June 6, 2003 – Businesses in the Virgin Islands can draw a breath of relief as the Senate Finance Committee late Thursday night killed the governor's proposed 18.75 percent gross receipts tax increase, along with other taxes the committee found untenable, including an "environmental tax" later changed to a "use fee" on oil imported by Hovensa.
And, in a continuing power struggle, they held in committee the governor's proposal to borrow $235 million in bonds to eliminate the projected $144 million budget deficit. Senate President David Jones had said earlier that the body wouldn't authorize any borrowing until Turnbull responded to the Senate's request to rescind the raises the governor granted last year to exempt employees.
In an exhaustive meeting that began at 10:30 a.m. and ended almost 12 hours later, breaking for caucuses, the Senate heard testimony from public and private sector officials, kicked the public sector officers out at one point, and joined together ultimately to replace proposals with some of their own.
Finance Chairman Adlah "Foncie" Donastorg addressed the committee after returning from a last caucus after 10 p.m. "I do believe for the first time in history, you would see that all 15 senators would have supported an initiative to bring back some kind of integrity to this institution and to address the financial situation of the Virgin Islands," he said with a broad smile.
Calling Turnbull's tax initiatives "brutal," Donastorg said the senators had been "considerate and compassionate" in creating their own cost saving proposals to reduce the projected $144 million budget deficit this fiscal year.
They essentially threw out Turnbull's massive $90 million tax increases, retaining only a few, which include:
– A hike in gasoline tax from 14 cents to 17 cents per gallon.
– A tire tax of $1 per tire 18 inches or less, and $2 more than 18 inches.
– A personal use tax on all personally imported items over $1,000.
They retained several measures, including:
– A $9.5 million appropriation for court ordered sewer repairs.
– A $750,000 appropriation for emergency sewer repairs.
– A $600,000 appropriation to create a new cemetery on St. Thomas.
– Reducing the number of government paydays from 26 to 24 starting Jan. 2004.
– A measure to include Water and Power hazardous duty workers for early retirement, which drew criticism from Hugo Dennis, chairman of the Advocates for the Preservation of our Retirement System. "They are creating a new body of workers we cannot support," he said outside of the meeting Thursday.
They also tossed out the $5 per day tax on car rentals, an increase in stamp tax rates, an increase in hotel room tax from 8 to 10 percent, which hoteliers and others had vehemently opposed, an environmental two cents per pound excise tax, and a 2 percent tax on certain foodstuffs. And they killed the governor's proposal to increase government employees' share of health insurance premiums from 27 percent to 40 percent.
The senators' plan incorporates some of the 25 suggestions the minority caucus had proposed last month, and is the culmination of closed door meetings the senators have held for the past week.
Highlights of the senator's amendment include:
– A 14 percent cut in all budget allotments for the balance of Fiscal Year 2003. The Legislature's budget has been cut 14 percent.
– A hiring freeze for the balance of FY 2003, except for teacher, hospital and health care workers, firefighters, peace officers, and Health and Human Services personnel.
– A $2 million payment by the West Indian Co. annually in lieu of taxes payable by law to the government.
– Mandatory direct deposit for all government employees into a financial institution of the employee's choice.
– An increase in unemployment benefits equal to 80 percent of the V. I. average weekly wage in insured work in effect the first day of the benefit year.
– An increase in banking fees, a move strongly opposed by the V. I. Bankers Association.
– Increasing marriage license fees from $25 to $50.
– Allowing all government departments and agencies to increase administrative fees up to 10 percent.
– Increasing business license fees up to $500.
– Increasing moving violation vehicle fines from $500 to $1,000.
– A reduction in time limits for Coastal Zone Management permit processing.
– Reducing government overtime compensation by 50 percent for FY 2004.
All senators attended the meeting except Sen. Douglas Canton who was off-island, and Sen. Emmett Hansen II, who had to attend a court case on St. Croix.

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.

June 6, 2003 – Public Works Commissioner Wayne D. Callwood reminds residents on the house-to-house trash collection route that all household garbage must be placed in proper waste receptacles and placed in an accessible area for pickup.
Residents are asked to call Public Works' Division of Solid Waste at 773-1290 to report any trash not picked up on collection days.

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.

