In a statement Thursday, Congresswoman Stacey E. Plaskett said the newly signed federal reconciliation bill, while securing a long-fought win on rum cover-over revenue, will bring deep cuts to Medicaid, Medicare, SNAP, and other essential programs in the U.S. Virgin Islands.
“Last week President Trump signed into law his tax and spending bill, H.R. 1, which passed the House and Senate narrowly with solely Republican votes and several Republican defections,” Plaskett said in a statement. “While the inclusion of permanent rum cover-over in H.R. 1, the One Big Beautiful Bill Act, represents a major win for the Virgin Islands and Puerto Rico … the bill will also bring significant challenges.”
Plaskett said she has already reached out to the Virgin Islands Legislature and government finance team to offer her office’s support and begin preparing for the anticipated fiscal impacts, according to the statement.
“It will be imperative for the Virgin Islands local government to focus on finding new revenues and act creatively to remedy the impacts of federal cuts locally,” she said. “This legislation will require us to find additional sources for increasing revenues to the general fund to continue providing support to families — supporting new businesses, jump starting local small businesses and training our own local workforce to support the rebuilding and construction projects that must come online.”
Plaskett emphasized in the statement the opportunity to leverage the Biden-Harris administration’s cost-share waiver and billions in federal recovery funding to stimulate economic growth. Under the current waiver, eligible projects approved before Sept. 30, 2024, require only a 2 percent local match instead of the standard 10 percent, with others reduced to 5% resulting in projected cost savings of nearly $1.5 billion for the territory.
“Seven years ago, our community’s infrastructure was devastated by Hurricanes Irma and Maria,” she said. “Out of devastation came the opportunity to transform our territory … with profound funding from the federal government.”
Plaskett said she secured legislative provisions in the 2018 Bipartisan Budget Act that allow the Virgin Islands to rebuild to modern resilient design standards regardless of their pre-disaster condition, enabling funding for hospitals, schools, power, water, communications, and other critical systems.
She also pointed to unresolved issues related to the rum cover-over, including ensuring the Virgin Islands receives its proportional share of global cover-over revenues, and pressing rum companies to better use marketing funds to benefit the local economy.
“Under the Caribbean Basin Initiative (CBI), rum produced outside the Virgin Islands and Puerto Rico and then imported into the U.S. also has a rum cover-over that is divided between the two territories,” she said. “That ratio should be based upon the rum produced by each, however there was never a change in ratio made when Diageo came to the Virgin Islands from Puerto Rico.”
She urged the Bryan administration to address the imbalance and ensure rum companies “are utilizing these funds for the maximum benefit for our community.”
Despite the challenges, Plaskett stressed the importance of acting now.
“While federal cuts will create challenges, we also have untapped resources and underutilized opportunities at our disposal,” she said. “The key is acting decisively during this critical recovery window while building sustainable economic growth for our future.”
Plaskett said her office is committed to working with the governor and local lawmakers “to ensure that we can not only weather these changes but emerge stronger.”
