Lawmakers examined the territory’s financial future Thursday as representatives from the Office of the Governor and the Office of Management and Budget (OMB) went before the Committee on Appropriations and Budget.
Included in Gov. John deJongh, Jr.’s budget for fiscal year 2011 was $70.9 million from the American Recovery and Reinvestment Act to be distributed to the departments of Education and Finance, the University of the Virgin Islands and the Office of Economic Opportunities.
However, Senator Wayne A.G. James asked representatives from the governor’s office if they had begun planning for a financial worst-case scenario.
He said the federal funds have helped sustain the territories since 2009 but would eventually run out. “We have benefitted from over a half a billion that otherwise would not have been here,” he said. “What is the thinking in your office as to how we function once this is finished?”
Lauritz Mills, Director of the Bureau of Economic Research, told James that she is depending on a better economic outlook. She said that she believes the economy is improving, “albeit slowly.”
James also asked officials about a disagreement between the U.S. Virgin Islands and Puerto Rico, in which Puerto Rican officials are questioning the V.I. government’s use of tax dollars to help make the area more attractive to rum companies.
“What are we going to do,” James asked. “Are we anticipating any of this?”
Mills said that she was hoping that the territory would prevail in the dispute, and that the territory would be able to continue receiving federal funds. She said the governor has been working to help bring the matter to a positive conclusion.
Sen. Sammuel Sanes asked about the current state of the federally administrated stripper wells fund – the outcome of a lawsuit 23 years ago. Money from that fund will make up a little over 5 percent of next year’s proposed budget, but Sanes pointed out that the funds will not last forever. There is about $1 million left in the fund.
The proposed budget for the Office of the Governor is $10.4 million – with about 90 percent of that money coming from the General Fund, 2.9 percent from federal funds, 5.4 percent from the Stripper Wells Fund and 1.4 percent from the Tourism Revolving Fund.
Director of Business and Administration Nellie Varlack said the govorner’s General Fund appropriation of $9.34 million was actually a 7.25-percent reduction over last year’s figure.
She said that her department had taken a number of cost-cutting measures, such as reducing travel, instituting energy-efficient initiatives and consolidating cell phone plans.
However, Sanes questioned the proposed $300,000 budgeted for inaugural activities. He said that given the tough economic times, the event can be scaled down. “That can go a long way in helping families,” he said.
Varlack told him that her office would work to ensure that they would come in under budget, and that the amount is actually much less than what has been spent in the past.
Lawmakers had more questions regarding federal stimulus funds for OMB Director Debra Gottlieb.
Sen. Terrence “Positive” Nelson asked Gottlieb about $40 million that would be used by the Department of Education for hiring teachers and other personnel. He asked what will happen in 2012, when those funds are no longer available.
“The General Fund will have to be able to sustain those positions without that funding,” she said.
Senators also chastised Gottlieb for not doing more local hiring. Sen. Nereida “Nellie” Rivera-O’Reilly said that employers sometime assume that off-island hires will do a better job than a local person. She said that assumption hurts her, and that she would be forwarding Gottlieb resumes for some talented people already living in the Virgin Islands.
While some senators were critical about local hiring, there wasn’t much to complain about when it came to OMB’s cost-cutting measures instituted for next year. The 2011 proposed budget for the office is $8.58 million—nearly half of last year’s $15.2 million budget.
