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HomeNewsArchivesSenate Passes 'Stabilization Act' to Counter Government Layoff Plans

Senate Passes 'Stabilization Act' to Counter Government Layoff Plans

The Senate’s majority caucus stood firm Wednesday against accusations from minority members that they were playing into the governor’s pocket by passing a "hopelessly flawed" austerity bill that some said could incite riots in the street.

It’s yet to be seen what the public’s response to the bill — called the V.I. Economic Sustainability Act — will be, but the Senate’s majority have been championing its merits ever since the governor’s announcement last week that hundreds of employee layoffs are on the horizon pending any action from the Senate to help solve the now $20.5-million budget deficit for fiscal year 2011.

At a press conference last Wednesday on St. Thomas, Gov. John deJongh Jr. said that he met with senators for six hours last Tuesday in hopes of hammering out an agreement that would eliminate the need for the layoffs, and announced that senators had not only reneged on its terms, but told him so just hours before he was scheduled to deliver an address on the FY 2012 budget.

Senators fired back immediately, holding their own press conference the same afternoon, in which they refuted the governor’s claims and said they were "committed" to passing the bill so everyone could keep their jobs.

As promised, the bill was passed during Wednesday’s full Senate session, much to the chagrin of the nonmajority members who said that several of the sections would put employees — particularly those living paycheck to paycheck — in further financial distress.

Majority members, however, said that while the bill’s provisions were severe, the territory’s fiscal crisis has left the government with little other alternative and put its officials between the proverbial "rock and a hard place."

Among other things, the bill calls for an 8-percent cut in salary for government employees in all branches — including the governor and lieutenant governor, senators, top officials, and employees in the autonomous or semi-autonomous agencies.

The cut cannot, however, take any employees’ salary below $26,000, and a cap will be in effect to make sure that does not happen, according to the bill. Employees who decide to retire within two years of when the bill becomes law will still be able to collect annuity on their full salary — if they pay the difference between that and the 8-percent cut.

The cut and its accompanying provisions would be in effect from July 4, 2011 until July 3, 2013 if the bill is signed into law.

The bill also allows the government to "divert," or use, up to 80 percent of revenue collected in various public fund accounts — except for the St. John and St. Croix Capital Improvement Funds — to help cover operating costs.

Among other things, other sections of the bill:

-enact a hiring and rehiring freeze, which does not apply to doctors and nurses hired by the Health Department, hospital employees, teachers, guidance counselors, school librarians, tax collectors/assessors/auditors, essential court or Legislative staff, police officers or students hired for summer employment; along with personnel within the Emergency Medical Services, Fire Service or Bureau of Corrections;

-prohibit the rehiring of retirees by the government (with much of the same exceptions cited above);

-gives a $10,000 early retirement incentive to employees with 30 or more years of government service and allows the governor and Finance Commissioner to borrow money to cover the payments, provided that they don’t borrow more than $13 million (the borrowing authorization for the governor expires on Sept. 11, 2011);

-requires any employee with 30 or more years of credited service to pay an extra 3 percent of their salary in to the Government Employees’ Retirement System, effective Oct. 1, 2011;

-allows the Bureau of Internal Revenue director to publish in the newspaper the names of all residents and business owing at least six months worth of gross receipts, hotel occupancy and excise taxes; and gives the delinquent taxpayers 45 days notice after their names are published to pay half of what’s owed, and to work out a payment plan to cover the rest of the debt;

-reduces the salary of the governor and lieutenant governor by 8 percent for two years;

-creates a recurring $7 million appropriation, beginning Sept. 30 ,2013, from the government to the GERS from the Internal Revenue Matching Fund;

-implements a $1 cell phone or wireless surcharge; and

-reprograms $500,000 budgeted for the territory’s third-party fiduciary to Human Services Energy Crisis Program, Indigent Burial, Transient Travel Welfare Services, Pharmaceutical Assistance Program, Disabled Persons Fund, Cancer Care and Adult Protective Services Fund.

Nonmajority members introduced an amendment Wednesday meant as an alternative to the bill, but that was defeated by the majority. Included in the amendment were proposals for a two-year budget, an early gross receipts tax payment program and the creation of a Workforce Reduction Planning Board within the Office of the Governor with a mandate to reduce no less than 150 government employments for five consecutive quarters beginning in October.

One of the amendment’s sponsors, Sen. Nereida Rivera-O’Reilly said that while she agrees with the idea that the number of public sector employees should be reduced, it should be done methodically and without "any rush." Rivera-O’Reilly also said that hundreds of thousands could be saved by suspending for two years professional service contracts executed by government that may duplicate services already being provided within the various government departments and agencies.

Offering a more impassioned argument against the majority’s bill, Sen. Neville James said he was not going to "mince words" when he said the majority caucus was "deathly afraid" of standing up to the governor, while Sen. Terrence "Positive" Nelson said he was most concerned about the salary cut that would impact employees who are relying on their full salaries to survive.

In response, majority members said they had opted to make some hard decisions in order to save the same jobs the minority senators were in favor of eliminating.

"I’ve tried to be as reasonable as possible with a very difficult situation," said Sen. Shawn-Michael Malone. "But the reality is that between now and September we have to find $17 million. It is an unfortunate situation … but right now, there is only bad and worse. Take your pick."

While Malone also pointed out that the impacts of the global economic recession have forced other states and territories to make similar, if not deeper, cuts, Sen. Usie R. Richards added that the majority had put months of thought into the bill and met with various stakeholders — including the unions and GERS officials — in hopes of getting as much input as possible.

"We were meticulous," he said, adding that the Senate had already helped to reduce the deficit by passing a reduced FY 2011 budget, and was now looking to plug the remaining gap so the government could keep running.

"It’s unfortunate what we’re hearing today, as if we all just arrived here without crossing other hurdles and bumps while trying to deal with the fiscal crisis," he said. "And that is not the truth. The bill is about economic stability, and deals with Sept. 30 as the cut off point for getting things under control."

Senate President Ronald E. Russell also refuted James’ claims about the majority being afraid of the governor. The majority has maintained its independence in decisions but continues to show respect to local executive branch leaders, he said.

Voting in favor of the Stabilization Act were Sens. Carlton "Ital" Dowe, Hill, Malone, Richards, Russell, Sammuel Sanes, Patrick Simeon Sprauve, Celestino A. White Sr., Alvin L. Williams, and Janette Millin-Young.

James, Nelson, Rivera-O’Reilly and Sen. Craig W. Barshinger voted against the bill.

Sen. Alicia "Chucky" Hansen was absent from Wednesday’s session.

The session picks up again Thursday morning.

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