The V.I. Legislature called a special session Friday to change legislation passed last week authorizing the government to receive a rolling $40 million line of credit and to allow financial institutions besides the Government Employee Retirement System to bid.
In early June, Gov. John deJongh Jr.’s financial team raised the alarm, saying revenue projections were lower than anticipated and expenditures a bit higher, leaving a shortfall in the current fiscal year.
On June 28 the Legislature approved a package of budget cuts, new borrowing authority and intergovernmental transfers worked out with Government House in an effort to bridge a $26 million budget shortfall in Fiscal Year 2013. (See related links below)
The package also authorizes the government to enter into a rolling line of credit for up to $40 million annually in order to improve cash flow in the months when tax revenues are lower than average. The debt contract would require the loan be paid in full that same fiscal year and so would not add to the overall government debt from year to year.
An amendment in the nature of a substitute submitted by Senate President Shawn-Michael Malone during a Rules and Judiciary Committee on June 27 added a series of changes to budget line items and specified the government "shall negotiate with the GERS" for the credit line.
At the outset of the brief session, the Senate clerk read a letter from GERS Administrator Austin Nibbs, urging the Legislature to seek financing from other institutions which may offer better terms.
"The GERS has … a rate of return it expects to earn on its portfolio in order to ensure its viability," Nibbs wrote. The Public Finance Authority and GERS "may not be able to negotiate an interest rate that is expected for the GERS, therefore … the PFA should have the flexibility to negotiate a credit facility with local financial institutions that is in its best interest," he concluded.
The measure approved Friday also included a series of technical and arithmetic changes to the bill approved in late June.
After the vote, Sen. Alicia "Chucky" Hansen said she wanted to "draw attention to the fact that what has really brought us here is the concern in the letter from the GERS administrator and his concern about the GERS as sole provider."
Malone thanked Hansen for the clarification, thanked staff and media, and adjourned the session.