June 6, 2003 – Public Works Commissioner Wayne D. Callwood advises residents of William's Delight that road repairs will begin Monday, June 9, in the southeastern residential portion of the area.
V.I. Asphalt Products will provide drainage improvements and road repairs to the area adjacent to Melvin Evans Highway. The project is expected to take 60 days to complete.
Callwood said the contractor would work under the supervision of the Engineering Department to resurface the roads and improve drainage in the area.
Residents are asked to remove all vehicles from the roadway during this construction period. One-lane access will be made available into the area, and motorists are asked to adhere to posted signs and to reduce vehicular speed in the area.

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.

June 6, 2003 – Public Works Commissioner Wayne D. Callwood reminds residents on the house-to-house trash collection route that all household garbage must be placed in proper waste receptacles and placed in an accessible area for pickup.
Residents are asked to call Public Works' Division of Solid Waste at 773-1290 to report any trash not picked up on collection days.

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.

June 6, 2003 – Public Works Commissioner Wayne D. Callwood reminds residents on the house-to-house trash collection route that all household garbage must be placed in proper waste receptacles and placed in an accessible area for pickup.
Residents are asked to call Public Works' Division of Solid Waste at 773-1290 to report any trash not picked up on collection days.

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.

June 6, 2003 – Public Works Commissioner Wayne D. Callwood reminds residents on the house-to-house trash collection route that all household garbage must be placed in proper waste receptacles and placed in an accessible area for pick up.
Residents are asked to call Public Works' Division of Solid Waste at 773-1290 to report any trash not picked up on collection days.

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.

June 6, 2003 – The Year 2003 Dining Out coupon books from Rotary East have just been issued and are now available on St. Thomas and St. John.
The booklets contain 29 coupons for 26 fine restaurants on St. Thomas and St. John, offering one free lunch or dinner with the purchase of a second lunch or dinner of equal or greater value. Cost of each book is $20.
Proceeds from the sale of the books will enable Rotary East and Rotary St. John to fund scholarships high school students.
Books can be purchased through Rotary East members or at The Color of Joy, East End Secretarial Services, Home Again, all on the East End of St. Thomas; at SRI at Havensight; and at outlets on St. John.

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.

June 6, 2003 – The Year 2003 Dining Out coupon books from Rotary East have just been issued and are now available on St. Thomas and St. John.
The booklets contain 29 coupons for 26 fine restaurants on St. Thomas and St. John, offering one free lunch or dinner with the purchase of a second lunch or dinner of equal or greater value. Cost of each book is $20.
Proceeds from the sale of the books will enable Rotary East and Rotary St. John to fund scholarships high school students.
Books can be purchased through Rotary East members or at The Color of Joy, East End Secretarial Services, Home Again, all on the East End of St. Thomas; at SRI at Havensight; and at outlets on St. John.

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.

