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HomeNewsArchivesTURNBULL: NO FY 2004 BUDGET 'TIL FY 2003 RESOLVED

TURNBULL: NO FY 2004 BUDGET 'TIL FY 2003 RESOLVED

May 29, 2003 – The announcement came at "the 12th hour," to quote Gov. Charles W. Turnbull from another recent statement, but it came as no surprise: The governor will not be submitting his proposed Fiscal Year 2004 budget for the administrative branch to the Legislature by May 30 as required by law.
A Government House release issued Thursday afternoon said the budget would not be submitted by Friday and that it will be submitted only after the Legislature approves a plan to resolve the Fiscal Year 2003 "situation."
On April 24, the governor announced that the government was facing a deficit of $100 million for the current fiscal year, a figure revised soon thereafter to $115 million. Last week, members of his financial team testified before the Senate that the shortfall could reach $144 million as a result of a May 12 federal court order imposing a moratorium on the collection of property taxes.
Late on the night of May 13, the governor's package of six multi-part bills to address the financial crisis was delivered to the Legislature for consideration at a special session called for May 15. The bills call for borrowing another $235 million, spending much of it on projects that include $80 million for a new hotel that the government would build and own on St. Croix, and increasing existing taxes and adding new ones, most of them aimed at the business sector.
The revenue proposals include raising the gross receipts tax to 4.75 percent from the current 4 percent, adding a 2 percent surcharge to the 8 percent hotel room tax, and instituting an "environmental excise tax" based on the weight of items imported into the territory and a per-barrel tax on crude oil that one business executive calculated would cost Hovensa more than $32 million a year.
Nowhere in the bills were there any proposals to reduce government expenditures, save for changing the pay periods to twice monthly rather than every other week, which would mean two less instances of processing payments but would not affect the salaries government employees receive.
A top administration official told the senators that $5 million could be saved through natural attrition in the government work force of 2 percent a year for five years; enforcement of a hiring freeze; limitations on overtime, travel and the use of cellular phones; and restrictions on unauthorized use of government vehicles. Police officers got their marching orders on Monday to apprehend the drivers of any such vehicles found to be in use outside of authorized hours.
After 11 hours of deliberations on May 15, the Legislature voted unanimously to refer all of the bills to the Finance Committee for consideration on June 5. The hearing does not shape up to be a rubber-stamp affair; Sen. Adlah "Foncie" Donastorg, the committee chair, said on the Senate floor on May 15 that the administration officials were "stone crazy" if they thought he was going to sign off on the bills as proposed.
Reaction to the proposals was predictably negative from the business community. Joe Aubain, long-time executive director of the St. Thomas-St. John Chamber of Commerce, said: "I'm assuming this is one part of the package, and the cuts haven't come down yet."
Noel Loftus, president of the St. Croix Alive business organization and a former St. Croix Chamber of Commerce president, said: "There is no recovery plan. It is not balanced, not thought out, not responsible, and it won't work. If this passes, you will see more businesses close."
Delegate Donna M. Christensen was largely in agreement, expressing concern about "the Turnbull administration's tax-laden response" to the territory's fiscal crisis. "I am still waiting to hear the other side — how spending will be reduced," she said. "I know that the federal government, who I am sure will be called on for help, will be waiting also." In his letter to Senate President David Jones on Thursday concerning the FY 2004 budget, Turnbull wrote: "The executive branch departments and agencies have worked very hard to develop budgets within the confines of the limited resources available."
However, he added, "The budgets of all departments and agencies will be directly affected by the measures that are ultimately utilized" to resolve the projected massive funding shortfall by the end of the current fiscal year, on Sept. 30.
Turnbull said his administration is continuing its efforts to prepare "a realistic and meaningful budget."
The Senate Finance Committee not only is key to the immediate fate of the governor's proposals to address the burgeoning FY 2003 deficit but also has first say in the Legislature's manipulation of the administration's proposed FY 2004 budget.
On Sunday, the governor again called the Senate into special session, this time to act Tuesday on a bill ratifying the leasing of submerged lands in Long Bay and the granting of a Coastal Zone Management permit for development of those lands. In his transmittal letter to Jones on Sunday, he wrote: "If I understand the situation, if this development is to move forward and this investment is to be made for the people of the Virgin Islands, the time to act is now. This is the 12th hour and the cock is crowing."
On Tuesday, the Legislature approved both the lease and the permit.

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