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HomeNewsArchivesGovernor Signs Pay Cut Bill Amid Union Objections

Governor Signs Pay Cut Bill Amid Union Objections

Forestalling a looming budget crisis, Gov. John deJongh Jr. on Tuesday signed into law the package of temporary pay cuts and retirement incentives passed by the Legislature June 22.

The United Steelworkers, meanwhile, have issued a statement opposing the measures, saying the government can legally only lay off its members, not cut their pay.

In his signing statement, deJongh said the legislation reflected a fair start in the renewed efforts of the executive and legislative branches of government to work “collectively and cooperatively” to tackle the fiscal and budgetary challenges that confront our territory.

The bill, now enacted into law, contained the Legislature’s proposal for an 8-percent reduction in the salaries of all government workers paid over $26,000 per year; a program to incentivize government workers with 30 or more years in service to retire; a program of voluntary leave without pay for government workers and a cell phone surcharge extending the charge for emergency services now paid by land lines to all phone service in the territory.

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DeJongh vetoed a broad hiring freeze in the bill, saying it "regrettably appears to encroach improperly on the functions of the co-equal branches of government."

While wielding his veto pen to excise passages here and there, deJongh was conciliatory and spoke of cooperation.

"Most assuredly, these are all highly complicated matters," deJongh said. "The development of legislation in areas of such complication is seldom achieved without revision and review. Certainly it is not in this case. However, I am confident that our renewed commitment to working together on these matters would lead to a better—and workable—plan."

This is the second economic stabilization act passed this year by the Legislature to address what was initially a $75 million budget shortfall this year, and $131 million next. As amended by the Legislature, the first package left a $17 million-gap, making a second measure necessary to avoid layoffs.

The United Steel Workers issued a statement Tuesday evening after business hours opposing deJongh’s signing of the law, saying it is a "potentially illegal action."

The union’s press release says USW District 9 Director Daniel Flippo wrote deJongh last week, saying, "It is our position the government’s action violates (the law) which provides that employees with one or more years of service shall be dismissed without prejudice and given the right to reemployment."

A call to Flippo was not returned as of 11 p.m. Tuesday.

Reached at the union office after hours Tuesday, St. Thomas USW representative Randy Allen confirmed the union’s position. Allen said he believes neither pay cuts nor layoffs are actually necessary and that the impending shortfall can be made up by pressing harder to collect the multiyear accumulation of over $200 million in delinquent real property, personal income and business taxes. But if it came down to pay cuts or layoffs, the government must lay off his union’s members, he said.

"We don’t like layoffs either, but between layoffs and pay, it is not a choice," Allen said. "The only way is layoffs. You cannot cut salaries. You cannot legislate it out. It is a violation under the Organic Act of 1954 that states no law shall be enacted that shall impair the obligations of contract."

With his veto pen, deJongh also deleted:
— an automatically recurring $7-million annual appropriation from the Internal Revenue Matching Fund to the GERS to offset a small part of the GERS’ billion-dollar-plus unfunded shortfall;
— a provision that no one who retires under the bill may reenter government for two years;
— a provision setting a deadline of 30 days to pay all accumulated sick leave to retirees under the act; and
— a section saying those who choose to retire will receive credit toward their retirement annuity for any pay raises negotiated but not implemented before their retirement, without regard for whether they paid into GERS.

DeJongh exempted prepaid cell phones from the act’s $1 per month cell phone user fee. No explanation is given, but prepaid cell phones do not have monthly bills, complicating the assessment of the fee.

In a section allowing V.I. Internal Revenue Bureau to publish the names of tax-delinquent businesses, owners and individuals behind on personal income taxes, deJongh vetoed publishing personal income tax information and vetoed a requirement that businesses get a 30-day advance notice before publication.

He also vetoed a requirement that IRB hire two individuals "for the sole purpose of collecting the approximately $200 million in outstanding income taxes owed to the territory."

Under the newly signed act, 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 act 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.

It also:
— 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;
— reduces the salary of the governor and lieutenant governor by 8 percent for two years; 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.

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