, Turnbull and several members of his financial team with him at the press conference said, the territory will be in dire fiscal straits, facing a projected $29 million shortfall by the end of June and a projected $144 million deficit less than four months from now at the end of FY 2003.
The Finance Committee's decision to remove $80 million in anticipated revenues by gutting measures to add or increase taxes leaves the government in "serious imbalance," Turnbull said. Unless the Legislature restores the taxes or comes up with similar measures, he said, "the government will have to take the Draconian actions we have attempted to avoid, including employee layoffs, salary reductions, payless paydays and the elimination of vital services."
Since the writing on the wall had been clear that the Senate would likely vote down the tax additions and increases, Turnbull was asked if he had any other fallback plan besides "massive layoffs."
Administration's fallback: There are other plans
Nathan Simmonds, director of the governor's Office of Fiscal Recovery and Economic Implementation, answered. He said the administration does, indeed, have contingency plans, but it will not reveal them until the appropriate time — after Monday's full Senate session.
The governor said the irony was not lost on him of the Finance Committee's action in increasing unemployment insurance benefits to 80 percent of the V.I. average weekly wage from the current 50 percent. "While the federal government is trying to move workers from welfare to work, the Finance Committee appears to want to move our workers from work to welfare," he said.
Turnbull also said the Finance Committee's decision to cut 14 percent of the government's total budget for personal services and fringe benefits "does not fix the problem." Ira Mills, director of the Office of Management and Budget, reiterated what he had said on Thursday at the Finance meeting: "The personal services cost has not changed substantially. In FY 1999 it was $271.4 million. In FY 2002 it was $277.7 million."
On Thursday, however, Mills had pointed out that the cost had been reduced substantially in FY 2000 and FY 2001, down to about $243 million.
Turnbull defended the administration's plan repeatedly, saying it would balance the budget. He reiterated information Simmonds had presented to the senators on Thursday. (See "Little sign of support for governor's bills".)
Responding to questions, the governor also defended recent hirings which were publicized. He said most of them were to fill vacancies in existing positions. He said the one new position filled, that of protocol officer, was "necessary" in order to care properly for visiting dignitaries. Karen Andrews, the governor's chief negotiator, said the salary for the position is $50,000, not $80,000, which she said had been reported in the press.
Turnbull did not overlook the Finance Committee's dismissal of his financial team Thursday. "I am disappointed that, at a time when we should all be working together … some member of the Legislature prefer to grandstand or issue meaningless ultimatums," he said, terming the dismissal "an apparent show of one-upmanship."
The governor cautioned the Legislature: "Piecemeal solutions are unacceptable. It is the responsibility of the Legislature either to pass my plan intact or to modify my plan, provided that it fully closes the projected $144 million deficit."
The governor and Simmonds urged the Legislature to act "post haste" to avoid a payless payday at the end of June.
Turnbull concluded his letter to Jones: "Mr. President, as you and all the other members of the 25th Legislature know full well, we are all together in this tempest-tossed boat. If we work together, we can make it to the sunny shore of fiscal recovery. If we choose to fight among ourselves, the boat will hit the rugged rocks of financial insolvency."
The "tempest-tossed boat" will dock at the Earle B. Ottley Legislative Hall at 10 a.m. Monday when the Senate convenes in full session to act on the governor's bills, except for the bond-issue measure, and its own. How sunny the "shore of fiscal recovery" will be by the end of the session remains to be seen.
Publisher's note : Like the St. John Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
The lawmakers got under the governor's skin Thursday in more ways than one.
First, the Senate Finance Committee sent his financial team packing early in the afternoon, refusing to hear more testimony until he answered a letter the full Senate had sent him on Monday demanding that he rescind hefty raises given last year to exempt and unclassified employees.
Thursday evening, the committee eviscerated the governor's package to address the territory's fiscal deficit, killing more than $80 million of his $95 million in proposals.
Having accomplished that, the committee then voted not to send the governor's $235 million bond issue bill to the floor for Monday's full Senate session, but to hold it in committee for further study. Senate President David Jones said Thursday the body would not authorize the bond issue until Turnbull answered their letter.
The governor did on Friday.
He wrote Jones, in part, that while appreciating the senators' concerns, "I, however, must take umbrage at the Legislature attempting to give the executive branch an ultimatum complete with date and hour." Nowhere in the Organic Act, Turnbull said, is the Legislature given that authority.
Turnbull said the Legislature's call for him to roll back the raises he approved last year by executive order "falls far short of the mark." He said it would result in savings of no more than $2.2 million through Sept. 30, the end of the 2003 fiscal year.
Nonetheless, Turnbull said, he would take the letter "under advisement." He stopped short, in responding to media questions later, of saying when and how he would respond.
The governor offered some ideas of his own on cost-cutting measures the Legislature "may consider." Among them:
"- A part-time Legislature, which he said is the case with most states and other jurisdictions and municipalities.
– Cutting the Legislature's budget by an additional 15 percent beyond the 14 percent reduction already instituted.
– A mirroring of the executive branch initiative to control the abuse of government vehicles, cellular phones and unnecessary travel.
– Curtailment of the Legislature's practice of over-appropriating funds — via amendments attached to so-called "Christmas tree" bills — and "the subsequent override of the vetoes of these bills."
Legislature's call: If not taxes, then what?
