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DeJongh Submits Revised 2009 Budget

Jan. 9, 2009 — While members of the incoming 28th Legislature have yet to take their oath of office, Gov. John deJongh Jr. is wasting no time in addressing some of the financial concerns that were left hanging when the Senate abruptly adjourned last month.
On Friday, the governor submitted to incoming Senate President Adlah “Foncie” Donastorg a revised fiscal year 2009 budget meant to reflect current economic conditions and factor in those items that were left out of the document when it emerged out of the mark-up process last September.
“Overall, the submission reflects certain changes to the appropriations made to various departments, agencies, instrumentalities and the miscellaneous section of the budget to ensure than critical items are addressed with priority,” the governor wrote in a letter to Donastorg sent along with the revised budget. “The changes made by this measure are not made to indicate that any previously approved items are not worthy of Government funding. Indeed, I very much regret having to decrease funding to the several community service entities which assist our populace in various fashions. However, at this juncture, the reality of the worldwide economic crisis, and its direct and indirect effects on our local economy, cannot be ignored and therefore requires that we begin to align our spending patterns to fit this financial picture.”
Among the items included in the revised budget are: negotiated salary increases for Government employees which were implemented during Fiscal Year 2008; the increased three percent employer contribution of the Government to the Government Employees Retirement System; and the costs of the recently approved health insurance package for government employees, retirees, and their dependents.
The revised submission also reduces the budget of the V.I. Superior Court by about $2 million, which is still a $5.7 million increase over last year’s appropriation – more than any other government department or agency, deJongh wrote.
“This reduction still provides the Superior Court with a substantial increase,” the governor said. “While the implementation of the Magistrate Division is important to the development of the Superior Court and the judicial apparatus of the U.S. Virgin Islands, the total funding should not be committed to the project in the FY 2009 budget at this time in light of the current pace of implementation, and the immediate dire needs in other areas of the government. In light of the fact that there are only nine months left in the fiscal year, the aforementioned large increase in funding over FY 2008, and the flexibility of a lump-sum budget, it does not appear that this reduction should hinder the Superior Court’s implementation of the Magistrate Division. I also point out that the monies re-budgeted in this measure from the Superior Court can be provided to the Superior Court in the FY 2010 budget or in a subsequent supplemental FY 2009 proposal or re-programming measure, should the financial landscape of the territory improve.”
The revised budget – which is pretty much what the governor submitted to senators before the 27th Legislature closed up shop last month – also provides the money needed to address two outstanding court judgments: a $4 million settlement to the Long Bay Trust and a $3 million settlement with H&O Warehouse.
“The Government must respect these court orders and comply with their requirements,” the governor wrote. “In the case of the Long Bay Trust the court order, further interest on the settlement figure will not accrue pending payment of the judgment in January 2009. However, pursuant to the order of the Superior Court, if the payment is not made in a timely fashion, the government will be required to pay the full amount due, in excess of $4.3 million, plus interest at 6 percent and the attorney’s fees and costs incurred by the Long Bay Trust from the inception of this litigation. With respect to H&O Warehouse, while we have reached a settlement with the plaintiff, if the judgment is not paid, interest will begin to accrue at 4 percent per annum.”
Money previously committed to the Williams Delight road project has been taken out of the budget, since the Public Finance Authority recently set aside $4 million for the project. Another $2 million has also been committed from the St. Croix Capital Improvement Fund, according to the governor.
Given the current market conditions, additional budget or reprogramming bills may be submitted later on, deJongh wrote Friday.
“In addition, the resolution of the government’s appeal pending before the U.S Third Circuit Court of Appeals on the status of our ability to control our real property tax system will play a significant role in any future budgetary submissions to the Legislature,” he said. “It is because of the existing financial uncertainty that it is necessary that the Legislature act on the proposed measure promptly to ensure that the Government operates smoothly, to avoid default on our health insurance coverage premiums, to prevent the Government from further exacerbating the unfunded liability of the GERS, and to preclude the growth of any existing retroactive wage amounts owed to Government employees.”
The current fiscal year is going to be “one of the most challenging in the history of the Virgin Islands,” as officials continue to monitor the government’s expenses, develop a local stimulus package and make sure that the Virgin Islands is included in any future stimulus package from the federal government, the governor added.
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