Home Community Data STATE OF THE TERRITORY 2000



JANUARY 10, 2000
Senate President Vargrave A. Richards and other Members of the Twenty Third Legislature, Lieutenant Governor Gerard Luz A. James, II and Mrs. James, Delegate to Congress Donna M. Christensen, Presiding Judge Maria Cabret and other Members of the Territorial Court, Chief Judge of the District Court Raymond L. Finch and other Members of the Federal Judiciary, Members of the Cabinet and other Agency heads, distinguished guests, ladies and gentlemen, my fellow Virgin Islanders.
I come before you and the people of the United States Virgin Islands on this tenth day of the 21st century and of a new millennium to deliver my second State of the Territory Address in accordance with the Revised Organic Act of 1954, as amended.
I am pleased to be able to report that the State of the Territory today is better than it was one year ago.
We have staved off financial collapse by cutting unnecessary expenditures, increasing our revenues, securing major new Federal assistance, and imposing fiscal discipline. Today, we are paying long- delayed income tax refunds, overdue vendor bills, and making needed investments in our infrastructure. Today, we have a plan for financial and economic recovery. We also have plans to improve education, public safety, and health care in the Territory. And, we are committed to resolve the long-ignored issue of government workers’ pay.
When I assumed office last year, I said the time for business as usual was over. The Government had been living beyond its means for too long, growing in size without restraint, and spending money it did not have. The Government could not pay its bills, could not pay legally-owed refunds to its taxpayers, and could not pay its workers. And worse, there was no plan to see our way out.
I said then we could no longer sustain the course of inaction and hope to survive. I said the bill for the sins of the past had become due and must now be paid.
I am very happy to report the state of the Territory today is better, in part, because of the following:
Improvement in our approach to solving our fiscal and financial problems.
Better cooperation between the Executive and Legislative branches of the Territorial Government.
Improved cooperation between the Executive branch and the Delegate to Congress.
Improved cooperation between the Executive branch and the Federal Government.
It has not been easy and it has not always been smooth, but we have made great strides over the last year on our path toward financial recovery and fiscal stability. The first step was to develop an accurate assessment of the true financial condition of the Government. The second step was to seize control of unbridled spending and to impose the first semblance of fiscal discipline. And the third and final step was to develop a plan to increase our revenues, here at home as well as from Washington, to allow the Government to meet its essential obligations to all of our people, particularly the youth of the Virgin Islands, who represent our future, as well as the elderly and those who, as a result of illness or circumstance, are unable to care for themselves and thus have become persons with special needs.
The first task of assessing the Government’s finances was made difficult because of past questionable, and in certain instances, unauthorized financial practices utilized to hide the true nature of our financial condition and to mask the need for change. I will not belabor the details of these practices here, but I reaffirm my commitment today that they will not be repeated under my stewardship of the Turnbull-James Administration.
The task of financial assessment was also made difficult by the discovery, at the beginning of this Administration, of new obligations incurred, but not recorded into our financial accounting systems. By the beginning of June, it became obvious that the Government was, in fact, technically insolvent:
The structural deficit in the General Fund was approaching one hundred million dollars.
The Government’s accumulated debt was in excess of one billion dollars.
And cash flow imbalances, generated by these inherited conditions, caused the Government to delay a scheduled payday.

When the true picture of our worsening financial condition was revealed, the Administration took the second decisive action. By executive order, I implemented a strict hiring freeze, with severely limited exceptions for critical personnel. In addition, I imposed new managerial systems and instructed that baseline overtime costs for Government departments and agencies be reduced by 50 percent in the first year alone. I also imposed limits on off-island travel, use of government vehicles and cellular phones, and other unnecessary expenses.
And I demanded that the Office of Management and Budget (OMB) return to me a revised budget for fiscal year 2000, one that would include an additional, aggregate reduction of 10 percent in departmental spending. Without precedent in modern Virgin Islands history, I have upheld my commitment, by presenting to this body last September, a revised budget for FY 2000 that incorporated painful but necessary cuts in almost every department of Government, for a total reduction of approximately $54 million dollars over the previous budget and a reduction of over $75 million dollars from actual FY 1999 spending levels.
