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HomeNewsArchivesDeJongh Nixes Fixed WAPA Rates, Line Items

DeJongh Nixes Fixed WAPA Rates, Line Items

Gov. John deJongh Jr. vetoed legislation Monday mandating specific BTU heat rates for V.I. Water and Power Authority generators once they are converted to alternative fuels, along with several other line items in a wide-ranging omnibus bill the Legislature approved in November.

In 2012, the Legislature increased the territorial fuel tax by seven cents a gallon and devoted that increase to purchase new, more efficient power-generating units in both districts and help WAPA secure bond financing.

The bill, approved in November, amends that law to allow WAPA to also use the funding to help with its ongoing conversion to less costly liquefied natural gas and liquefied petroleum gas, but mandates that the newly modified generators operate at a heat rate of 10,000 BTU or better. (See related links below)

(BTU stands for British thermal unit, the heat required to raise the temperature of a pound of water one degree Fahrenheit.)

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"It would be extremely difficult to find a generator that would meet the 10,000 BTU requirement," because the only ones that could meet it, do not meet environmental permit requirements, deJongh said.

"Hence, the fact of the matter remains that WAPA was apportioned funds which are needed to upgrade its facilities only to now see a bill limiting the use of those funds to an extent making the initial funding moot and meaningless."

The governor vetoed a passage requiring the Internal Revenue Bureau devote two employees to auditing persons renting out apartments and homes on a daily and weekly basis, saying it violated the principle of separation of powers and the executive branch’s role to manage and direct agency employees.

He vetoed a section appropriating money from the St. John Capital Improvement Fund to buy land for the Waste Management Authority saying the fund is over appropriated and it sets a dangerous precedent to legislate that a government agency purchase property for an independent agency that already has the independent authority to acquire land and manage its assets.

And he vetoed a passage requiring funding for cultural education be spend on cultural educational activities saying it is redundant and infringes on separation of powers.

He also vetoed a passage creating a separate, enhanced penalty for assaulting any employee of the Department of Education in the lawful discharge of the employee’s duties, saying it "is merely a reiteration of bill 30-0164 which I vetoed … on the basis that as drafted it would not withstand constitutional scrutiny."

And he vetoed a legislated change in how night differential pay is calculated for call center operators, saying it is "a matter more appropriately addressed through the collective bargaining process. It should not be a legislative matter and .. would further add to this territory’s deficit."

DeJongh signed a bill he requested, restructuring the territory’s captive insurance industry licensing, regulation, fees and tax incentives.

Captive insurance is when a large company insures itself by setting up its own insurance subsidiary. Rather than insuring through a separate company, it insures itself and doesn’t have to pay premiums. The territory has had a law allowing tax benefits to bring in captive insurance companies but has not had much growth, while other jurisdictions have been more successful in attracting this business.

The law will create within the Office of the Lieutenant Governor a division of alternative markets and international reinsurance, which will be supervised by a superintendent of alternative markets, appointed by the commissioner of insurance with the advice and consent of the governor.
The territory will generate revenues from annual licensing fees, but, like the finance companies attracted to the territory by its Economic Development Authority’s tax benefit program, the captive insurance companies will receive very substantial breaks on V.I. and federal taxes on the potentially billions of dollars in insurance company funds flowing through the territory.

As written, the bill would have offered 100 percent exemption from any and all V.I. taxes.
Sen. Nereida "Nellie" Rivera-O’Reilly offered – and the Legislature adopted – an amendment changing the income tax exemption so that businesses on St. Thomas would receive 90 percent exemptions and those on St. Croix 100 percent.

Provisions giving different tax incentives depending on what island the business is based in is inconsistent with existing law, deJongh said. Also, because most exempt insurance companies are not required to have a physical presence in the territory or be licensed in one district, the requirement is meaningless, according to deJongh.

DeJongh also signed into law legislation which:

  • adds "federally qualified health centers to the list of facilities permitted to provide minors with treatment for pregnancy, communicable diseases, drug or controlled substance abuse, emergency medical or surgical treatments, family planning services, as well as behavioral health and dental services";
  • expands the current homestead law and its exemption of a forced sale from $30,000 to $300,000;
  • changing local law to conform to recent changes in federal unemployment insurance rules;
  • creating a framework for selling insurance for portable electronics;
  • and several zoning matters, use variances and resolutions in honor of various Virgin Islanders.

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