Jan. 28, 2003 – When the first of two Senate meetings scheduled for Tuesday morning finally got under way, the news was not good. Lawmakers were told that the government is operating on a deficit and that the reported "fiscal crisis," or whatever one chooses to call insufficient funds, is a reality.
The scheduling of the two meetings — of the Committee of the Whole at 9 a.m. and the Finance Committee at 10 a.m. — appeared destined to create confusion. And it did.
At 9 a.m., one of the few legislators in the Senate chambers was minority member Celestino A. White Sr., who noted the majority's absence, stating he believed those invited to testify were actually arriving at 10 a.m. for the Finance Committee meeting.
He was joined shortly by Sen. Douglas Canton, the majority leader — the position White held in the 24th Legislature. In some good-natured verbal sparring off the floor, Canton assured White that "the spirit of the motion" calling for the Committee of the Whole meeting — a motion made by freshman and minority Sen. Raymond "Usie" Richards and approved by the body at the opening session on Jan. 13 — "would be honored." (See "Senate doubles efforts to examine V.I. finances".)
White assured Canton: "I'm your biggest fan; you can do it."
About 9:25 a.m., Senate President David Jones convened the meeting. However, there being no one present to testify, he then adjourned it for 10 minutes. Almost as if on cue, the three witnesses — Finance Commissioner Bernice Turnbull; Ira Mills, director of the Office of Management and Budget; and Louis Willis, director of the Bureau of Internal Revenue — appeared in the chambers.
All that being resolved, the Committee of the Whole session got under way shortly after 9:30 a.m. Jones said there should have been no confusion: "One meeting had nothing to do with the other."
OMB director: There is a deficit
Mills said the V.I. government revenues for Fiscal Year 2002 totaled $476.1 million. Time shares and hotel taxes to date for FY 2003 are $1.5 million, he said. And, he said, there is a deficit.
For the current fiscal year, he stated: "The revenue update for FY2003 indicated that collections are now projected at $532.7 million against current appropriations of $587.7 million. In other words, if all appropriations were to be paid, it would result in a deficit of $54.9 million."
Mills said the deficit will reduce planned expenditures significantly, a reduction that must be shared by all branches of government. "We have begun to address this by reducing our first- and second-quarter allotments for FY2003," he said.
Real property tax collections to date are $9.2 million, he said, compared to $7.5 million at this time last year. He said the increase is due mainly to the delayed "due date" for calendar year 2001 residential real estate taxes. Total delinquent real property taxes are estimated at $85 million, he said.
With a contingent of firefighters sitting in the gallery, White asked Turnbull when they would be receiving their raises. She replied: "The governor is not against anyone getting an increase, but he is recommending another funding source be sought." That was the message Gov. Charles W. Turnbull sent to the Legislature earlier this month when he returned legislation from the last session of the 24th Legislature.
Then, last Thursday, the administration's chief labor negotiator, Karen Andrews, sent a memo to at least three unions informing them that "we are forced to temporarily suspend all contract negotiations, pending a reassessment of the government's finances." (See "Government suspends contract negotiations".)
White was no more satisfied with the Finance commissioner's answer than the firefighters appeared to be.
Sen. Almando "Rocky" Liburd asked Willis how the government is dealing with the crisis. He asked Bernice Turnbull what has become of the FY 2001 $35 million surplus in the General Fund which the governor cited in his State of the Territory address on Jan. 13. "Does it exist?" he asked. "Where are we today?"
The Finance commissioner said the General Fund has $18.7 million at the moment, and the government payroll every two weeks is $14.2 million. When Liburd asked whether there is a contingency plan to meet payroll needs, she said the administration's financial team meets every week to figure out how to get by, going over "day to day" finances.
Willis confirmed this: "We meet every morning. The honest truth is, every day we have to look." He added, "I don't know how we are keeping afloat, but we are." (In the Finance Committee hearing that followed, Willis would expand on these statements, explaining the Internal Revenue Bureau's position and finances.)
Sen. Norman Jn Baptiste asked Mills: "In light of the fiscal crisis, do you recommend that the raises given to the executive branch be rescinded?"
Mills replied that any recommendation he would make would go to the governor, not the Legislature. "The economic situation changes daily," he said. Noting that he had read in a newspaper on Tuesday morning that Hovensa might have to lay off employees, he added: "We must now evaluate … how this will affect the economy."
Sen. Adlah "Foncie" Donastorg, who chairs the Finance Committee, said he had no questions for the Committee of the Whole hearing. "I will wait patiently for the Finance Committee meeting," he said.
All senators attended the Committee of the Whole meeting except for Carlton Dowe, who was excused.
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