While the budget ultimately passed by the Legislature included more spending than I requested, I signed it reluctantly, while giving clear notice that I would use my line-item veto and allotment powers to limit government spending within realistic and available revenues.
The success of our efforts to reduce spending to date is reflected in the downward trend of our payroll costs. In January 1999, the Government’s bi-weekly personnel costs totaled $12.7 million dollars. At the end of December 1999, our bi-weekly payroll costs had been reduced to $11.4 million dollars – a total of over ten percent since this Administration took office. In addition, over 50 classified positions have been eliminated in our first year alone, and I propose to reduce the number even more as our reorganization and other deficit reduction measures take effect.
Leading the way by example in this budget reduction, cost cutting and efficiency management effort was my office, the Office of the Governor. Indeed, one of the major accomplishments during the first year of the Turnbull-James Administration was the achievement of substantial reductions in spending in the Office of the Governor. Unlike the past several years during which the Office of the Governor consistently exceeded its appropriation allotments as well as requested supplemental budgets, the commitment of this Administration to live within its means resulted in an under-expenditure of $413,445 dollars for the fiscal year just ended. This was achieved through a reduction of positions and reduced expenditures in areas such as travel, supplies, and consultant contracts. In keeping with my pledge to lead by example, further reductions have been included in the FY 2000 budget for my office.
Another major accomplishment of the Office of the Governor was the development and implementation of a reorganization plan for the Executive branch. Significant progress has already been made in reaching the savings goal of $15.1 million dollars through the reduction of managerial positions, the freezing of several vacancies, and the incorporating of duties of former positions into existing positions. More progress will be made government-wide in the coming year through the shifting of some administrative expenditures to Federal accounts, the elimination of rental costs for some offices, the consolidation of units and divisions which have overlapping or similar functions, the reallocation and cross-training of staff, the reduction of overtime by
adjusting work schedules of employees who are required to perform regular after-hour assignments, the consolidation of service centers, and the return of some persons who are housed in off-island facilities. These initiatives are essential to achieving further savings, improving efficiency, streamlining operations, and reducing the structural deficit which must be, and will be, decreased significantly during this fiscal year.
While significant progress was made in cutting the budget and taking control of Government spending, it was also clear that cost cutting alone was not sufficient to generate the revenues needed for the Government to meet its payroll and to pay its bills. Therefore, bridge financing and new working capital were urgently required to pay vendors, make tax refunds, and ensure that workers’ paychecks would not bounce.
While on its face, taking on more debt by a financially distressed government might appear questionable, this financing has enabled the Government to meet its legal obligations to long-denied vendors, many of whom were forced to fend off bankruptcy with government-issued IOUs, and to hardworking taxpayers, some of whom have been patiently waiting for tax refunds dating back to 1995. The infusion of these payments has already begun to help generate economic activity in the Territory and to increase consumer confidence necessary for economic recovery. In addition, the success of the bond issue has enabled the Government to refinance other obligations at lower interest rates and to provide enough working capital to ensure the continuation of essential services as the other elements of my Administration’s financial recovery program begin to take effect.
At the same time, we were instituting cost-reduction, financial restructuring and other self-help measures at the local level, I directed my Administration to redouble its efforts at the national level to secure additional Federal assistance required to return the Government to fiscal balance and stability. Never before has the Federal government — including President Bill Clinton and his Administration, as well as both Houses of Congress — been more willing to assist the Virgin Islands than now, provided we earnestly work to help ourselves. As a result of our diligent lobbying efforts, working in close cooperation with the Delegate Donna Christensen, we have, in the past year, achieved historic and unparalleled success.
Beginning with my first meeting with Secretary of Interior Bruce Babbitt at Government House within days of my inauguration, I made clear that even with the elimination of the structural deficit through self-help initiatives and unprecedented budget reductions, the Government’s total amount of accumulated debt and unfunded obligations could not be addressed without significant additional Federal funding. To this end, my Administration, working with our friends in Washington, developed an ambitious program, which included the following elements:
Elimination of the cap of the amount of Federal rum taxes returned to the Virgin Islands Treasury – an initiative that would increase our existing funds by $12-15 million dollars each year.