With the air all but taken out of his tax plans, leaving an $80 million dollar or so hole, Turnbull said the Senate would have to find other ways to shore up the deficit, if not by taxes. "It is now the duty" of the Legislature, he said, "to formulate the legislative plan so that as a territorial government of checks and balances, we can move ahead and serve the people."
In his letter, he told Jones: "If the Legislature does not act promptly, massive layoffs of workers, payless paydays and the curtailment of vital services and other serious consequences lie ahead."
In answer to questions from reporters about his relationship with the Legislature, the governor stressed that the two branches of government must work together to solve the financial dilemma. He noted that friction between the two entities is not uncommon.
Asked if he would submit legislation to create a part-time lawmaking body, Turnbull smiled. "I wouldn't draft that," he said. "It was just a suggestion." He said he reserved his personal feelings about the 24th Legislature's refusal to reduce its own makeup to nine members from 15, a proposal approved by voters in a 2000 referendum but voted down by the senators.
If the Senate doesn't allow the $235 million bond issue, Turnbull and several members of his financial team with him at the press conference said, the territory will be in dire fiscal straits, facing a projected $29 million shortfall by the end of June and a projected $144 million deficit less than four months from now at the end of FY 2003.
The Finance Committee's decision to remove $80 million in anticipated revenues by gutting measures to add or increase taxes leaves the government in "serious imbalance," Turnbull said. Unless the Legislature restores the taxes or comes up with similar measures, he said, "the government will have to take the Draconian actions we have attempted to avoid, including employee layoffs, salary reductions, payless paydays and the elimination of vital services."
Since the writing on the wall had been clear that the Senate would likely vote down the tax additions and increases, Turnbull was asked if he had any other fallback plan besides "massive layoffs."
Administration's fallback: There are other plans
Nathan Simmonds, director of the governor's Office of Fiscal Recovery and Economic Implementation, answered. He said the administration does, indeed, have contingency plans, but it will not reveal them until the appropriate time — after Monday's full Senate session.
The governor said the irony was not lost on him of the Finance Committee's action in increasing unemployment insurance benefits to 80 percent of the V.I. average weekly wage from the current 50 percent. "While the federal government is trying to move workers from welfare to work, the Finance Committee appears to want to move our workers from work to welfare," he said.
Turnbull also said the Finance Committee's decision to cut 14 percent of the government's total budget for personal services and fringe benefits "does not fix the problem." Ira Mills, director of the Office of Management and Budget, reiterated what he had said on Thursday at the Finance meeting: "The personal services cost has not changed substantially. In FY 1999 it was $271.4 million. In FY 2002 it was $277.7 million."
On Thursday, however, Mills had pointed out that the cost had been reduced substantially in FY 2000 and FY 2001, down to about $243 million.
Turnbull defended the administration's plan repeatedly, saying it would balance the budget. He reiterated information Simmonds had presented to the senators on Thursday. (See "Little sign of support for governor's bills".)
Responding to questions, the governor also defended recent hirings which were publicized. He said most of them were to fill vacancies in existing positions. He said the one new position filled, that of protocol officer, was "necessary" in order to care properly for visiting dignitaries. Karen Andrews, the governor's chief negotiator, said the salary for the position is $50,000, not $80,000, which she said had been reported in the press.
Turnbull did not overlook the Finance Committee's dismissal of his financial team Thursday. "I am disappointed that, at a time when we should all be working together … some member of the Legislature prefer to grandstand or issue meaningless ultimatums," he said, terming the dismissal "an apparent show of one-upmanship."
The governor cautioned the Legislature: "Piecemeal solutions are unacceptable. It is the responsibility of the Legislature either to pass my plan intact or to modify my plan, provided that it fully closes the projected $144 million deficit."
The governor and Simmonds urged the Legislature to act "post haste" to avoid a payless payday at the end of June.
Turnbull concluded his letter to Jones: "Mr. President, as you and all the other members of the 25th Legislature know full well, we are all together in this tempest-tossed boat. If we work together, we can make it to the sunny shore of fiscal recovery. If we choose to fight among ourselves, the boat will hit the rugged rocks of financial insolvency."
The "tempest-tossed boat" will dock at the Earle B. Ottley Legislative Hall at 10 a.m. Monday when the Senate convenes in full session to act on the governor's bills, except for the bond-issue measure, and its own. How sunny the "shore of fiscal recovery" will be by the end of the session remains to be seen.
Publisher's note : Like the St. John Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
FISCAL CRISIS IS GOVERNOR'S FAULT, BERRY CHARGES
June 6, 2003 – Sen. Lorraine Berry was the first legislator to fire back at Gov. Charles W. Turnbull publicly in writing Friday evening after reading the letter he sent the lawmakers on Friday in response to theirs of Monday.
And she had little sympathy for the "umbrage" the governor expressed at the Senate's call for him to rescind millions of dollars in pay raises to unclassified employees as a condition of considering his bill to float another $235 million in bonds to keep the government from sinking in a sea of red ink.
Borrowing another $235 million, she said, "would push our debts to over $1.2 billion … not to mention the growing unfunded liability that is over $500 million (and some suggest it is closer to $800 million!)."
Berry, the ranking Democrat in the Legislature and a former president of the body and chair of its Finance Committee, took the Democratic governor to task from the first paragraph of her response:
"Usually he procrastinates and avoids making tough decisions; he has become notorious in not responding to my queries. I had to read his letter several times to make sure I did not misunderstand anything he suggested."