June 5, 2003 – Almost all of Gov. Charles W. Turnbull's ideas for shoring up the territory's ailing finances met a brick wall at Thursday's Senate Finance Committee meeting as senators and business leaders dissected his proposals preparatory to a full Senate session scheduled for Monday.
And by the time the lawmakers called it a night around 10:45 p.m., it looked as if many of Turnbull's proposals will not make it out of the Finance Committee, by Monday or ever.
The senators are developing a plan of their own, but no details were revealed Thursday. Senate President David Jones, speaking off the floor, said only that their strategy is "to wait until the governor responds to our letter before we agree to borrow any money." He said the plan was still in the draft process.
The governor's six far-ranging bills include a provision for the government to borrow another $235 million and the enactment of a 19 percent increase in the gross receipts tax, an excise tax on food imports, surcharges on car rentals and hotel room charges, fees for containers shipped to the territory, an "environmental excise tax" based on weight on nearly all goods coming into the territory, and a per-barrel tax on crude oil refined in the territory and imported motor fuel.
The bills were taken up on May 22 at a special session called by the governor, 36 hours after they were delivered to the Legislature. After 11 hours of deliberation, the Senate referred them all to the Finance Committee. (See "Senators send governor's bills to committee".)
The bills have generated strong opposition, especially from the private sector but also from a number of senators, including Donastorg, who commented at the May 22 session that administration officials were "stone crazy" if they thought he was going to sign off on the measures as proposed.
The senators heard on Thursday from a gaggle of the governor's chief financial officers including Finance Commissioner Bernice Turnbull; Ira Mills, director of the Office of Management and Budget; Nathan Simmonds, director of the governor's Office of Fiscal and Economic Recovery Implementation; Attorney General Iver Stridiron; and Karen Andrews, chief labor negotiator.
Simmonds took the heat as he dodged senators' inquiries about a letter they had written to the governor on Monday calling on him to rescind the hefty pay raises he granted exempt and classified employees last year via an executive order. Simmonds said the governor had gotten the letter and "would answer," but he didn't say when, to the annoyance of the senators.
He reiterated his statement of May 22 that the projected deficit of $115 million for this fiscal year announced by the governor on April 24 has grown to $144 million with the anticipated loss of property tax revenues as a result of a federal court moratorium on collections issued last month.
Spending cuts planned, but not laid out in bills
Simmonds also said that "the governor's plan has been unfairly criticized as containing no expenditure reduction initiatives." Some of the governor's initiatives do not require legislative action, he said, "and so no bill was submitted to this body."
He continued: "We have initiated spending cuts to the tune of $50 million in Fiscal Year 2003, and we have asked for your authorization to implement an additional $10 million in expenditure reductions."
These include, he said:
– Reductions totaling $46 million in the allotments of all branches of government, including a cut of 10 percent cut, or $1.6 million, for the Legislature.
– A reduction in the government work force by 10 percent over the next five years.
– Increasing the employee share of health insurance premiums to 40 percent from the current 27 percent, which he said will save the government about $9 million annually.
Further, Simmonds said, the governor's proposals will close the deficit over the next year "without layoffs, reduction of salaries or the elimination of essential services."
He said the administration is holding firm on the proposed tax increases. But "the suggestion that no consideration was given to the impact these tax increases would have on the various sectors of our community is absurd," he said. The conclusion was that "it was the fairest way to spread the pain throughout all the community."
Business representatives who testified Thursday were articulate and adamant in their objections to almost all of the governor's proposals.
What's proposed not what was discussed
Cassan Pancham, St. Thomas-St. John Chamber of Commerce president, said:"These measures are a complete departure from what we had discussed in meetings with the governor's financial staff. The gross receipts tax, for instance, was to be raised from 4 percent to 4.25 percent, not 4.75 percent," as the governor has proposed.
Pancham, who also is president of the V.I. Bankers Association, objected as well to the governor's proposal to "increase by 50 percent the annual fees for bank licenses in the V.I." The idea, he said, is "an inappropriate and counterproductive proposal for many reasons and should be rejected."
Along with his criticism, Pancham offered an alternative plan. He said the bankers' group is has been meeting with Lt. Gov. Vargrave Richards and his Banking and Insurance Division director, Deverita Carty Sturdivant, to develop a proposed comprehensive Financial Services Act and that the legislation is undergoing final amendments. He asked that any change in the present bank fee structure be postponed pending action on the legislation.
Alexander A. Moorhead, Hovensa vice president for government affairs and community relations, challenged the governor's proposed "environmental excise tax" of 20 cents per barrel on crude oil imported to the territory. He said the tax — which he calculated at $27 million annually — would violate Hovensa's agreement with the V.I. government, a point raised earlier by lawmakers and other business leaders.
In his testimony, Moorhead stated: "It should be obvious that the imposition of this large additional tax burden on Hovensa — even if it did not violate Hovensa's exemption, which it clearly does — would undo the company's efforts to keep expenses and revenues in balance and maintain a positive cash flow." Because of its own financial setbacks, he said, "Hovensa has … implemented an expenditure reduction program which includes the cancellation of merit and contractual pay increases and the postponement of capital projects."
Moorhead offered no room for compromise. "Senators," he said, "the continued operation of the refinery, the largest private employer in the V.I. and the main private industry sustaining the economy on St. Croix, would be placed in jeopardy by this tax."
Stridiron suggested an amendment in the nature of a substitute, which he claimed would resolve the situation. In part, the amendment would scratch the tax in favor of a "transitional environmental infrastructure user fee" of 20 cents per barrel of crude oil and refined petroleum products imported into the V.I."
Moorhead, who appeared with Hovensa attorney George H.T. Dudley, said it was the same thing under a different name. Stridiron, in earlier testimony, had said the government's legal research suggested the "fee is legal and permissible."
Expenditure problem vs. revenue problem
Pancham, speaking as Chamber president, objected to most of the tax and fee increases Turnbull has proposed. "It is the chamber's position that the corrective measures submitted by Governor Turnbull … are not in the best interests of the V.I. community and will result in severe hardship for many of the territory's busi nesses, especially smaller businesses, the labor force and all consumers," he said.
The chamber's opinion, he said, is that "the government has more of an expenditure problem than a revenue problem. There must be a substantial level of reduction in the public sector's expenditures." He added: "It is critical to note that government expenses have increased over $200 million in the past two years without any noticeable infrastructure improvement."
Pancham outlined a series of strategies for economic recovery that he said were developed by both of the territory's chambers of commerce and both of its hotel associations. He urged the immediate establishment of a working group with business, labor and government representation, including a member of the 25th Legislature, to develop "realistic solutions to our financial crisis."
After hearing from private- and public-sector representatives, but with no answer from the governor to the Senate's demand that he rescind raises granted exempt employees last year, the committee dismissed the administration financial officers until such time as Turnbull should respond. (See "Finance kicks administration officials out".)
The committee agreed to hear further testimony from the private sector in the afternoon.