Enactment of a new $100 million dollar multi-year program of Federal grants to improve the infrastructure of the Virgin Islands and to reduce the need for further capital borrowing.
Restructuring and securing relief from the approximately $200 million of debt held by the Federal Emergency Management Agency (FEMA) in the aftermath of Hurricanes Hugo and Marilyn.
I am pleased to report that substantial progress has been made in each major element of our massive Federal effort.
First, as I have previously announced, the President signed into law just this past month legislation that lifts the rum tax cap, which will generate an additional $30-34 million for the local treasury over a 30 month period, retroactive to last July 1. This signal achievement was accomplished through the hard work of this Administration, the personal lobbying I undertook in my several visits to Washington, the effective advocacy of our Delegate, and, not least, the unstinting efforts of our friends in Washington of both major political parties. In particular, I wish to acknowledge the personal involvement of President Bill Clinton on this issue in the tough negotiations that marked the end of the congressional session. His support never wavered in the face of constant pressures to cut Federal spending, including spending for the Territories. I also wish to acknowledge and thank our good friends, Senator Daniel Patrick Moynihan (D-N.Y.) Senator Frank Murkowski (R-Alaska), Senator Orrin Hatch (R-Utah), Rep. Phil Crane (R-Illinois), Rep. Charles Rangel (D-N.Y.), and Rep. Don Young (R-Alaska), among others, for their invaluable support in helping to make this landmark legislation – one of the very few tax provisions to make it through this Congress – a reality.
Second, the Congress has made good on the first installment of what I expect will be a multi-year, multi-million dollar program of infrastructure grants to lessen our future requirements to borrow for such improvements and to help strengthen and revitalize our economy. This installment this past year included $16.1 million dollars in Federal grants to enhance and protect our vital computer and information systems and a $5.4 million dollars special appropriation to help fund Federally-mandated improvements to our wastewater treatment and corrections facilities. With the recently executed Memorandum of Understanding between myself and the Secretary of the Interior, I am pleased to report that the Department of Interior has committed to seek a minimum of $10 million in new infrastructure grants for the Virgin Islands each year for the next several years.
And third, notwithstanding that the previous administration had signed a legally binding repayment agreement with respect to the balances owed on the Hurricane Hugo Community Disaster Loan and the Hurricane Marilyn State-Share Loans, my Administration successfully negotiated a one-year forbearance on all FEMA loan payments while our petition for additional FEMA debt relief and forgiveness is under consideration by the highest councils of the Federal Government.
In this respect, too, I note that the path of fiscal discipline and self-help that we have now embarked upon will serve us in good stead as we proceed to address the difficult legal issues related to our request. This initiative will take considerable time to resolve, but I am pleased to report that the forbearance already granted has saved the Government nearly $10 million dollars in debt service payments over this 12 month period alone.
In short, we have achieved much in the few months afforded this Administration. However, much more important work now awaits us. While financial necessity required that, in the beginning of the new Administration, we focus on our immediate finances, our successes in the last year now allow us to look forward to more meaningful changes and more permanent reforms in the Virgin Islands, including the way we operate our Government.
First, we must not, we cannot, indeed, we dare not relax our efforts to control our unrestrained spending habits. In this vein, I have called on the Board of the Government Employees Retirement System (GERS) to rescind immediately the raises approved for senior staff of the Retirement System. I believe their action to be irresponsible and inappropriate at this time. I consider retroactive increases in salaries of fifty percent or more, amounting to tens of thousands of dollars, to be an abuse of the Board’s discretion and an insult to the hardworking government employees and retirees who depend on the system.
