The V.I. Legislature met briefly Friday to consider legislation addressing the ongoing fiscal crisis, but quickly adjourned until next Tuesday, citing news of Hovensa’s impending closure. Senators asked Gov. John deJongh Jr. to postpone his State of the Territory Address in favor of emergency talks, and Government House indicated deJongh would comply.
"In light of the Hovensa closing, we have decided to recess until Tuesday and request the governor delay the State of the Territory Address," Senate President Ronald Russell said moments after gaveling in the session. "This body has decided to work around the clock on how to respond to the Hovensa situation."
Government House spokesman Jean Greaux confirmed Friday afternoon the senate did request a postponement.
"They asked for a delay of about a week," Greaux said. "We have been told a formal letter will be coming, but I can tell you the governor will acquiesce. Given all that is going on there is no reason not to."
Asked if he agreed with the decision to delay acting on legislation to address the largely unrelated government budget crisis and ongoing layoffs, Greaux said there was "no reaction at this time."
Senate Vice President Louis Patrick Hill issued a statement Friday saying that Hovensa is not likely to be rebuilt or replaced "under the U.S. flag," as any new entity would face restrictions and regulations he called "onerous."
Hill noted a small minority of the V.I. community has not always appreciated Hovensa’s tremendous contribution to the Virgin Islands and has even resented the tax benefits conferred upon the refinery.
“Be that as it may,” Hill said in the statement, “the entire community has come to the realization that Hovensa was not earning the enormous profits widely believed. . .and if we are to attract firms to our shores on the corporate level of Hovensa, we must prepare to meet them with greater concessions and favorable labor union [negotiations]."
The Legislature had been scheduled to meet Friday to vote on new legislation to address waves of government layoffs as a result of a serious budget shortfall and cash crisis.
In December, it rejected legislation proposed by the administration that would have increased gross receipts taxes from 4.5 to 5 percent of receipts, among other measures. DeJongh had previously proposed a series of measures, including increasing the gross receipts tax from 4 percent to 5 percent, creating new cell phone fees, and eliminating nine paid government holidays.
The Legislature implemented some but not all of deJongh’s proposals, increasing gross receipts tax to 4.5 percent, not 5 percent, and declining to eliminate paid holidays. In June, it passed a broad budget stabilization package that imposed an unpopular 8 percent government pay cut and offered cash incentives for senior employees to retire.
Since then, the administration has continued to raise the alarm, saying tax revenues were coming in lower than expected, exacerbating the crisis, and that more needed to be done. On Christmas Eve, the Legislature voted down new measures in a special session called by the governor, saying it would take up the question again after the holidays.
Hovensa, a petroleum refinery partnership and the territory’s largest private employer, stunned the territory Wednesday when it announced it would cease operations. The closing poses serious problems for the government’s budget, among many other things.