It is OK to give V.I. government employees raises costing $20 million every year going forward because the government already has a $100 million per year "structural deficit" so another $20 million a year "would not make our situation any worse," Budget Director Nellon Bowry told the Senate Finance Committee Monday.
Bowry was testifying in support of a bill, proposed by Gov. Kenneth Mapp, appropriating just under $20 million, with about $14.4 million as partial payment for salary increases, and $5.1 million for school lunches and substitute teachers. The measure is financed by the rapidly dwindling remaining funds from a $220 million one-time windfall from the sale of the former Hovensa refinery earlier this year. With this new appropriation, roughly $12 million remains from the original $220 million, Bowry said.
The bill was voted out of committee without opposition. If enacted, it would fund pay raises for employees of the Bureau of Corrections, Bureau of Internal Revenue, Division of Personnel, Office of the Lieutenant Governor, Fire Service, Department of Human Services, Department of Licensing and Consumer Affairs and the Police Department.
"Are you comfortable that we are going to be able to sustain these salaries?" Sen. Jean Forde asked, pointing out that the funding source was a one-time windfall.
"It would not make our situation any worse," Bowry said, adding "we have a structural deficit of about $100 million on an annual basis and that will face us next year also."
He also said that because the government had paid off most prior year tax refunds with some of the Hovensa windfall, "we think we can adjust the projection for next year by $20 million or so because we don’t have to reserve our income taxes for a high amount of tax refunds."
The difference will be "at least enough to cover the amount of salary increases next year," Bowry said, after saying the upcoming budget as a whole was going to be $100 million short.
Sen. Janette Millin Young pursued a similar line of questioning, asking "if these special circumstances are over, how do we keep them employed?"
"I am confident that what we could say about this is that it does not worsen our fiscal situation," Bowry said.
"When we talk about fiscal sustainability that has to be discussed in the context of the next fiscal year’s budget. We have a structural deficit of about $100 million per year and the sustainability we have going forward will have to be discussed with that whole amount … That will be addressed as part of a five-year plan going forward. Obviously we cannot fill a $100 million gap all in one year. That is why we have said we need to address it over some longer period of time." he said.
A plan will be presented during upcoming budget hearings, he said.
Young said she would support the bill, in support of unionized employees, but pushed a little further, saying "it’s fine to say we want to dish out money now, but how are we going to replenish the money?"
"I can tell you right now the first draft (of the plan) is going to say we have a $100 million deficit or so going out five years, so we will have a $500 million gap … That gap can’t be filled by cutting. We can’t cut $500 million out of the budget without some kind of anarchy," he said.
"At the end of the day, the only solution is going to be to grow the tax base, which means we have to grow the … economy," Bowry concluded.
Other funding in the bill goes to shore up the public school lunch program, to pay for meals that were ineligible for federal reimbursement because they were served without milk, for substitute teacher pay and for a new literacy and math program. Another $438,000 is to subsidize the V.I. Taxicab Commission for operating expenses and for ongoing training for taxi drivers. That sum appears to be in addition to the existing $540,000 Taxicab Commission budget, financed by the fees and fines it imposes. Mapp vetoed that budget, but the Legislature overrode his veto on Oct. 20.
Sen. Kenneth Gittens asked Legislative Post Auditor Jose George about the Taxicab Commission appropriation.
"Generally we do not appropriate money for salary increases for autonomous agencies. This is an extraordinary circumstance," George said.
There is also funding for a JROTC program at the St. Croix Education Complex.
Voting to send the appropriations bill out of committee for more consideration in the Rules and Judiciary Committee were: Graham, Sens. Marvin Blyden, Myron Jackson, Positive Nelson and Sammuel Sanes. Sen. Tregenza Roach was absent. Non-committee members Young and Gittens also attended.
In related news, Government House issued a statement Monday saying Mapp is "honoring his January pledge to faithfully negotiate and implement raises for Government employees and Agriculture Department workers will be among the first to see increases now that a new three-year agreement with the our Virgin Islands Labor Union has been successfully executed."
In the statement, acting Chief Labor Negotiator Designee Natalie Nelson Tang How said Mapp has signed off on pay raises for unionized Department of Agriculture employees.
“Negotiations have been finalized and Agriculture staff will be among the first set of employees that can expect to receive their salary increases,”Tang How said. “Announcements about other departments are anticipated in the weeks ahead.”
VITEMA reported that about half of its employees will see increases in their next paychecks, with the remainder still being processed. The Finance Department is prepared to issue raises as soon as an agreement is finalized with its unionized employees, Finance Commissioner Valdamier Collens said in the statement.
Tang How also urged senators to approve the aforementioned appropriation bill, saying it was "critical … so that salary increases can be finalized for employees of the Bureau of Corrections, Bureau of Internal Revenue, Division of Personnel, Office of the Lieutenant Governor, Virgin Islands Fire Service, Department of Human Services, Department of Licensing and Consumer Affairs and the Virgin Islands Police Department."