This article is one in a series about how to strengthen the Virgin Islands government’s finances without raising tax rates. Each deals with a specific proposal.
There is a fleeting opportunity for the Virgin Islands government to obtain – for free – badly needed expertise to help with the monumental task of collecting the more than $100 million currently owed in delinquent property taxes.
Our argument is that if a few hundred thousand in available federal dollars were spent on jumpstarting the collection of overdue taxes – some of the bills are 20 years old – it would probably result in millions of dollars in additional revenue for the islands. (We will look into property tax collections, more generally, in future articles.)
In a prior article we pointed out how the Virgin Islands government is, by one measure, 600 times less effective than some mainland counties when it comes to collecting property taxes. So the case for bringing in outside assistance is fairly self-evident. And, in this proposal, the Virgin Islands government does not even need to pay for that help. It just needs to ask for it.
The resource we have in mind is available only until March 1. On that date applications will no longer be accepted by the Department of the Interior’s Technical Assistance grants, which are awarded by the department’s Office of Insular Affairs.
These grant opportunities are available only for projects submitted by the governors of the island territories; in 2014, the last year that we were able to secure data, USVI’s collection of proposals secured $827,000, while, at the top of the range, the Guam proposals got $1,064,000.
On the one hand, this is not big money, if one is thinking in terms of using such outside funds for paving roads, for example, but it could produce a lot more money if a large portion of the Technical Assistance grants were devoted to collecting the scores of millions owed to the territory in back property taxes.
Presumably the governor has various interest groups seeking his approval of TA proposals on other subjects, and setting some of those aside in preference to hiring some demon tax collectors would not be an easy choice.
Currently we gather from OIA that the TA grants, awarded previously, deal with climate change, invasive species, hospital equipment upgrades and a youth program, all worthy I am sure. There is also a current grant for a “self-determination office”―a byproduct of the failed effort of the USVI to create a new territorial constitution.
The technical assistance we have in mind – all devoted to increasing the property tax revenues quickly – could come in two different ways. In the first model, the Virgin Islands government would either hire some known skilled, assertive tax collectors directly from the mainland, or give a contract to an organization; in either case the short-term workers would then be assigned to the back-tax collection effort, given adequate support from existing staff, and be walled off from any political attempts to interfere with specific collection efforts. That last provision would be a key element in the whole program.
The second model would be for the Virgin Islands government to enter into an arrangement with a mainland municipality that has an excellent record for tax collections, ask that the entity to assign two or more of its collection experts to the territory for, say, three to six months each, give them the support and the protection from political forces that they need, and then pay the municipality for their services.
These “rented” municipal professionals would then retain their security and pension rights back home, get to tackle an interesting, maybe once-in-a-career type challenge, all while visiting a beautiful tropical island. I can imagine a lot of interest from highly qualified, veteran tax collectors across the U.S. The Virgin Islands government would, of course, have to make sure that these cooperating municipalities were paid promptly.
This is a fleeting opportunity, and not without costs, but it would be a splendid way to jumpstart the collection of long overdue property taxes and simultaneously demonstrate that the Virgin Islands government is taking every measure possible to get its fiscal house in order.