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HomeNewsArchivesSenate Increases Tobacco Excise Taxes in ‘Thanksgiving Bill’

Senate Increases Tobacco Excise Taxes in ‘Thanksgiving Bill’

Sen. Carlton "Ital" Dowe speaks in support of a bill during Tuesday's legislative session, while Sen. Janette Millin Young checks her cell phone.The V.I. Legislature voted to increase its own budget by $850,000, to increase tobacco excise taxes and approved an array of other legislative measures Tuesday, bypassing the committee process by attaching them as amendments to an unrelated bill.

Sen. Celestino White proposed the amendment increasing the Legislature’s budget on behalf of Senate President Ronald Russell, who is out of the territory on a family matter. It appropriates the funding from a $120 million bonding bill passed earlier this year to pay government payroll expenses, income tax returns, and millions in past due government and hospital utility bills.

The amendment says the funding is to "pay the shortfall of the 29th Legislature in the first quarter of the Fiscal Year 2012-2013 due to a budget reduction and for transition of the 29th Legislature to the 30th Legislature." White said the Legislature’s budget was “cut by $2 million this year and this restores some of that." He spoke of helping the 30th Legislature prepare and "get off to a good start," and of the cost for relatives of new senators to travel for opening ceremonies, among other concerns.

Sen. Carlton "Ital" Dowe spoke in support of the measure, saying some senators had become timid about any expenses, but "they are the ones that continue to disrespect themselves." "You don’t want to drive a car because some people are talking nonsense," Dowe said. When they had a mold problem at the V.I. Internal Revenue Bureau, "senators moved millions of dollars to take care of it.” “This is an institution that operates like any other," he said.

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Sen. Usie Richards questioned where the funding was coming from and whether it really existed, and was told the funds remained from the $120 million in bonds purchased under Act 7342, which was signed into law in January.

Voting in favor of the amendment were Dowe, Richards, White, Sens. Louis Patrick Hill, Neville James, Shawn-Michael Malone, Terrence "Positive" Nelson, Nereida "Nellie" Rivera-O’Reilly, Sammuel Sanes, Patrick Simeon Sprauve and Janette Millin Young. No one voted nay. Absent were Sens. Craig Barshinger, Alicia "Chucky" Hansen, Ronald Russell and Alvin Williams.

Another amendment, sponsored by eight senators, increased the territorial excise tax on cigarettes from 35 percent to 45 percent, and on other tobacco products from 20 percent to 30 percent. It also creates a "Tobacco Investment Fund" using 10 percent of tobacco excise taxes on cigarettes and non-cigarette tobacco.

Taxes specifically from cigarettes that are placed in the fund are to be divided, with 50 percent transferred out of the Tobacco Investment Fund into the General Fund; 30 percent to the Department of Health for healthy living programs and 20 percent to the V.I. Olympic Committee. The portion from other forms of tobacco is to be divided, with half going to the General Fund and the other half split between the territory’s two hospitals. The amendment was approved by unanimous consent.

Luz Maria Guadalupe Luis, widow of Gov. Juan F. Luis, will be eligible for a pension equal to half of Luis’ salary as governor, due to an amendment proposed by Hill and passed. The measure does not mention her by name, and would cover any surviving spouse of a governor or lieutenant governor that meets a list of criteria. It retroactively covers widows and widowers whose spouse "dies on or after June 1, 2011." Juan Luis passed away June 4 of that year.

James proposed and the Legislature approved an amendment to the Casino Control Act, reducing the number of casino licenses for tier I- large hotels of 1,500 rooms and more – from four to three; and increasing the number of tier III- hotels of 100 to 199 rooms. James said it would allow a second casino of similar size as Divi Carina Bay Resort and Casino to be built, "hopefully on the west end of the island." He added it could apply to Carambola Beach Resort, if its owners, the V.I. Government Employee Retirement System, saw fit to apply for a license.

The Legislature approved an amendment from Dowe to take any funds remaining under GERS control from loan payments for retroactive salary payments and apply it to unpaid employer pension contributions for employees who retired after 2010 and those who retire "on or about Jan. 1, 2013.
About $6 million was set aside for employer pension contributions when the government made $45 million in retroactive salary payments, but GERS had not made the payments and the sum had increased to roughly $7.1 million, Dowe said.

GERS is currently projected to go bankrupt and cease being able to pay pensions in 10 years.

Detailed rules for when and why convicted sex offenders can travel, who they must notify and request permission from, and under what timelines, were established by an amendment sponsored by Sanes.

The rules, which Sanes said were approved by Attorney General Vincent Frazer, make the process more efficient and clear for both the government and registered offenders, and in case of emergency travel allowed notification by telephone, Sanes said.

The Government Employees’ Service Commission, which negotiates government health insurance contracts, was increased from seven to nine members, with the two new members to be government retirees. The amendment, proposed by White, also stipulates that the Legislature must approve any insurance contract and, if it does not do so within 60 days of receipt, "the existing contract shall be renewed automatically under the same terms and conditions until such time as the Legislature approves a new contract."

How the insurance company that is the other party to the government’s insurance contract would be bound by this stipulation was not discussed.

Also approved were amendments:
– from O’Reilly, striking $60,000 in funding for the Sports, Parks and Recreation Department for Girl Scouts programs on St. Croix and reallocating the funds to the Gov. Juan F. Luis Hospital for mammography services;
– from James, appropriating $25,000 from the Casino Revenue Fund to the Tourism Department to fund the "Crucian Christmas Festival Showcase" scheduled for Dec. 15;
– from Dowe, decreasing the budget of the Economic Development Authority from $5.3 million to $4.7 million and applying the funds to increase the budget for the Office of the Governor to $9.6 million to fund the budget of the Bureau of Economic Research, which was to move to EDA, but currently remains under the Office of the Governor;
– from Hill, allowing St. John car rental companies to use cars for six years before replacing them, rather than the current five years;
– and several technical amendments to existing law.

All the measures were attached to a bill, effectively making technical changes to the law, that eliminates a requirement that outside insurance companies have an agent residing in the territory countersign its policies. The law was struck down as unconstitutional in 2006 but remained on the books.

The heavily amended bill, which senators jokingly referred to as the "Thanksgiving Bill," was approved with Dowe, Hill, James, Malone, Nelson, Sanes and Sprauve voting yea. Voting nay were Nelson, O’Reilly, Richards, White and Young. Barshinger, Hansen, Russell and Williams were absent.

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