Tapping into Turnbull's imagery of the territory as a "tempest-tossed ship," Berry said that he "is the captain who must rise to the occasion." The members of the 25th Legislature have "put aside our internal differences in the effort to develop the necessary political consensus and will to keep the ship afloat," she said.
Midway into her eight-page response, addressing the federal court moratorium imposed last month on the collection of property taxes, Berry accused Turnbull of "ignoring necessary reforms to make the collection of property taxes equitable and efficient" after such reforms were mandated in a 2000 court case settlement.
"He could have fixed a constant revenue stream," she said, but instead "the governor took the adversary approach against a group of commercial landowners and amazingly gambled the entire property tax revenue stream on a single legal dispute."
She also said cost cutting has got to entail job cutting, politically popular or not, something Turnbull avoided altogether in his package of bills to address the fiscal deficit. Cutting back on personnel costs is "the most important means of reducing deficits" in some 38 states right now, she said, challenging the governor to "tell us your plan for personnel reduction now!"
And, she added, the place to begin is by setting an example "within the senior, highly paid layers of government."
At the same time, she rejected Turnbull's suggestion for reducing costs by cutting the Legislature's budget by another 15 percent on top of a 14 percent reduction for all branches of government already in place.
The executive branch, she said, "consumes well over 85 percent of the government's resources, and thus "it is the branch of government that must make the most sacrifices."
A member of the minority in the 24th Legislature, Berry also took her majority colleagues in that body to task. Two years ago, she wrote, "in a very bizarre political move, Gov. Turnbull and a group of senators in the 24th Legislature took the so-called $100 million surplus, and in the blink of an eye they spent it on pay increases and other pet projects."
She agreed with Turnbull's call for the Senate to stop over-appropriating funds but added that he "must practice what he is preaching."
She called the administration's proposal to impose a tax of 20 cents a barrel on crude oil imported by Hovensa not only illegal but "suicidal if not simply absurdity." And she charged that imposing or increasing taxes on food, shipping containers and gross receipts would "cause the Virgin Islands to explode."
And as for further borrowing, Berry recalled that she supported a $300 million bond issue in 1999 "on the condition that fiscal controls would be put in place to develop an austerity budget." But she said Turnbull "has not implemented" many of the fiscal measures that the 23rd Legislature passed or many of the recommendations of the Five-Year Operating and Strategic Financial Plan developed at his request.
Finally, she told the governor that the Legislature expects him "to speak to us as your allies not enemies, for surely you know who remains on any ship when it sinks — the captain. Everyone else is expected and will get on the lifeboat."
Publisher's note : Like the St. John Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
And she had little sympathy for the "umbrage" the governor expressed at the Senate's call for him to rescind millions of dollars in pay raises to unclassified employees as a condition of considering his bill to float another $235 million in bonds to keep the government from sinking in a sea of red ink.
Borrowing another $235 million, she said, "would push our debts to over $1.2 billion … not to mention the growing unfunded liability that is over $500 million (and some suggest it is closer to $800 million!)."
Berry, the ranking Democrat in the Legislature and a former president of the body and chair of its Finance Committee, took the Democratic governor to task from the first paragraph of her response:
"Usually he procrastinates and avoids making tough decisions; he has become notorious in not responding to my queries. I had to read his letter several times to make sure I did not misunderstand anything he suggested."
Tapping into Turnbull's imagery of the territory as a "tempest-tossed ship," Berry said that he "is the captain who must rise to the occasion." The members of the 25th Legislature have "put aside our internal differences in the effort to develop the necessary political consensus and will to keep the ship afloat," she said.
Midway into her eight-page response, addressing the federal court moratorium imposed last month on the collection of property taxes, Berry accused Turnbull of "ignoring necessary reforms to make the collection of property taxes equitable and efficient" after such reforms were mandated in a 2000 court case settlement.
"He could have fixed a constant revenue stream," she said, but instead "the governor took the adversary approach against a group of commercial landowners and amazingly gambled the entire property tax revenue stream on a single legal dispute."
She also said cost cutting has got to entail job cutting, politically popular or not, something Turnbull avoided altogether in his package of bills to address the fiscal deficit. Cutting back on personnel costs is "the most important means of reducing deficits" in some 38 states right now, she said, challenging the governor to "tell us your plan for personnel reduction now!"
And, she added, the place to begin is by setting an example "within the senior, highly paid layers of government."
At the same time, she rejected Turnbull's suggestion for reducing costs by cutting the Legislature's budget by another 15 percent on top of a 14 percent reduction for all branches of government already in place.
The executive branch, she said, "consumes well over 85 percent of the government's resources, and thus "it is the branch of government that must make the most sacrifices."
A member of the minority in the 24th Legislature, Berry also took her majority colleagues in that body to task. Two years ago, she wrote, "in a very bizarre political move, Gov. Turnbull and a group of senators in the 24th Legislature took the so-called $100 million surplus, and in the blink of an eye they spent it on pay increases and other pet projects."
She agreed with Turnbull's call for the Senate to stop over-appropriating funds but added that he "must practice what he is preaching."
She called the administration's proposal to impose a tax of 20 cents a barrel on crude oil imported by Hovensa not only illegal but "suicidal if not simply absurdity." And she charged that imposing or increasing taxes on food, shipping containers and gross receipts would "cause the Virgin Islands to explode."
And as for further borrowing, Berry recalled that she supported a $300 million bond issue in 1999 "on the condition that fiscal controls would be put in place to develop an austerity budget." But she said Turnbull "has not implemented" many of the fiscal measures that the 23rd Legislature passed or many of the recommendations of the Five-Year Operating and Strategic Financial Plan developed at his request.
