At the hearing before the House Resources Committee on HR3589, the Governor made clear that his submitted FY 2005 balanced budget addressed the fiscal problems of the Territory. So, the League of Women Voters of the Virgin Islands read with interest and anticipation the Governor' s letter to the Senate President that accompanied the Executive Budget for FY 2005.
The League was encouraged that the governor again proposed a two-year suspension of negotiations for salary increases, a move the League has long supported. The graphs make clear that 63 cents of every $1 of General Fund revenues is used for personal services (salaries) and fringe benefits (the government' s contribution to FICA, health insurance, retirement, etc.). But this alone will not reduce expenditures nor will it permit the government to pay down its existing debt. The impact of this measure will hopefully stop the expansion of that debt.
Lump sum appropriations provide flexibility to departments and agencies, permitting them to determine their own priorities. As a result, other agencies such as the Water and Power Authority are hit with cash flow problems when departments decide to use monies that had been budgeted for utilities to pay for unplanned expenses. A lump sum budget and the requested legislation to permit agencies to pay larger amounts of prior year bills from current funds are ill advised and encourage the postponement of payment for current year expenditures.
Likewise, across the board cuts of currently funded vacant positions are not realistic. The League does not believe that cuts of positions for teachers, nurses, policemen, and firemen are meaningful approach.
This budget proposal suggests the lack of a meaningful comprehensive plan and policy to contain costs. This is further evidenced by the total disregard for fiscal restraint as department and agency heads appeared before the Legislature seeking increases beyond the Governor' s recommendations. In addition, the budget does not contain any measures to relieve the General Fund of the nearly 9 percent pledged to pay off debt, loans, bonds, etc.
A truly balanced budget includes realistic estimates of income. The League questions if this is truly a balanced budget. Will senators step up to the plate and vote for a flat tax on all cell phones and personal vehicles? Is it practical to expect senators to increase the tax obligation of a voter by $86 a year in an election year? Is it truly balancing a budget when the Legislature increases recurring costs and the Executive raids other funds planned for capital improvements, roads, and transportation in excess of $27 million?
When appropriations for which no real revenue source is identified are included in the budget to appease a segment of one' s constituency, isn' t the electorate being played for a fool? The proposal to create two new agencies, Homeland Security and a supreme court, and the proposed appropriations for these agencies totaling some $3.3 million are also very recent example of plans to spend with no identifiable revenue source.
The League wonders if the Legislature will accept its mandated responsibilities, show fiscal discipline, and recognize that one-time windfalls and escalating debt are not the solution to balancing the budget.
The League believes that a balanced budget requires honest estimates of legitimate revenue streams. When costs overrun those streams, hard decisions must be made and difficult questions answered. Is the government of the Virgin Islands providing mandated services in the most cost effective ways possible?
Rosalie Simmonds Ballentine
President, League of Women Voters of the Virgin Islands
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