75.7 F
Charlotte Amalie
Friday, March 29, 2024
HomeNewsArchivesGovernment Revenues Down But Expected to Rebound

Government Revenues Down But Expected to Rebound

Aug. 20, 2007 — Current budget-year revenues are down, creating a cash shortfall, while 2008 revenue projections are up, Gov. John deJongh Jr.’s budget team told the Finance Committee during budget wrap-up testimony in Frederiksted Monday.
The 2007 General Fund is experiencing a cash-flow shortfall of $32.4 million, reducing revenue projections to the $806.3 million the administration estimated this past June, said Debra E. Gottlieb, designated director of the Office of Management and Budget.
“Although collections are up in various tax categories in comparison to last fiscal year, the shortfall of over $45 million in corporate taxes significantly impacts our fiscal year 2007 revenues,” Gottlieb said. Adding to the shortfall, federal education funds to the tune of $18 million have not yet materialized, she said.
Noting that corporate revenues were falling, Sen. Liston Davis asked Commissioner of Finance Claudette-Watson-Anderson why. She said last year's projection was too high and had been revised down from $212 million to about $150 million. That sum is largely determined by taxes from the Hovensa refinery, though Hovensa regards the specific figure as confidential.
Next year’s revenue projections are up, however, affecting the 2008 budget currently before the Legislature. Fiscal 2008 revenue projections have been raised from $799.2 million to $825.3 million, Gottlieb said. That increase is mostly because projected real property tax collections have increased by $27 million, from $96 million to $123 million.
The increased property-tax projection was influenced by the recently completed territory-wide property revaluation and in anticipation of receipt of the past two years of uncollected property tax, said DeJongh’s senior policy advisor, Nathan Simmonds.
“If the rate stayed the same, there would be a 60-percent increase in taxes as well as in land values,” he said. “We basically cut that in half, estimating somewhere between zero and 60 percent is where the rate should be. So we took 30 percent as a reasonable assumption.”
Acknowledging that such a large property-tax increase may be burdensome, Simmonds said the projection may be revised downward when the Legislature sets a new property-tax rate.
The territory has regained control of property-tax administration by completing the territory-wide property revaluation recently, along with repeal of a federal property-tax statute, Gottlieb said.
“While it is anticipated the new valuations will yield increased revenue,” she said, “the Office of the Lieutenant Governor … is … developing a tax-rate proposal that does not create undue hardship for property owners, to put before the legislature.”
Other major sources of revenue remain largely unchanged. Personal income taxes are up, from $382.1 million to $406.2 million. But corporate income taxes for 2007 are down from $180 million to $150.2 million, nearly balancing out the rise in personal income taxes.
Sen. Terrence “Positive” Nelson was critical of the widespread practice among government agencies of covering other personnel costs by using funds appropriated to pay salaries for jobs that remain unfilled.
“It’s shady,” he said. “I know you don’t like me using these terms. But it is only just recently we found out government agencies are using vacant positions to pay for accrued vacation and overtime. It seems almost like they are not intending to fill those positions — that the unfilled position is used as a way to fund overtime.”
Nelson, who chairs the Finance Committee, later said he felt these costs should be budgeted more accurately, rather than funded through a “back door.”
Sen. James Weber III expressed a similar concern, asking Gottlieb why overtime was not budgeted.
“Government agencies generally do not fund both overtime and vacancies,” Gottlieb said. “Because if you fill the positions, you generally eliminate the overtime.”
Weber was not reassured.
“You can understand my dilemma, Ms. Gottlieb,” Weber said. “I’m looking at this for the first time as a senator here and it looks like line items really don’t get used for what they are meant for, but are put toward other, reoccurring expenses.”
The financial team appears before the Finance Committee again Tuesday to answer more questions.
Back Talk Share your reaction to this news with other Source readers. Please include headline, your name and city and state/country or island where you reside.

Print Friendly, PDF & Email
Keeping our community informed is our top priority.
If you have a news tip to share, please call or text us at 340-228-8784.

Support local + independent journalism in the U.S. Virgin Islands

Unlike many news organizations, we haven't put up a paywall – we want to keep our journalism as accessible as we can. Our independent journalism costs time, money and hard work to keep you informed, but we do it because we believe that it matters. We know that informed communities are empowered ones. If you appreciate our reporting and want to help make our future more secure, please consider donating.