Finally, she told the governor that the Legislature expects him "to speak to us as your allies not enemies, for surely you know who remains on any ship when it sinks — the captain. Everyone else is expected and will get on the lifeboat."
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END 'CRISIS MANAGEMENT,' LEAGUE AGAIN URGES
June 6, 2003 – The League of Women Voters will see some bright spots in amendments the Senate Finance Committee made Thursday to Gov. Charles W. Turnbull's proposed fiscal recovery package.
The senators threw out virtually all of the governor's proposed business tax increases. And they approved his funding plan for waste collection and disposal and sewer projects. And they held in committee the $235 million bond issue he proposed as an immediate cure-all for the territory's financial deficit. (See "Finance axes gross receipts tax increase".)
Rosalie Simmonds Ballentine, league president, addressed the Finance Committee Thursday during its meeting to consider Turnbull's proposals. She began by reiterating the league's statement on the 2003 Omnibus Bill: "When will the government of the Virgin Islands shelve its crisis-to-crisis management style?"
"We ask that question again," she said.
Ballentine noted that "barely four months before the end of this fiscal year, the executive proposed a plan to cover a projected $144 million deficit, not even an exact figure." She wondered: "Is it true that closing this gap will only meet this year's operating expenses?" Prior years' obligations — such as amounts owed to the Water and Power Authority — have not been included, she said.
She also said that, with the recently enacted federal income tax reduction and the territory's mirror tax system, the deficit "will increase as personal income-tax revenues decrease."
Ballentine minced no words regarding the stiff new and increased taxes that Turnbull proposed. "It is the league's position that new or increased taxes must not be imposed until such time as there has been a vigorous program to reduce the cost of operations and an aggressive tax collection program," she said.
Altogether, she said, the league is "keenly aware" that the federal tax cut, a lack of adjustments to account for prior-year obligations and the projected outcome of current 90-day tax amnesty programs will all impact on the fiscal year 2003 deficit. She urged the governor to revisit his projections to "arrive at more realistic revenue and expenditure estimates."
Two amnesty programs are in progress: on pre-1999 property taxes, through Aug. 26, and on pre-April 2003 gross receipts taxes, through Sept. 2.
The league suggested a number of cost-reduction and revenue-enhancement options to address the fiscal crisis:
Short term cost-reduction options:
– Reduce by 50 percent the sizable salary increases granted last year to exempt employees, which reportedly have an annual price tag of $7.9 million.
– Defer Earned Income Credit payments, an annual expense estimated at $16 million to $20 million.
– Prorate the health insurance premium payments of retirees and active employees.
– Decrease government contributions to the Government Employees Retirement System by 3 percent and increase employee contributions by the same rate.
– Reduce the Legislature's operating costs by 15 percent starting July 1. The Legislature's budget has already been cut by 14 percent.
– Suspend provisions of Act 4440 relative to negotiating for economic issues for at least three fiscal years in order to mitigate the steady climb of executive salary increases.
Revenue-enhancement options:
– Initiate an aggressive program to collect the reported $150 million outstanding in accounts receivable, including individual and corporate income taxes.
– Enact legislation to require that all proposed tax measures be analyzed and recommended by the Tax Study Commission.
– Enact legislation to discontinue the practice of extending tax exemptions beyond the first benefit period.
Long-term cost-reduction options:
– Enact legislation setting a cap on the cost for personal services and fringe benefits that the General Fund may pay out in a given fiscal year.
– Establish a financial control board to monitor the implementation of programs or plans for elimination of the deficit.
– Adopt the policy of the federal government not to negotiate for wages. Instead, develop an effective merit system that provides for annual increments based on satisfactory performance.
– Pursue further privatization of government services.
– Limit Economic Development Authority tax exemptions to a single seven-year start-up period for new businesses.
– Increase the real property tax rolls and annual cash flow by selling government-owned real properties not in use, or for which plans do not exist.
Publisher's note : Like the St. John Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
The senators threw out virtually all of the governor's proposed business tax increases. And they approved his funding plan for waste collection and disposal and sewer projects. And they held in committee the $235 million bond issue he proposed as an immediate cure-all for the territory's financial deficit. (See "Finance axes gross receipts tax increase".)
Rosalie Simmonds Ballentine, league president, addressed the Finance Committee Thursday during its meeting to consider Turnbull's proposals. She began by reiterating the league's statement on the 2003 Omnibus Bill: "When will the government of the Virgin Islands shelve its crisis-to-crisis management style?"
"We ask that question again," she said.
Ballentine noted that "barely four months before the end of this fiscal year, the executive proposed a plan to cover a projected $144 million deficit, not even an exact figure." She wondered: "Is it true that closing this gap will only meet this year's operating expenses?" Prior years' obligations — such as amounts owed to the Water and Power Authority — have not been included, she said.
She also said that, with the recently enacted federal income tax reduction and the territory's mirror tax system, the deficit "will increase as personal income-tax revenues decrease."
Ballentine minced no words regarding the stiff new and increased taxes that Turnbull proposed. "It is the league's position that new or increased taxes must not be imposed until such time as there has been a vigorous program to reduce the cost of operations and an aggressive tax collection program," she said.
Altogether, she said, the league is "keenly aware" that the federal tax cut, a lack of adjustments to account for prior-year obligations and the projected outcome of current 90-day tax amnesty programs will all impact on the fiscal year 2003 deficit. She urged the governor to revisit his projections to "arrive at more realistic revenue and expenditure estimates."
