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Budget Aimed at Cleaning Up Old Messes, Governor Says

May 30, 2007 — While this year's executive budget will not be a "cure-all" for the territory's problems, it is the first step toward addressing a mountain of debt and legal obligations left behind from previous administrations, Gov. John deJongh Jr. said Wednesday morning during a press conference at Government House.
Using this idea as a central theme throughout his presentation, deJongh and members of his fiscal team laid out the main components of the $799.2 million spending plan, which is designed to pair the government's expenditures with the administration's top priorities.
"There are many issues and deeply rooted challenges that we must address in order to lead the territory into the future," deJongh said. "This budget takes the first steps in that process, but by no means is it a panacea for all that ails us. It does, however, establish the foundation and the base to which will be added more initiatives to address our challenges."
Though the government's revenue streams are gradually increasing — budget documents show that tax collections, for example, are projected to grow moderately over the next few months — deJongh added that the territory itself is still in a "precarious" position. That's because past operating budgets failed to take care of outstanding obligations, such as salary increases and a large unfunded liability plaguing the Government Employees' Retirement System, he said.
Seeking to address these and other issues, deJongh said the proposed spending plan is designed to promote "openness and transparency" in government, and will be followed by more efforts designed to reconcile old debts and make sure financial-reporting practices accurately depict the territory's financial status.
Top Priorities
The budget places significant emphasis on areas such as education, public safety and health, akin to budgets of previous administrations. This year's budget is unique, however, in that it also seeks to make several policy and structural changes, decentralizing some of the authority previously placed only in the government's department and agency heads.
The budget for the Department of Education, for example, awards the bulk of a $176.5 million General Fund appropriation to the insular superintendents within each district.
"Through a process of reallocating resources by district, and transferring more managerial responsibility for the day-to-day operations to the district superintendents and away from state-level administrators, we can better address the needs of our children, give our front-line educational leaders the tools they need, and ensure that more money is spent in the classroom rather than on administration," deJongh explained.
Long-standing needs such as teacher certification and summer maintenance have also been factored into the budget, along with funds to hire two district facility managers tasked with making sure local public-school facilities are properly taken care of, he added.
Public-safety issues also stand in the forefront of this year's budget, deJongh said, along with initiatives designed to assist the VIPD in hiring new recruiters to help with staffing levels, cover improvements in the 911 system, set up a new recruitment program and create a cold-case squad to cut down on the number of unsolved crimes. A new training officer and training program will also be implemented to help local officers deal with on-the-job situations, he said.
Handling the unfunded GERS liability, along with its annual contribution shortfalls, also has a significant place in the FY 2008 budget, which includes legislation calling for a 3-percent increase in employer contributions, from 14.5 to 17.5 percent.
The $10.5 million needed to cover the upcoming fiscal year's increase is included in the miscellaneous section of the budget, along with another $20 million contribution intended to pay down on the more than $1 billion unfunded liability.
The increase in employer contributions will be followed by the issuance of pension-obligation bonds during the 2008 calendar year, which will also send an immediate infusion of cash into the system, deJongh said.
Also included in the miscellaneous section of the budget is $15.5 million for pending and negotiated collective-bargaining contracts. On Wednesday, deJongh explained that more than 14 of these union agreements are currently expired and will be addressed as soon as possible.
Another unique feature contained within the FY 2008 spending plan is a $12-million capital project budget. During the press conference, deJongh explained that all money for these expenditures — which include the purchase of computers, vehicles and repairs to various government buildings — will be coming from the Internal Revenue Matching Fund, which holds the government's rum revenues.
Revenues and Economic Outlook
While the government's projected revenues are down slightly from approximately $804.3 million in FY 2007 to $799.2 million in FY 2008, tax collections and other funding sources do continue to show moderate increases.
A decrease in contributions to the General Fund from other government funds, coupled with a reduction in the projected reimbursement from the federal government for funds given to the Department of Education, has led to the lower revenue figure, the governor explained.
However, he added that the territory's economic outlook continues "to look strong," with losses — such as those caused by changes to the local Economic Development Commission's tax-incentive program — offset by growth in the manufacturing, construction and tourism sectors.
Several public-sector projects, such as the Christiansted Bypass and the proposed Long Bay expansion on St. Thomas, will have a positive impact on the local economy, along with aggressive promotional efforts led by Tourism Commissioner Beverly Nicholson-Doty, deJongh said.
Expressing confidence that the territory's economic outlook is strong, deJongh added that the next step in the budgetary process will be getting the proposed appropriations passed through the Senate.
"We are hoping to convince them that this is the best budget," he said. "That this is the budget that we want."
See the FY 2008 Budget here.
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