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Charlotte Amalie
Thursday, August 18, 2022
HomeNewsArchivesGovernor's Fiscal Warnings Need to Be Heeded

Governor's Fiscal Warnings Need to Be Heeded

A History Lesson: Gov. DeJongh’s recent op-ed (St. Thomas Source, May 21) brought back vivid memories. In the early 1970s, I served as assistant Health commissioner for the City of New York. My boss was the city’s Health Services administrator, one of the Mayor’s most important agency heads. There were lots of rumors about the city’s shaky finances, but my boss assured me that “they’ve got buckets of money down there.” “Down there” being City Hall.

Well, it turned out that they did actually have buckets down there. Unfortunately, they were all empty. The city was staying afloat on something called RANs, or “Revenue Anticipation Notes.” One day, the banks decided that there was no revenue to be anticipated, the city and nation being in recession. And therefore, the RANs were worthless, and the banks’ money was at risk.

They stopped lending to the city, and the whole house came crashing down. It was all quite sudden, seemingly without warning, except for those that had been ignored for years.

Jobs were slashed; services were cut. The city entered a very dark period. It was dirty. The subways didn’t work. Criminals figured out that there weren’t enough cops, and crime spiked. Arson became commonplace. Rioting associated with the blackout of 1977 devastated entire neighborhoods. And there was a widespread sense that “New York was dying,” an outcome that many in the United States seemed to welcome, a deserved ending for unbridled liberalism.

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Control: In his warning, Gov. deJongh emphasized the importance of Virgin Islanders keeping control of their own future. The Senate and others would do well to heed this warning. In response to its fiscal crisis, New York City was placed under the authority of something called the Financial Control Board. The city no longer controlled its own destiny. Its real leaders were no longer elected but were appointed by powerful interests which had two goals: restore fiscal stability and to make sure that the banks got their money back. Period, end of story.

A painful and nondemocratic process worked. New York has thrived since the mid-1980s, but there was a lot of suffering during a period of more than 10 years. And those who had dug in their heels, refused to give anything up and looked for someone else to make the sacrifices all learned a painful lesson: once what deJongh referred to as the “tipping point” has been reached, there are no “do-overs.” “Give us another chance” doesn’t wash.

In New York, the mayor, union leaders and other powerful individuals and groups were shocked to find out that nobody cared what they thought anymore. They had had their chance and blown it. No longer big shots, they now had trouble getting their phone calls returned. It was rough justice, but they had brought it on themselves by denying reality and refusing to face the world as it was. Sound familiar?

Luck: The U.S. Virgin Islands is lucky in two respects. For the first time in decades, it has a strong and intelligent leader who is not only willing to face reality but also to lay out the least damaging paths to deal with it.

The second form of good luck takes the form of “cushions.” The territory has many cushions. There are lots of sacrifices that public sector workers can make without cutting anywhere near the bone. Foregoing holidays and pay increases is as painless a way of dealing with a situation like this as one can imagine. In this respect, V.I. government workers generally lack an awareness of how far outside national norms their benefits are.

The element of bad luck is the one that the governor mentioned, the closed nature of the territory’s economy and the huge impact that the public sector has. This is where not pretending that the choices are between good and bad, and not holding on to the belief that there is a magic bullet become so important. Finding the “least worst” solution will involve thoughtful action. It will also involve not putting all of the territory’s chips on job protection at the expense of services. As always, the devil will be in the details.

An Approach: As the V.I. Senate has demonstrated, bad times often bring out the worst in people and groups. It happens everywhere. Let the governor make all of the hard decisions and take the blame for the outcomes. We’re the good guys. We tried to save your job or your benefits. I looked out for “my group.”

In New York State, Gov. Andrew Cuomo, faced with a similar nightmarish fiscal crisis and similarly irresponsible behavior, did something interesting. New York’s health care costs, especially Medicaid, are unsustainable. The governor named a panel of all of the key “stakeholders.” He gave them a target number, put them in a room and told them to figure out the least damaging way to get to that number. Message no. 1: don’t come out of the room until you have figured it out. Message no. 2: we are all in this together, and we are all going to own the solution.

This approach would seem to have particular value in the Virgin Islands because it gets at the culture and behaviors of evasion and nonaccountability.

Summary: Gov. deJongh made three critical points in his op-ed. First, the need to face reality, to see the world as it is, rather than the way we would like it to be. Second, the fact that the clock is ticking, and that choices inevitably get narrower and worse as time passes. And, third, that saying “we need more information” is a form of evasion and delay. We have all of the information that we need to make informed decisions.

I would reiterate a fourth point. There are no “do-overs.” Once the bell rings, and you have lost control, it doesn’t come back for a long time. As Mark Twain once said, “History doesn’t repeat itself, but it does rhyme.” Virgin Islanders should not tempt fate or ignore the lessons of recent history.

Note: Dr. Schneiger is the author of the 2009 book "Managing in Hard Times"

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