Two amnesty programs are in progress: on pre-1999 property taxes, through Aug. 26, and on pre-April 2003 gross receipts taxes, through Sept. 2.
The league suggested a number of cost-reduction and revenue-enhancement options to address the fiscal crisis:
Short term cost-reduction options:
– Reduce by 50 percent the sizable salary increases granted last year to exempt employees, which reportedly have an annual price tag of $7.9 million.
– Defer Earned Income Credit payments, an annual expense estimated at $16 million to $20 million.
– Prorate the health insurance premium payments of retirees and active employees.
– Decrease government contributions to the Government Employees Retirement System by 3 percent and increase employee contributions by the same rate.
– Reduce the Legislature's operating costs by 15 percent starting July 1. The Legislature's budget has already been cut by 14 percent.
– Suspend provisions of Act 4440 relative to negotiating for economic issues for at least three fiscal years in order to mitigate the steady climb of executive salary increases.
Revenue-enhancement options:
– Initiate an aggressive program to collect the reported $150 million outstanding in accounts receivable, including individual and corporate income taxes.
– Enact legislation to require that all proposed tax measures be analyzed and recommended by the Tax Study Commission.
– Enact legislation to discontinue the practice of extending tax exemptions beyond the first benefit period.
Long-term cost-reduction options:
– Enact legislation setting a cap on the cost for personal services and fringe benefits that the General Fund may pay out in a given fiscal year.
– Establish a financial control board to monitor the implementation of programs or plans for elimination of the deficit.
– Adopt the policy of the federal government not to negotiate for wages. Instead, develop an effective merit system that provides for annual increments based on satisfactory performance.
– Pursue further privatization of government services.
– Limit Economic Development Authority tax exemptions to a single seven-year start-up period for new businesses.
– Increase the real property tax rolls and annual cash flow by selling government-owned real properties not in use, or for which plans do not exist.
Publisher's note : Like the St. John Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
TURNBULL DEFENDS HIS FISCAL PLAN, RAPS SENATE
June 6, 2003 – Gov. Charles W. Turnbull struck back at the Senate Friday afternoon in a lively press conference at Government House on St. Thomas where he made clear his displeasure with the first branch of government.
The lawmakers got under the governor's skin Thursday in more ways than one.
First, the Senate Finance Committee sent his financial team packing early in the afternoon, refusing to hear more testimony until he answered a letter the full Senate had sent him on Monday demanding that he rescind hefty raises given last year to exempt and unclassified employees.
Thursday evening, the committee eviscerated the governor's package to address the territory's fiscal deficit, killing more than $80 million of his $95 million in proposals.
Having accomplished that, the committee then voted not to send the governor's $235 million bond issue bill to the floor for Monday's full Senate session, but to hold it in committee for further study. Senate President David Jones said Thursday the body would not authorize the bond issue until Turnbull answered their letter.
The governor did on Friday.
He wrote Jones, in part, that while appreciating the senators' concerns, "I, however, must take umbrage at the Legislature attempting to give the executive branch an ultimatum complete with date and hour." Nowhere in the Organic Act, Turnbull said, is the Legislature given that authority.
Turnbull said the Legislature's call for him to roll back the raises he approved last year by executive order "falls far short of the mark." He said it would result in savings of no more than $2.2 million through Sept. 30, the end of the 2003 fiscal year.
Nonetheless, Turnbull said, he would take the letter "under advisement." He stopped short, in responding to media questions later, of saying when and how he would respond.
The governor offered some ideas of his own on cost-cutting measures the Legislature "may consider." Among them:
– A part-time Legislature, which he said is the case with most states and other jurisdictions and municipalities.
– Cutting the Legislature's budget by an additional 15 percent beyond the 14 percent reduction already instituted.
– A mirroring of the executive branch initiative to control the abuse of government vehicles, cellular phones and unnecessary travel.
– Curtailment of the Legislature's practice of over-appropriating funds — via amendments attached to so-called "Christmas tree" bills — and "the subsequent override of the vetoes of these bills."
Legislature's call: If not taxes, then what?
With the air all but taken out of his tax plans, leaving an $80 million or so hole, Turnbull said the Senate would have to find other ways to shore up the deficit, if not by taxes. "It is now the duty" of the Legislature, he said, "to formulate the legislative plan so that as a territorial government of checks and balances, we can move ahead and serve the people."
In his letter, he told Jones: "If the Legislature does not act promptly, massive layoffs of workers, payless paydays and the curtailment of vital services and other serious consequences lie ahead."
In answer to questions from reporters about his relationship with the Legislature, the governor stressed that the two branches of government must work together to solve the financial dilemma. He noted that friction between the two entities is not uncommon.
Asked if he would submit legislation to create a part-time lawmaking body, Turnbull smiled. "I wouldn't draft that," he said. "It was just a suggestion." He said he reserved his personal feelings about the 24th Legislature's refusal to reduce its own makeup to nine members from 15, a proposal approved by voters in a 2000 referendum but voted down by the senators.
If the Senate doesn't allow the $235 million bond issue, Turnbull and several members of his financial team said, the territory will be in dire fiscal straits, facing a projected $29 million shortfall by the end of June and a projected $144 million deficit less than four months from now at the end of FY 2003.