On the matter of labor, we have a moral obligation to address the issue of retroactive wages owed to our government workforce. This issue, which has plagued past administrations for too long, can no longer be ignored and allowed to fester. The fiscal reality is suc
h that it is extremely unlikely that this community and Government can ever afford to pay $200 million dollars in retroactive raises previously negotiated without regard to the means available to pay. However, I am committed to working with labor to reach a compromise, based on the implementation of negotiated step increases, that addresses the essential interests of all the parties. Accordingly, I now call for a summit meeting with representatives of government unions within the next 60 days to discuss compromise proposals. My only condition for the consideration of any proposal is that it include a specific revenue plan to finance it.
Similarly, we must and will do more to ensure that the Government collects its fair share of revenues from those who benefit from public services. The Bureau of Internal Revenue (BIR) is in the last phases on installing automated information tracking systems that will enhance our collection capabilities. I have also directed the Bureau, the Department of Finance and the Department of Property and Procurement to submit to me, within 30 days, an action plan to address the over $100 million dollars in delinquent gross receipts, income taxes, withholding taxes, and lease payments that are outstanding. Various fees of several departments are also being adjusted to reflect the actual cost of services provided.
Finally, we will also continue our efforts to pursue the return of gasoline excise taxes, through congressional means, along with the recently established task force that is working toward this end.
But in the final analysis, our economic salvation rests with our ability to attract new investment and new economic activity to these Islands. To this effort, my Administration is committed to developing new incentives, strengthening our marketing, and improving our infrastructure and the delivery of essential public services.
Here, too, we have begun to make important progress. Working closely with our Delegate, we were successful in this past year in persuading Congress to extend Federal wage credits, originally designed for the Virgin Islands watch industry, to the fine jewelry industry. This new industry is expected to attract several new companies to the Virgin Islands and employ several hundred skilled workers on St. Croix.
While the establishment of an entirely new industry in our Islands is certainly cause for hope, I am committed to a comprehensive review of this Government’s past development policies and marketing practices in order to attract additional investment and even more new industries.
Earlier this past year, I established a task force, which includes representatives of both the public and private sectors, to develop a Five-Year Economic Recovery Plan (the "Plan") that will guide our policies and set targets for our actions in the new millennium. I firmly instructed the members of the task force that the overriding principle governing their work is that everything is on the table, and that the members should not be limited by politics or by preconceived notions. Rather, I instructed the members to use their real world experiences to recommend the best policies to increase economic growth and to create better opportunities for meaningful employment for our people.
In particular, the Plan will review the effectiveness of our Industrial Development Program and recommend ways to improve its attractiveness to potential investors. With recent advances in telecommunications and the explosive growth of the Internet, the world seems much smaller and certainly is more competitive. What we provide by way of incentives in comparison to other jurisdictions is readily known to potential investors both in the United States and around the world. Thus, while our existing program may have been adequate in the past, we cannot afford to rest on our laurels or on our past successes.
Within the body of this Address are various initiatives that are outlined in even greater detail in the Five-Year Economic Recovery Plan, including initiatives that deal with private sector development, reform of government operations, and labor issues. I expect to receive the final version of the Plan from the task force by February 29, 2000. However, there is no need to wait for the final report for the Legislature to act on my proposal to merge the economic development agencies into a single and consolidated agency. This action alone, if approved by the Legislature, will significantly increase administrative efficiency and strengthen the Government’s capacity to promote needed economic development.
In addition to strengthening our manufacturing base, we have also taken important action to strengthen tourism. As you know, St. Thomas today enjoys the distinction of being the most popular cruise destination in the Eastern Caribbean. Almost all vessels that homeport in Puerto Rico make St. Thomas either their first port of call or their last port of call before returning to San Juan. We have initiated agreements with the cruise ship industry to increase their visits to St. Thomas, with additional emphasis on St. Croix. I also commend the Legislature for creating the Cruise Ship Industry Task Force to address the concerns of the cruise ship industry.
I am also committed to ensure that the Department of Tourism, even in an era of tight budgets, has adequate resources to promote our Islands. I am pleased to report that my first budget includes, for the first time in recent memory, general funds in addition to those generated by the hotel occupancy tax. In particular, I am requesting a supplemental appropriation of $1.5 million dollars from the General Fund to stimulate our summer campaign. I am also calling on the hotel and tourism associations to match these funds.
