The long and short of it is that the government hasn’t finished paying out fiscal year 2008 tax refunds because there’s no money, Sen. Carlton "Ital" Dowe said Tuesday, as the Appropriations and Budget Committee met on St. Thomas to discuss the Finance Department’s FY 2010 budget request.
Questions about the outstanding tax refund payments were raised during Monday’s budget hearings. At the time, Internal Revenue Bureau head Claudette Watson-Anderson said her agency really acts as the processing center, and leaves the refund payments up to Finance.
Finance Commissioner Angel Dawson said Tuesday that a "tremendous amount" — about $46 million in FY 2008 refunds — has already been taken care of, leaving approximately $19 million in outstanding refunds. Making note of the territory’s "cash flow situation," Dawson said the government has already received a joint proposal for an up to $250 million line of credit from FirstBank and Banco Popular, which will cover the payments.
The governor recently signed into law an up-to-$250 million borrowing bill, which would allow the government to tap into public fund accounts and borrow from the banks to cover some critical operating expenses. It was originally anticipated that the government would be borrowing $50 million in public funds and $200 million from the banks, but the joint proposal covers the full $250 million, Dawson explained Tuesday.
The government is negotiating the particulars, and hopes to close on the line of credit by the end of August, he said. Meanwhile, anyone whose refund was not paid by June 1 is entitled to four percent interest on their refund, Dawson added.
Otherwise, Finance is cutting corners where it can, he said later. The government has proposed that eight holidays be unpaid in FY 2010 — an initiative that senators railed against Tuesday, saying that it would cause government employees to "riot." The initiative is projected to save Finance $16,424, in FY 2010, according to a report by the Legislature’s post auditor.
But Dawson pointed out that the government has continued to make its $22 million payroll every two weeks and said that Finance has also managed to "squeeze" an overall $584,229 out of their FY 2010 budget — $261,736 from the General Fund alone.
The department’s General Fund request is almost $7.1 million, and its overall budget includes $686,245 from the Government Insurance Fund, $2.3 million from the Indirect Cost Fund and $70,876 from the Data Processing Fund for a near $10.1 million. Of that amount, $4.6 million is slated for personnel services, covering 98 filled and 14 vacant positions.
Despite the ongoing hiring freeze, senators encouraged Finance officials to fill the vacancies if they need to. The justification, they said, was that other departments are still hiring, ignoring the initiative that has been in place for about the past two fiscal years. Every department needs money, so Finance’s positions are critical, according to Sen. Terrence "Positive" Nelson.
"What we need most of all is financial management," Nelson said. "So if you need the manpower, I think it’s justifiable."
The other option, senators said, is to start cross-training programs throughout the departments so that when employees retire, others can be shifted around from within to take their place.
Nearly $1.7 million of the department’s budget will be put toward fringe benefits, while supply costs are estimated at $288,301. Another $760,000 is earmarked for utility costs, while approximately $2.68 million covers the "other services and charges category," which includes a $2 million contact with Ernst & Young.
There was a brief discussion Tuesday on the operations of the Tax Review Board and whether it has been dealing with the backlog of property tax appeals. Officials said they couldn’t comment in detail because of the government’s ongoing property tax case, but the board’s Executive Director Walter Challenger said the board currently doesn’t have a full compliment of members — but has enough to put together a quorum, if everyone attends the monthly meetings.
The government hopes to deal with the last 41 appeals pending by September, Dawson said.
Present during Tuesday’s meeting were Sens. Craig W. Barshinger, Dowe, Louis P. Hill, Wayne James, Nelson, Sammuel Sanes, Patrick Simeon Sprauve and Michael Thurland.
