New beneficiaries of tax benefits from the Economic Development Commission provide jobs and revenue for the territory that are all the more crucial in tough economic times, EDA Chief Executive Officer Percival Clouden said in budget hearings Friday.
There are 98 companies in the EDC program, Clouden said. In the first nine months of this fiscal year, 15 companies filed applications – a 60-percent increase over fiscal 2010. Of those, 11 were new and four were extensions or changes to benefits.
The 11 new applications represent a projected annual payroll of $6 million, investments of about $23.7 million and about 207 jobs, Clouden said.
From 1999 through 2009, EDC beneficiaries paid out $618 million in capital expenditures, Clouden said, an average of about $56 million for each of the 11 years. Over the same time frame, beneficiaries spent $25.6 million, an average of $2.3 million per year. EDC beneficiaries had gross sales amounting to $14.9 billion and paid $1 billion in local taxes – roughly $91 million per year on average.
So far this fiscal year, EDC has issued 12 benefit certificates, of which seven were new. Those certificates anticipate the seven new beneficiaries employing 732 full-time employees with wages of $135 million, investments of $22.3 million and annual charitable contributions of $618,000.
Four businesses suspended or terminated benefits this fiscal year, "primarily due to various economic challenges resulting from the global economic crisis," he said. The loss of those companies resulted in the loss of 40 full-time jobs with $1.9 million in salaries and thousands of dollars in charitable contributions and scholarships, according to Clouden.
The V.I. Economic Development Authority requested $5 million from the general fund, unchanged from its 2011 appropriation. However there was a five-percent reduction implemented at EDA after the original appropriation, decreasing its fiscal 2011 budget to $4.8 million.
Along with its government funding, EDA anticipates generating $600,000 internally, bringing the total EDA budget to $5.6 million for 2012. Of that, $2.5 million is for salaries and wages’ $824,000 for benefits and employer contributions to Social Security and Medicare, utilities are expected to consume $210,000 and the catch-all category "other services and charges," $1.9 million.
EDA is made up of the Economic Development Commission, which confers generous tax benefits for new businesses, The Enterprise Zone Commission, created to revitalize run down and blighted communities, the Government Development Bank, the Small Business Development Agency, and the Industrial Park Development Corporation.
The budget hearing was informational and no votes were taken. Afterwards, in a second hearing Friday, the Finance Committee approved a series of appropriation transfers, allowing several agencies to transfer funds originally appropriated for one budget line item to be used for another, more pressing purpose within the agency. The approved transfers were:
• $591,000 within the Department of Labor;
• $380,000 within the Bureau of Internal Revenue;
• $12,000 within the V.I. Board of Education; and
• $79,000 within the Bureau of Information Technology.
Present at the meeting were Sens. Patrick Hill, Shawn-Michael Malone, Janette Millin-Young, Nereida "Nellie" Rivera-O’Reilly and Carlton "Ital" Dowe, the committee chairman. Absent were Sens. Celestino White and Patrick Sprauve.