The Finance Committee's decision to remove $80 million in anticipated revenues by gutting measures to add or increase taxes leaves the government in "serious imbalance," Turnbull said. Unless the Legislature restores the taxes or comes up with similar measures, he said, "the government will have to take the Draconian actions we have attempted to avoid, including employee layoffs, salary reductions, payless paydays and the elimination of vital services."
Since the writing on the wall had been clear that the Senate would likely vote down the tax additions and increases, Turnbull was asked if he had any other fallback plan besides "massive layoffs."
Administration's fallback: There are other plans
Nathan Simmonds, director of the governor's Office of Fiscal Recovery and Economic Implementation, answered. He said the administration does, indeed, have contingency plans, but it will not reveal them until the appropriate time — after Monday's full Senate session.
The governor said the irony was not lost on him of the Finance Committee's action in increasing unemployment insurance benefits to 80 percent of the V.I. average weekly wage from the current 50 percent. "While the federal government is trying to move workers from welfare to work, the Finance Committee appears to want to move our workers from work to welfare," he said.
Turnbull also said the Finance Committee's decision to cut 14 percent of the government's total budget for personal services and fringe benefits "does not fix the problem." Ira Mills, director of the Office of Management and Budget, reiterated what he had said on Thursday at the Finance meeting: "The personal services cost has not changed substantially. In FY 1999 it was $271.4 million. In FY 2002 it was $277.7 million."
On Thursday, however, Mills had pointed out that the cost had been reduced substantially in FY 2000 and FY 2001, down to about $243 million.
Turnbull defended the administration's plan repeatedly, saying it would balance the budget. He reiterated information Simmonds had presented to the senators on Thursday. (See "Little sign of support for governor's bills".)
Responding to questions, the governor also defended recent hirings which were publicized. He said most of them were to fill vacancies in existing positions. He said the one new position filled, that of protocol officer, was "necessary" in order to care properly for visiting dignitaries. Karen Andrews, the governor's chief negotiator, said the salary for the position is $50,000, not $80,000, which she said had been reported in the press.
Turnbull did not overlook the Finance Committee's dismissal of his financial team Thursday. "I am disappointed that, at a time when we should all be working together … some members of the Legislature prefer to grandstand or issue meaningless ultimatums," he said, terming the dismissal "an apparent show of one-upmanship."
The governor cautioned the Legislature: "Piecemeal solutions are unacceptable. It is the responsibility of the Legislature either to pass my plan intact or to modify my plan, provided that it fully closes the projected $144 million deficit."
The governor and Simmonds urged the Legislature to act "post haste" to avoid a payless payday at the end of June.
Turnbull concluded his letter to Jones: "Mr. President, as you and all the other members of the 25th Legislature know full well, we are all together in this tempest-tossed boat. If we work together, we can make it to the sunny shore of fiscal recovery. If we choose to fight among ourselves, the boat will hit the rugged rocks of finan cial insolvency."
The "tempest-tossed boat" will dock at the Earle B. Ottley Legislative Hall at 10 a.m. Monday when the Senate convenes in full session to act on the governor's bills, except for the bond-issue measure, and its own. How sunny the "shore of fiscal recovery" will be by the end of the session remains to be seen.
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The lawmakers got under the governor's skin Thursday in more ways than one.
First, the Senate Finance Committee sent his financial team packing early in the afternoon, refusing to hear more testimony until he answered a letter the full Senate had sent him on Monday demanding that he rescind hefty raises given last year to exempt and unclassified employees.
Thursday evening, the committee eviscerated the governor's package to address the territory's fiscal deficit, killing more than $80 million of his $95 million in proposals.
Having accomplished that, the committee then voted not to send the governor's $235 million bond issue bill to the floor for Monday's full Senate session, but to hold it in committee for further study. Senate President David Jones said Thursday the body would not authorize the bond issue until Turnbull answered their letter.
The governor did on Friday.
He wrote Jones, in part, that while appreciating the senators' concerns, "I, however, must take umbrage at the Legislature attempting to give the executive branch an ultimatum complete with date and hour." Nowhere in the Organic Act, Turnbull said, is the Legislature given that authority.
Turnbull said the Legislature's call for him to roll back the raises he approved last year by executive order "falls far short of the mark." He said it would result in savings of no more than $2.2 million through Sept. 30, the end of the 2003 fiscal year.
Nonetheless, Turnbull said, he would take the letter "under advisement." He stopped short, in responding to media questions later, of saying when and how he would respond.
The governor offered some ideas of his own on cost-cutting measures the Legislature "may consider." Among them:
– A part-time Legislature, which he said is the case with most states and other jurisdictions and municipalities.
– Cutting the Legislature's budget by an additional 15 percent beyond the 14 percent reduction already instituted.
– A mirroring of the executive branch initiative to control the abuse of government vehicles, cellular phones and unnecessary travel.
– Curtailment of the Legislature's practice of over-appropriating funds — via amendments attached to so-called "Christmas tree" bills — and "the subsequent override of the vetoes of these bills."
Legislature's call: If not taxes, then what?
With the air all but taken out of his tax plans, leaving an $80 million or so hole, Turnbull said the Senate would have to find other ways to shore up the deficit, if not by taxes. "It is now the duty" of the Legislature, he said, "to formulate the legislative plan so that as a territorial government of checks and balances, we can move ahead and serve the people."
In his letter, he told Jones: "If the Legislature does not act promptly, massive layoffs of workers, payless paydays and the curtailment of vital services and other serious consequences lie ahead."
