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FEDS SAY AGREEMENT ISN’T A TAKEOVER OR BAILOUT

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Saying that an agreement between the Interior Department and Gov. Charles Turnbull is neither a federal bailout nor a takeover of the territory, Interior Secretary Bruce Babbitt on Tuesday signed the plan to restore the Virgin Islands’ economy.
Turnbull signed the memorandum of understanding on Oct. 5 and was immediately criticized by many in the territory who said that provisions in the plan amounted to a federal takeover.
Along with mandating that the government cut its budget by reducing payroll, eliminate five paid government holidays and trim department spending, a major part of the agreement calls for the restructuring of the territory’s public labor relations laws, including Act No. 4440, to conform with the federal public labor relations law by June 30, 2000.
The memorandum states that the territory’s general fund deficits of recent years and this year’s $98 million deficit have been aggravated significantly by "collective bargaining agreements whereby (V.I. government) employees enjoy greater bargaining rights than those enjoyed by federal employees."
Because the V.I. government’s long-term debt is more than $1 billion, Babbitt said, serious economic reforms are needed. He added, however, that local solutions will help secure federal funding in the future.
"This MOU is neither a federal bailout nor a federal takeover," Babbitt said in a statement Tuesday. "It does, however, set forth certain local performance standards articulated by the governor which we support and are prepared to encourage and assist from Washington within limited parameters that respect the authority and responsibility of local self-government."
In a press conference Tuesday, Danny Aranza, director of Interior’s Office of Insular Affairs, noted that further federal funding for capital improvement projects and technical assistance in fiscal year 2001 hinges on Turnbull's submitting legislation that conforms with the labor provisions in the understanding, not on the Senate's approval of it.
"This particular provision is fulfilled when the governor submits legislation," Aranza said. "Our hope is the governor and the Legislature will work together in a constructive way. We’re not really concerned with how the local government does it, just as long as they do it."
If progress isn’t made, Aranza said, the capital improvement and technical assistance funding would be pulled. Although he said he couldn’t predict how much funding was at stake, Delegate to Congress Donna Christian-Christensen has said multi-year infrastructure improvement grants alone are worth as much as $50 million.
Meanwhile, Aranza said that the memorandum isn’t tied to the Federal Emergency Management Agency forgiving the territory's $200 million Community Disaster Loan. If the loan isn’t forgiven, the territory will have to start making annual payments of $25 million beginning in 2001.
"I can tell you right now, I don’t think a formal application has been made," he said, adding that FEMA isn’t "predisposed" to forgiving debts.

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