Sept. 25, 2002 – The territory's bonded indebtedness, which has more than doubled in the last few years, now exceeds $1 billion. And this total does not include at least $400 million in unbonded debt.
Assuming a Virgin Islands population of 110,000, the bonded debt of $1,069,664,000 works out to about $9,724 for every man, woman and child in the territory. Despite the fact that the islands have a smaller tax base — and thus a lesser ability to repay the debt — than mainland jurisdictions, the average per-capita debt in the territory is more than twice that in the 50 states.
The comparison is between apples and apples: between state and local debts combined on the mainland, and the territory's debt (with the Virgin Islands having no local political jurisdictions).
The most recent information in the "Statistical Abstract of the United States" shows that mainland residents carry about $4,285 per person in state and local debt. In some jurisdictions near to the Virgin Islands in the alphabet, the load is lower: $3,799 in Vermont and $3,523 in Virginia. These numbers are derived by dividing the total state and local debt in a state by the population of that state.
The territorial government has not in recent years disclosed the size of its bonded debt. However, the information is readily available to anyone willing to do rudimentary research: The figures can be found in the most recent annual report on state and municipal bonds published by Mergent, the financial reporting institution that replaced Moody's. These reports are available in every good-sized public library on the mainland.
Mergent's 2001 report showed $1,047,955,000 in issued and outstanding bonds for the U.S. Virgin Islands. To this is added the recently floated bond issue against future tobacco revenues of $21,709,000, giving the $1,069,664,000 total cited above.
This total is more than twice the amount shown by the Moody's 1998 report, which apparently covered bonds issued through the last part of 1997. It showed a bonded debt for the territory at that time of $510,255,000.
PFA bond debt largest and fastest growing
The largest — and the fastest growing — portion of the territory's bonded debts relates to the Public Finance Authority. In the 1998 report, Moody's recorded $238,390,000 in PFA bonds; by the 2001 report, this total had blossomed to $735,870,000.
The U.S. Interior Department's Office of the Inspector General completed an audit of the PFA last summer. A preliminary draft was given to Kenneth Mapp, director of finance and administration for the Public Finance Authority, for discussion purposes and the final draft is now undergoing review by the Washington office.
The territory's other, more specialized bonded debts at the end of 2001 as reported by Mergent were:
Housing Authority – $28,000,000
Port Authority – $25,110,000
Public Works Department – $64,975,000
Water and Power Authority – $155,100,000
Special tax (Hurricane Hugo) – $13,900,000
University of the Virgin Islands – $25,000,000
These bonded debts total $312,085,000
This kind of debt — as opposed to that of the PFA — has been growing relatively slowly in recent years. At the end of 1997, bonds in this grouping totaled $271,865,000.
In addition, and not included in any of the above figures, WAPA plans to issue $50 million in bonds next year (See "WAPA to seek electricity base rate increase".)
The outstanding Virgin Islands bonds are only part of the territory's long-term financial obligations. In addition, there are debts to the federal government, the under-funded pension system, not-yet-paid raises for government employees and past-due vendor payments. There may be additional obligations expressed in some vehicle other than bonds.
The total amount of these non-bonded obligations is not known. But it is known that, as of last month, there was $386 million owed in retroactive pay increases to classified government workers, with the lion's share of that amount, perhaps as much as $100 million, owed to teachers. An estimated $50 million to $100 million is owed to vendors.
While classified — that is, civil servant — workers are waiting for their retroactive raises, the governor by executive order last spring granted often-hefty increases to nearly 900 exempt employees — that is, political appointees — that add some $8.7 million a year to public payroll and benefits costs. (See "Proposed exempt employee pay hikes total $8.7 million".)
Efforts on Wednesday afternoon to obtain information from top government fiscal authorities about the territory's bonded indebtedness were unsuccessful. Messages were left for Ira Mills, director of the Office of Management and Budget, and Mapp. An aide to Kent Bernier, assistant to the governor for economic affairs, said he is off island until Friday.
The response of Nathan Simmonds, director of the Office of Fiscal and Economic Recovery Implementation, to the question of how much the territory's bonded debt is was: "Have you tried the PFA or the OMB? I would have to call them to get it."
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