I will also appoint members to the Tourism Advisory Council, with representatives from industry as well as the Government, to recommend organizational changes in the Department, as well as the way we market our economic lifeblood. I will make these appointments after receiving recommendations from the various hotel and tourism associations. I will also ask this group, once it is reestablished, to make its recommendations in time for our summer and winter campaigns, and also to work directly with our advertising and public relations firms. It is my hope that this advisory council will serve as a model for public/ private partnerships to improve specific sectors of our economy.
But all of our efforts to increase tourism and grow our economy will be undermined unless we are able to guarantee the public safety, both for visitors and residents alike. While there has been a decrease in some categories of crime and an increase in others, we cannot let up our efforts to protect our community.
We are working closely with the Drug Enforcement Agency (DEA), U.S. Customs, Immigration, the Coast Guard and the U.S. Attorney’s Office to combat the importation and sale of illegal drugs which are the root cause of much of the escalation in crime. We have made a number of arrests in the confiscation of illegal weapons and illegal drugs. This Administration is determined to provide the necessary resources and the basic equipment required for our law enforcement personnel to better do their work. This year, the Police Department will move into new quarters, purchase new vehicles, bulletproof vests and improved communications equipment will be installed. By maximizing available Federal funds, the Virgin Islands Police Department will also augment its police force by 30 officers by the end of the fiscal year.
I am also committed to ensuring that our firefighters have a safe and environmentally adequate workplace, as well as modern fire fighting equipment. I will also instruct the Fire Services Department to develop a comprehensive training program for their officers.
Our ability to grow our economy also depends on the most important natural resource of all: A well-educated workforce, trained for the challenges of the 21st century. Indeed, as we enter this new century, nothing is more important to achiev
e than to adequately educate our young people and to empower them to compete in the emerging global society.
Education is the top priority of our Administration, and improving student achievement is our principal goal. To this end, the Department of Education has completed a draft of a five-year strategic plan that includes major goals that have been and will continue to be utilized to guide major efforts within the Department. In particular this Administration is committed to:
Establish and maintain safe, drug-free schools;
Ensure that all schools have adequate materials and supplies;
Implement a comprehensive maintenance program;
Pay special and particular attention to the needs of primary school children;
Update teacher training programs;
Build a third High School on St. Thomas;
Provide an additional school facility on St. John;
Develop a comprehensive curriculum relevant to student needs in the new century;
Secure the re-accreditation of our secondary schools in both districts;
Complete phase two of the renovation to Elena Christian Jr. High School damaged during Hurricane Lenny; and
Provide adequate funding for the University of the Virgin Islands.
If we do not adequately educate our children for the demands of the new millennium, we dare not welcome tomorrow, because our children are our future, our promise of tomorrow.
Just as important as education is to the lives of our people is their access to a good and properly functioning health care system. The Department of Health has used this past year to assess and evaluate ways to improve the quality of health care in the Territory, to recruit and train the best possible staff, and to consolidate facilities and improve efficiency in the delivery of services. In particular, the Department has embarked on an aggressive capital improvement program to rehabilitate unoccupied department-owned buildings, including the reprogramming of funds from the Michelle Motel facility for the establishment of a Mental Health Complex on the East End of St. Thomas. This plan will greatly enhance the Department’s capacity to deliver mental health services, treat patients now housed on the U.S. mainland, and save $1.7 million dollars in off-island health care costs.
Other capital improvement plans for the Department of Health include relocation of programs from rented locations to department-owned facilities such as the Knud Hansen Complex and the Dr. John S. Moorehead Municipal Complex. This consolidation alone will save the Department over one-half million dollars a year.
On St. Croix, the Department has stopped construction of a smaller facility in Christiansted in order to use these funds for renovation and repairs to the Charles Harwood Complex, which suffered extensive damage as a result of Hurricane Lenny. The Frederiksted Health Center/Ingeborg Nesbitt Clinic is also slated for renovation and repairs to further enhance health care on the island of St. Croix.
