After arriving Monday, Kia’aina met with the Gov. Kenneth Mapp and his new administration on St. Thomas and St. John before flying to St. Croix. On Friday the secretary will meet with representatives from the U.S. Labor and Health and Human Services Departments to report her findings and recommendations.
“It’s my job to insure that I go to all of the areas. I don’t believe you could help to oversee any policy decisions we work on collaboratively or even budgetary issues from a desk in Washington, D.C.,” she said.
According to Kia’aina, the mandate of the Insular Areas is more than helping with economic development, government efficiency and quality of life, but also protecting and sustaining natural resources.
The territories, especially those that rely on tourism for income, must find a balance between the two, she said.
“Unsustainability is not the appropriate action for any of the territories,” Kia’aina said.
One of the first issues the assistant secretary learned about the Virgin Islands is the “fragile” fiscal state and ability to run the government and, second, that the cost of energy is the “top of the list” of issues.
While energy costs are very problematic to Virgin Islanders, Kia’aina said the proposed propane and alternative energy conversion is “ahead of the other territories.” She complimented the government and V. I. Water and Power Authority for “helping themselves,” instead of waiting for the federal government.
As far as helping WAPA financially, she said the Department of the Interior would support renewable energy efforts because it is a “priority” for the president. However, the support may not be financial, she added.
“I need to increase my funding to give them additional funding,” she said. “I would like to explore other funding for WAPA.”
Kia’aina said she also learned that the territory has no climate adaptation plan but that the Department of Planning and Natural Resources is working on a feasibility study.
“That’s important, but I would like to see a plan,” she said.
According to Kia’aina, economic development is “all encompassing” and can be achieved by creating better health care, education, infrastructure, a better quality of life and conserving natural resources. The federal government can help in some areas, but the state of the economy and development is up to the local government, she said.
The St. Thomas Chamber of Commerce told her economic development is on its priorities.
President Barack Obama has pledged to work on building up the nation’s infrastructure, including that of the territories, through the U.S. Department of Transportation, Kia’aina said. But the Virgin Islands needs to participate in rebuilding roads and historic building.
Kia’aina said the rum cover over tax reimbursement of $200 million to the territory is a “delicate” subject, partly because there is competition between the Virgin Islands and Puerto Rico and the way the money is spent. The territory’s reimbursed tax and subsidy is much more than the other protectorates, she noted, giving the example of Guam, which she said is similar in economy and size but receives $70 to $80 million.
During meetings with the 31st Legislature on Wednesday, Kia’aina said she talked to senators about using more cover over funds for capital improvement projects such as public schools.
“It is fair to expect capital improvement projects because the funding is significant and everybody agrees on the need,” she said.
Longstanding federal legislation encourages the territory to offer tax breaks in exchange for rum companies to set up here. At the same time, the federal government collects $13.50 in excise tax for every proof gallon of alcohol imported into the United States. By law it returns at least $10.50 per proof gallon to the Virgin Islands and Puerto Rico, in accordance with the level of importation. Another $2.75 per gallon – bringing the rate of cover over to $13.25 per gallon – must be approved by Congress every two years in tax extender legislation that includes a wide array of temporary tax provisions.
Kia’aina hopes to convince Congress to extend the commitment period from two years.
Much of the money goes to finance loans secured by the tax revenue stream. A large portion also goes to direct cash subsidies to the distilleries. Senate President Neville James, who has long criticized the high subsidies, is investigating whether the $2.75 per gallon, that Congress may or may not decide to send to the territory, can be separated out from subsidy contracts with Diageo and Cruzan and used to back federal lending.
"It’s a legal question right now,” James said, “But to me it stands to reason that we cannot contract away funds that belong to Congress and Congress has not yet decided to give to us."
"We are in pretty bad shape financially and need help right now,” James said, later adding, “We have to be aggressive and innovative."
James told Kia’aina there has not been regular ferry transportation from St. Croix to the other Virgin Islands since 2011. She was unaware, she said, and told about a ferry service initiative the Department of Interior helped establish in American Samoa to transport people 60 miles between the islands.
Kia’aina "actually gave us an example of a significant federal expenditure that took place in another insular territory, to the tune of around $9 million, for ferry service that is allowing those not living on the island to move back," James said. "That was well received by those of us who want to reestablish ferry service to the island," he said.
While she did not tour any of the public schools, Kia’aina said she is aware the territory’s schools reflect 1980’s construction. A recent report of 1,500 school buildings throughout the insular areas by the U.S. Army Corps of Engineers has provided the federal government lists of needs and costs to fix the schools. Insular Areas and the Army Corps of Engineers will continue to work with the territories and provide training for school maintenance staff, she said.
The assistant secretary also discussed with V.I. government officials the issue of illegal immigrants on St. John. She said she would raise the subject with federal officials because there were reports of possible drug, weapons and human traffickers walking along the main roads of the island and potentially traveling by ferry to St. Thomas and then to the mainland.
Kia’aina also talked about a new position for a climate change coordinator in Washington who will work with the territories and help DPNR write its climate adaption plan.
After Friday’s meeting with Health and Human Services and Labor personnel, Kia’aina will plan an interagency meeting with governors and delegates from the insular areas on Feb. 24. Individual and collective issues will be discussed and incorporated with Interior’s recommendations to Congress regarding taxes, trade and infrastructure.