While agencies and departments will still be facing budget cuts, the news means additional cuts may not be necessary.
The OMB now anticipates about $70 million in remitted federal alcohol excise taxes – a roughly $23 million increase from the $43.1 million projected in June when Gov. John deJongh Jr. submitted the FY13 budget, according to data Gottlieb supplied to the Senate Finance Committee.
The increase is based on increased rum production estimates; an $11 million adjustment the U.S. Treasury recently paid the territory; and also on the expectation that Congress will pass legislation to extend the rum cover-over for two years, increasing remittances from $10.50 to $13.25 per proof gallon and make the change retroactive to January, Gottlieb said.
Personal income tax revenues are now projected to come in at $359.7 million – $9 million more than initially projected. Real property tax collections projections increased $2.7 million to $101.7 million.
The government had planned to use $60 million out of $130 million in anticipated new bond revenues to help balance the FY13 budget, but has now decided to devote $35 million to the 2013 budget and $25 million to help shore up the FY14 budget, Gottlieb said.
This offsets much of the projected increase in revenues, leaving government coffers with $701 million, an increase of $5.1 million from projections in June.
The government just finished negotiating the sale of those bonds, Finance Commissioner Angel Dawson told the committee. There was a strong demand, and the government was able to get a 4.5 percent interest rate, he said.
"Having sold them today, I will be getting on a plane to New York to close on the sale Sept. 13, at which point we will receive the proceeds," Dawson said. "At that time we will accelerate the payment of income tax refunds, he said, adding that OMB expects to be “essentially complete in the payment of refunds" between the end of September and early October.
The overall economic forecast is mixed, with big increases in unemployment due to the closure of the Hovensa refinery, but some signs of improvement in leisure, hospitality, food service and other areas, Gottlieb said. But the government's financial shape may be stabilizing.
Sen. Terrence "Positive" Nelson asked Gottlieb if the territory was facing a budget deficit for 2013 or 2014.
"No,” Gottlieb said. “Based on the projections we have today, we are pretty much balanced."
However, the current fiscal year still has a substantial cash deficit, she said.
The current FY12 General Fund appropriation totals $764.7 million and is about $55 million more than the revised FY12 projected revenues of $709.6 million, she said.
"This budgetary shortfall will be mitigated through the allotment process, including the earlier reductions in departmental allotments of $33 million resulting from the employee dismissals," Gottlieb said. The shortfall has actually shrunk from $65 million projected in June, she said.
Gottlieb presented several budget amendments reflecting the anticipated $5.1 million in revenue. The changes include:
- adding $1.5 million for injured workers medical expenses and medical care;
- adding $3 million to fill critical vacancies at OMB;
- increased funding for debt service;
- move $45,000 in the drought relief fund to the Bont Tick eradication program;
- delete $13,500 appropriated for the St. John Humane Society and replace it with $25,000 for the Animal Care Center of St. John;
- increase St. Croix Animal Welfare Center funding and St. Thomas Humane Society from $40,000 each to $80,000 each;
- and increase Casino Control Commission funding from $707,000 to $807,000.
No votes were taken at the information gathering, budget markup hearing.