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.

June 5, 2003 – Almost all of Gov. Charles W. Turnbull's ideas for shoring up the territory's ailing finances met a brick wall at Thursday's Senate Finance Committee meeting as senators and business leaders dissected his proposals preparatory to a full Senate session scheduled for Monday.
And by the time the lawmakers called it a night around 10:45 p.m., it looked as if many of Turnbull's proposals will not make it out of the Finance Committee, by Monday or ever.
The senators are developing a plan of their own, but no details were revealed Thursday. Senate President David Jones, speaking off the floor, said only that their strategy is "to wait until the governor responds to our letter before we agree to borrow any money." He said the plan was still in the draft process.
The governor's six far-ranging bills include a provision for the government to borrow another $235 million and the enactment of a 19 percent increase in the gross receipts tax, an excise tax on food imports, surcharges on car rentals and hotel room charges, fees for containers shipped to the territory, an "environmental excise tax" based on weight on nearly all goods coming into the territory, and a per-barrel tax on crude oil refined in the territory and imported motor fuel.
The bills were taken up on May 22 at a special session called by the governor, 36 hours after they were delivered to the Legislature. After 11 hours of deliberation, the Senate referred them all to the Finance Committee. (See "Senators send governor's bills to committee".)
The bills have generated strong opposition, especially from the private sector but also from a number of senators, including Donastorg, who commented at the May 22 session that administration officials were "stone crazy" if they thought he was going to sign off on the measures as proposed.
The senators heard on Thursday from a gaggle of the governor's chief financial officers including Finance Commissioner Bernice Turnbull; Ira Mills, director of the Office of Management and Budget; Nathan Simmonds, director of the governor's Office of Fiscal and Economic Recovery Implementation; Attorney General Iver Stridiron; and Karen Andrews, chief labor negotiator.
Simmonds took the heat as he dodged senators' inquiries about a letter they had written to the governor on Monday calling on him to rescind the hefty pay raises he granted exempt and classified employees last year via an executive order. Simmonds said the governor had gotten the letter and "would answer," but he didn't say when, to the annoyance of the senators.
He reiterated his statement of May 22 that the projected deficit of $115 million for this fiscal year announced by the governor on April 24 has grown to $144 million with the anticipated loss of property tax revenues as a result of a federal court moratorium on collections issued last month.
Spending cuts planned, but not laid out in bills
Simmonds also said that "the governor's plan has been unfairly criticized as containing no expenditure reduction initiatives." Some of the governor's initiatives do not require legislative action, he said, "and so no bill was submitted to this body."
He continued: "We have initiated spending cuts to the tune of $50 million in Fiscal Year 2003, and we have asked for your authorization to implement an additional $10 million in expenditure reductions."
These include, he said:
– Reductions totaling $46 million in the allotments of all branches of government, including a cut of 10 percent cut, or $1.6 million, for the Legislature.
– A reduction in the government work force by 10 percent over the next five years.
– Increasing the employee share of health insurance premiums to 40 percent from the current 27 percent, which he said will save the government about $9 million annually.
Further, Simmonds said, the governor's proposals will close the deficit over the next year "without layoffs, reduction of salaries or the elimination of essential services."
He said the administration is holding firm on the proposed tax increases. But "the suggestion that no consideration was given to the impact these tax increases would have on the various sectors of our community is absurd," he said. The conclusion was that "it was the fairest way to spread the pain throughout all the community."
Business representatives who testified Thursday were articulate and adamant in their objections to almost all of the governor's proposals.