During the last year, the Department of Human Services made important advances in the efficient and effective use of its human resource pool. In particular, the Department has undertaken an extensive reorganization, which includes:
Redirecting its personnel to maximize administrative efficiency.
Establishing a certificate program to enable vocational rehabilitation counselors to upgrade their skills and training.
The Department has earned national recognition for maintaining the lowest error rating in the Mid-Atlantic Region for the operation of the Department’s Food Stamp Program. In addition, the Financial Programs Division continues to provide transition assistance to recipients of the Temporary Assistance to Needy Families Program to encourage full time employment. To date an additional 102 individuals have found permanent employment through this program.
The Department will continue its efforts to consolidate the residential services components of the Departments of Education, Health, and Human Services to address on and off-island residential care for physically and mentally challenged adolescents, as well as to develop a plan to increase the number of adoptions of the Territory’s foster children.
Finally, this Administration, as part of its Five-Year Economic Recovery Plan, is committed to strengthening our infrastructure and improving the delivery of essential services.
Capital Improvement Projects represent a key component of our plan for sustained long-term economic recovery by creating economic stimulus, as well as laying the necessary foundation to attract new investment. In addition to public infrastructure projects, we have also identified a significant number of public/private partnership initiatives to expand the economy.
Growing the private sector is essential as we continue in an organized manner to reduce the public sector workforce. The private sector projects generated by these initiatives will create the jobs for workers currently in the public sector.
In promoting these projects, I remain committed to protecting our environment, not only for visitors, but also for residents and future generations of Virgin Islanders to whom we are duty-bound to leave a better and stronger Virgin Islands.
We are working feverishly to move our capital improvement projects along. I am pleased to report that a fast track process has been established to ensure that capital projects are given the requisite priority. In particular, the processing of required permits and paper work for all capital improvement projects will be expedited to ensure that the economic stimulus generated by these projects will be available to benefit our economy as quickly as possible.
The Construction of the $24 million dollar Golden Grove Prison expansion and renovation project is on schedule and will be completed by this year.
The Christiansted Boardwalk Project has started and is scheduled to be completed by the end of this year.
One hundred units of affordable housing are currently being constructed at Castle Burke under the stewardship of the Department of Housing Parks and Recreation.
The Department of Public Works is currently completing a major flood control project at Williams Delight.
Plans for issuing a Request for Proposals on a comprehensive integrated solid waste management facility for St. Croix are complete and are at the Department of Property and Procurement for advertising and distribution. This project is expected, when built, to infuse $41 million dollars into the local economy.
The design of the Christiansted Bypass will be completed this year, with construction beginning in the year 2001.
The Virgin Islands will receive $73 million dollars in new Federal Highway funds over a period of five years to construct new roads and road improvements Territory-wide.

$42 million dollars in construction projects to rebuild Bertha C. Boschulte Middle School, Lockhart Elementary School and Peace Corps Elementary School are in progress.
Peace Corps Elementary School will be completed before the end of this year.
Bertha C. Boschulte Middle School will be completed by next year.
Lockhart Elementary School will be completed this year.
Over $16 million dollars in flood control hazard mitigation projects are currently being constructed at Altona, Sub-base and Frenchtown.
$7 million dollars worth of hazard mitigation projects for our schools are presently being designed and construction will be completed this year.
The $26 million Mangrove Lagoon Waste Water Treatment Plant for the East End is ready for construction. The Coastal Zone Management permit is currently before this Body and I urge that it be approved as soon as possible.
I affirm my commitment to the construction of Enighed Pond Marine facility on St. John, whether by the Government or by a private sector partnership.
Plans are also being developed to construct an integrated comprehensive solid waste management facility for the St. Thomas-St. John Di
strict. A Request for Proposals is also pending before the Department of Property and Procurement for advertising and distribution.
We are presently reviewing a land exchange proposal to establish a 10 acre cemetery on the East End of St. Thomas. A portion of the new cemetery will be specifically reserved for veterans.