In answer to questions from reporters about his relationship with the Legislature, the governor stressed that the two branches of government must work together to solve the financial dilemma. He noted that friction between the two entities is not uncommon.
Asked if he would submit legislation to create a part-time lawmaking body, Turnbull smiled. "I wouldn't draft that," he said. "It was just a suggestion." He said he reserved his personal feelings about the 24th Legislature's refusal to reduce its own makeup to nine members from 15, a proposal approved by voters in a 2000 referendum but voted down by the senators.
If the Senate doesn't allow the $235 million bond issue, Turnbull and several members of his financial team said, the territory will be in dire fiscal straits, facing a projected $29 million shortfall by the end of June and a projected $144 million deficit less than four months from now at the end of FY 2003.
The Finance Committee's decision to remove $80 million in anticipated revenues by gutting measures to add or increase taxes leaves the government in "serious imbalance," Turnbull said. Unless the Legislature restores the taxes or comes up with similar measures, he said, "the government will have to take the Draconian actions we have attempted to avoid, including employee layoffs, salary reductions, payless paydays and the elimination of vital services."
Since the writing on the wall had been clear that the Senate would likely vote down the tax additions and increases, Turnbull was asked if he had any other fallback plan besides "massive layoffs."
Administration's fallback: There are other plans
Nathan Simmonds, director of the governor's Office of Fiscal Recovery and Economic Implementation, answered. He said the administration does, indeed, have contingency plans, but it will not reveal them until the appropriate time — after Monday's full Senate session.
The governor said the irony was not lost on him of the Finance Committee's action in increasing unemployment insurance benefits to 80 percent of the V.I. average weekly wage from the current 50 percent. "While the federal government is trying to move workers from welfare to work, the Finance Committee appears to want to move our workers from work to welfare," he said.
Turnbull also said the Finance Committee's decision to cut 14 percent of the government's total budget for personal services and fringe benefits "does not fix the problem." Ira Mills, director of the Office of Management and Budget, reiterated what he had said on Thursday at the Finance meeting: "The personal services cost has not changed substantially. In FY 1999 it was $271.4 million. In FY 2002 it was $277.7 million."
On Thursday, however, Mills had pointed out that the cost had been reduced substantially in FY 2000 and FY 2001, down to about $243 million.
Turnbull defended the administration's plan repeatedly, saying it would balance the budget. He reiterated information Simmonds had presented to the senators on Thursday. (See "Little sign of support for governor's bills".)
Responding to questions, the governor also defended recent hirings which were publicized. He said most of them were to fill vacancies in existing positions. He said the one new position filled, that of protocol officer, was "necessary" in order to care properly for visiting dignitaries. Karen Andrews, the governor's chief negotiator, said the salary for the position is $50,000, not $80,000, which she said had been reported in the press.
Turnbull did not overlook the Finance Committee's dismissal of his financial team Thursday. "I am disappointed that, at a time when we should all be working together … some members of the Legislature prefer to grandstand or issue meaningless ultimatums," he said, terming the dismissal "an apparent show of one-upmanship."
The governor cautioned the Legislature: "Piecemeal solutions are unacceptable. It is the responsibility of the Legislature either to pass my plan intact or to modify my plan, provided that it fully closes the projected $144 million deficit."
The governor and Simmonds urged the Legislature to act "post haste" to avoid a payless payday at the end of June.
Turnbull concluded his letter to Jones: "Mr. President, as you and all the other members of the 25th Legislature know full well, we are all together in this tempest-tossed boat. If we work together, we can make it to the sunny shore of fiscal recovery. If we choose to fight among ourselves, the boat will hit the rugged rocks of finan cial insolvency."
The "tempest-tossed boat" will dock at the Earle B. Ottley Legislative Hall at 10 a.m. Monday when the Senate convenes in full session to act on the governor's bills, except for the bond-issue measure, and its own. How sunny the "shore of fiscal recovery" will be by the end of the session remains to be seen.
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FISCAL CRISIS IS GOVERNOR'S FAULT, BERRY CHARGES
June 6, 2003 – Sen. Lorraine Berry was the first legislator to fire back at Gov. Charles W. Turnbull publicly in writing Friday evening after reading the letter he sent the lawmakers on Friday in response to theirs of Monday.
And she had little sympathy for the "umbrage" the governor expressed at the Senate's call for him to rescind millions of dollars in pay raises to unclassified employees as a condition of considering his bill to float another $235 million in bonds to keep the government from sinking in a sea of red ink.
Borrowing another $235 million, she said, "would push our debts to over $1.2 billion … not to mention the growing unfunded liability that is over $500 million (and some suggest it is closer to $800 million!)."
Berry, the ranking Democrat in the Legislature and a former president of the body and chair of its Finance Committee, took the Democratic governor to task from the first paragraph of her response:
"Usually he procrastinates and avoids making tough decisions; he has become notorious in not responding to my queries. I had to read his letter several times to make sure I did not misunderstand anything he suggested."
Tapping into Turnbull's imagery of the territory as a "tempest-tossed ship," Berry said that he "is the captain who must rise to the occasion." The members of the 25th Legislature have "put aside our internal differences in the effort to develop the necessary political consensus and will to keep the ship afloat," she said.
Midway into her eight-page response, addressing the federal court moratorium imposed last month on the collection of property taxes, Berry accused Turnbull of "ignoring necessary reforms to make the collection of property taxes equitable and efficient" after such reforms were mandated in a 2000 court case settlement.