What's proposed not what was discussed
Cassan Pancham, St. Thomas-St. John Chamber of Commerce president, said:"These measures are a complete departure from what we had discussed in meetings with the governor's financial staff. The gross receipts tax, for instance, was to be raised from 4 percent to 4.25 percent, not 4.75 percent," as the governor has proposed.
Pancham, who also is president of the V.I. Bankers Association, objected as well to the governor's proposal to "increase by 50 percent the annual fees for bank licenses in the V.I." The idea, he said, is "an inappropriate and counterproductive proposal for many reasons and should be rejected."
Along with his criticism, Pancham offered an alternative plan. He said the bankers' group is has been meeting with Lt. Gov. Vargrave Richards and his Banking and Insurance Division director, Deverita Carty Sturdivant, to develop a proposed comprehensive Financial Services Act and that the legislation is undergoing final amendments. He asked that any change in the present bank fee structure be postponed pending action on the legislation.
Alexander A. Moorhead, Hovensa vice president for government affairs and community relations, challenged the governor's proposed "environmental excise tax" of 20 cents per barrel on crude oil imported to the territory. He said the tax — which he calculated at $27 million annually — would violate Hovensa's agreement with the V.I. government, a point raised earlier by lawmakers and other business leaders.
In his testimony, Moorhead stated: "It should be obvious that the imposition of this large additional tax burden on Hovensa — even if it did not violate Hovensa's exemption, which it clearly does — would undo the company's efforts to keep expenses and revenues in balance and maintain a positive cash flow." Because of its own financial setbacks, he said, "Hovensa has … implemented an expenditure reduction program which includes the cancellation of merit and contractual pay increases and the postponement of capital projects."
Moorhead offered no room for compromise. "Senators," he said, "the continued operation of the refinery, the largest private employer in the V.I. and the main private industry sustaining the economy on St. Croix, would be placed in jeopardy by this tax."
Stridiron suggested an amendment in the nature of a substitute, which he claimed would resolve the situation. In part, the amendment would scratch the tax in favor of a "transitional environmental infrastructure user fee" of 20 cents per barrel of crude oil and refined petroleum products imported into the V.I."
Moorhead, who appeared with Hovensa attorney George H.T. Dudley, said it was the same thing under a different name. Stridiron, in earlier testimony, had said the government's legal research suggested the "fee is legal and permissible."
Expenditure problem vs. revenue problem
Pancham, speaking as Chamber president, objected to most of the tax and fee increases Turnbull has proposed. "It is the chamber's position that the corrective measures submitted by Governor Turnbull … are not in the best interests of the V.I. community and will result in severe hardship for many of the territory's busin esses, especially smaller businesses, the labor force and all consumers," he said.
The chamber's opinion, he said, is that "the government has more of an expenditure problem than a revenue problem. There must be a substantial level of reduction in the public sector's expenditures." He added: "It is critical to note that government expenses have increased over $200 million in the past two years without any noticeable infrastructure improvement."
Pancham outlined a series of strategies for economic recovery that he said were developed by both of the territory's chambers of commerce and both of its hotel associations. He urged the immediate establishment of a working group with business, labor and government representation, including a member of the 25th Legislature, to develop "realistic solutions to our financial crisis."
After hearing from private- and public-sector representatives, but with no answer from the governor to the Senate's demand that he rescind raises granted exempt employees last year, the committee dismissed the administration financial officers until such time as Turnbull should respond. (See "Finance kicks administration officials out".)
The committee agreed to hear further testimony from the private sector in the afternoon.

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.