The governor has called senators into special session on Tuesday to make some changes to the $250 million borrowing bill he signed into law a couple months ago.
In a letter sent to Senate President Louis P. Hill along with a set of proposed amendments, Gov. John deJongh Jr. said, among other things, the current law doesn’t allow the government to use the money to cover prior year obligations — including money owed to vendors that have already finished their work but haven’t been fully paid for it.
"As we continue to feel the negative effects of the international economic slowdown, and the U.S. Virgin Islands adjusts to its annual slow season, I believe it prudent to put these monies into the hands of those who have assisted the government in providing services to the public and place these additional dollars in circulation in our economy," deJongh wrote in his letter to Hill. "Of course, any such payment of prior year obligations could only be made if sufficient funds were available after payment of current obligations."
The current law also requires the government to pay off any debt at the end of the same fiscal year in which it was incurred — a requirement that members of the governor’s financial team would defeat the purpose of the bill by putting more financial pressure on the government.
"My financial team previously testified that the economic doldrums are expected to continue throughout the rest of the current fiscal year and well into fiscal year 2010," the governor wrote. "A legal requirement mandating the retirement of any debt within the same fiscal year in which it is incurred will only increase the fiscal strain on the government in the following fiscal year and not provide the relief intended to be obtained by utilizing these tools."
The current law requires the government to borrow internally first before turning to the banks for another form of short-term financing. At a board meeting last month, Public Finance Authority head Julito Francis said about $50 million would be borrowed from public fund accounts and that the government expected to close by the end of August on a $250 million line of credit from the banking syndicate formed by FirstBank and Banco Popular.
In his recent letter to Hill, the governor pointed out that the law also requires that all documents relating to the loan process must be submitted to the Legislature not less than 14 business days prior to the documents becoming "legally binding."
Given the government’s current economic position, this mandate is "unduly burdensome," he added.
"The government requires the ability to draw upon these funds in the near term in order to meet its ability to provide its services . . . and the delay occasioned by the existing 14-day provision may serve to jeopardize the government’s ability to live up to its duties," deJongh explained. He proposed that a term of seven business days be substituted instead.
The special session starts at 10 a.m. at the Earle B. Ottley Legislative Hall on St. Thomas.