"He could have fixed a constant revenue stream," she said, but instead "the governor took the adversary approach against a group of commercial landowners and amazingly gambled the entire property tax revenue stream on a single legal dispute."
She also said cost cutting has got to entail job cutting, politically popular or not, something Turnbull avoided altogether in his package of bills to address the fiscal deficit. Cutting back on personnel costs is "the most important means of reducing deficits" in some 38 states right now, she said, challenging the governor to "tell us your plan for personnel reduction now!"
And, she added, the place to begin is by setting an example "within the senior, highly paid layers of government."
At the same time, she rejected Turnbull's suggestion for reducing costs by cutting the Legislature's budget by another 15 percent on top of a 14 percent reduction for all branches of government already in place.
The executive branch, she said, "consumes well over 85 percent of the government's resources, and thus "it is the branch of government that must make the most sacrifices."
A member of the minority in the 24th Legislature, Berry also took her majority colleagues in that body to task. Two years ago, she wrote, "in a very bizarre political move, Gov. Turnbull and a group of senators in the 24th Legislature took the so-called $100 million surplus, and in the blink of an eye they spent it on pay increases and other pet projects."
She agreed with Turnbull's call for the Senate to stop over-appropriating funds but added that he "must practice what he is preaching."
She called the administration's proposal to impose a tax of 20 cents a barrel on crude oil imported by Hovensa not only illegal but "suicidal if not simply absurdity." And she charged that imposing or increasing taxes on food, shipping containers and gross receipts would "cause the Virgin Islands to explode."
And as for further borrowing, Berry recalled that she supported a $300 million bond issue in 1999 "on the condition that fiscal controls would be put in place to develop an austerity budget." But she said Turnbull "has not implemented" many of the fiscal measures that the 23rd Legislature passed or many of the recommendations of the Five-Year Operating and Strategic Financial Plan developed at his request.
Finally, she told the governor that the Legislature expects him "to speak to us as your allies not enemies, for surely you know who remains on any ship when it sinks — the captain. Everyone else is expected and will get on the lifeboat."
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And she had little sympathy for the "umbrage" the governor expressed at the Senate's call for him to rescind millions of dollars in pay raises to unclassified employees as a condition of considering his bill to float another $235 million in bonds to keep the government from sinking in a sea of red ink.
Borrowing another $235 million, she said, "would push our debts to over $1.2 billion … not to mention the growing unfunded liability that is over $500 million (and some suggest it is closer to $800 million!)."
Berry, the ranking Democrat in the Legislature and a former president of the body and chair of its Finance Committee, took the Democratic governor to task from the first paragraph of her response:
"Usually he procrastinates and avoids making tough decisions; he has become notorious in not responding to my queries. I had to read his letter several times to make sure I did not misunderstand anything he suggested."
Tapping into Turnbull's imagery of the territory as a "tempest-tossed ship," Berry said that he "is the captain who must rise to the occasion." The members of the 25th Legislature have "put aside our internal differences in the effort to develop the necessary political consensus and will to keep the ship afloat," she said.
Midway into her eight-page response, addressing the federal court moratorium imposed last month on the collection of property taxes, Berry accused Turnbull of "ignoring necessary reforms to make the collection of property taxes equitable and efficient" after such reforms were mandated in a 2000 court case settlement.
"He could have fixed a constant revenue stream," she said, but instead "the governor took the adversary approach against a group of commercial landowners and amazingly gambled the entire property tax revenue stream on a single legal dispute."
She also said cost cutting has got to entail job cutting, politically popular or not, something Turnbull avoided altogether in his package of bills to address the fiscal deficit. Cutting back on personnel costs is "the most important means of reducing deficits" in some 38 states right now, she said, challenging the governor to "tell us your plan for personnel reduction now!"
And, she added, the place to begin is by setting an example "within the senior, highly paid layers of government."
At the same time, she rejected Turnbull's suggestion for reducing costs by cutting the Legislature's budget by another 15 percent on top of a 14 percent reduction for all branches of government already in place.
The executive branch, she said, "consumes well over 85 percent of the government's resources, and thus "it is the branch of government that must make the most sacrifices."
A member of the minority in the 24th Legislature, Berry also took her majority colleagues in that body to task. Two years ago, she wrote, "in a very bizarre political move, Gov. Turnbull and a group of senators in the 24th Legislature took the so-called $100 million surplus, and in the blink of an eye they spent it on pay increases and other pet projects."
She agreed with Turnbull's call for the Senate to stop over-appropriating funds but added that he "must practice what he is preaching."
She called the administration's proposal to impose a tax of 20 cents a barrel on crude oil imported by Hovensa not only illegal but "suicidal if not simply absurdity." And she charged that imposing or increasing taxes on food, shipping containers and gross receipts would "cause the Virgin Islands to explode."
And as for further borrowing, Berry recalled that she supported a $300 million bond issue in 1999 "on the condition that fiscal controls would be put in place to develop an austerity budget." But she said Turnbull "has not implemented" many of the fiscal measures that the 23rd Legislature passed or many of the recommendations of the Five-Year Operating and Strategic Financial Plan developed at his request.
Finally, she told the governor that the Legislature expects him "to speak to us as your allies not enemies, for surely you know who remains on any ship when it sinks — the captain. Everyone else is expected and will get on the lifeboat."
Publisher's note : Like the St. Thomas Source now? Find out how you can love us twice as much — and show your support for the islands' free and independent news voice … click here.