In addition to the projects which are underway or already on the drawing board, I am also reviewing ways of ensuring that more affordable housing is built for our low-to-moderate income residents. As a first step, I call on this Body to pass legislation I submitted last year for the merger of the three housing entities. The reorganization of the housing agencies is essential to achieving administrative efficiency and ensuring that the community is provided with a wide range of housing to meet the needs of all of its residents.

To this end, the Housing Authority is scheduled to demolish the Donoe Housing Community at a cost of $3 – 4 million dollars. The Donoe units will be replaced with affordable single and multi-family homeownership program. This will result in an additional $2 million dollars in Section 8 Certificates for infusion into the private sector. Additionally, the Housing Authority is scheduled to demolish 436 units at the Louis Brown Housing Community on St. Croix, replacing it over a four-year period with a four-phase construction program, valued at $50 million dollars.
I also recognize the pressing need for immediate attention to our school structures as well as the local roads in the Virgin Islands. A plan is being finalized that would allow us to secure the necessary funding to accomplish this. In particular, we are reviewing the possibility of reprogramming bond issue proceeds for these purposes and substituting Federal funds for locally borrowed ones whenever possible.
We are also working hard to bring major new private investment to these Islands. In particular, the construction of the Hovensa Coker Plant will be a tremendous boost in the arm for the St. Croix economy. It is hoped that the financing for this project can be completed shortly and that construction will soon begin. I have also met with investors who are considering major investments in several resort and casino developments and other private sector projects. I am pleased to report that the interest in St. Croix is very high, and we are doing what is necessary to attract these investments.
At the same time, I must state my great disappointment at the decision of Beal Aerospace not to locate on St. Croix. The economic benefits of having Beal in the Territory would have been enormous, including the creation of quality job opportunities for Virgin Islanders on the cutting edge space technology industry. I spoke to Beal officials on Saturday requesting that they reconsider their decision. I was informed that the matter would be taken under advisement. Today I received word that the answer is no.
Their decision to go elsewhere, in the face of narrowly-based opposition, should be a lesson to all of us. If we are serious about wanting new investments in these islands, we must work harder to welcome and encourage potential investors and avoid setting up unnecessary barriers to development. In short, we must become more "investor-friendly "if we are to compete successfully in the new global economy.
In seeking to improve the delivery of public services, we must abandon old ways of thinking including the notion that only government can provide or manage such enterprises. In this regard, I commend this body for its passage of its legislation endorsing the idea of privatization of certain government services. In addition, I have instructed my task force developing the five year plan to make recommendations on the possible privatization of: bus transportation, school maintenance, central motor pool operations, government printing, food service programs, garbage collections, and the Virgin Islands Lottery.
With respect to these initiatives, I want to make my position very clear: The move toward privatization and public-private partnership is, by no means, one driven solely by cost, but rather by the need to ensure innovation and constant improvements in the quality of services provided.
With this principle firmly in mind, I wish to call your attention to the fact that the Government is continuing its evaluation of a proposal from Southern Energy, Inc., to acquire a majority interest in the Virgin Islands Water and Power Authority (WAPA).
As I indicated in my public statement several weeks ago, my Administration has no interest in selling or restructuring WAPA simply to raise cash or to finance current debts. Rather, my Administration only has an interest in considering such a transaction if the restructuring can provide: better and more reliable service at lower rates than otherwise would be the case for the rate payers of the Virgin Islands; a greater return on the Government’s current investment in WAPA’s assets; and adequate protections for existing WAPA employees. If these conditions can be met, then I believe the Government has an obligation to consider the transaction and to increase the Government’s return on its investment by harnessing the power of the private sector for public purposes.
As I also indicated in my earlier statement, any restructuring or partnership with a private entity must ensure the public interest by providing essential water and electricity services to the people of the Virgin Islands at affordable rates. Under the proposal being reviewed, the public and social interests would be secured, not through government or bureaucratic ownership, but instead through government regulation of private activity pursuant to a re-invigorated Public Service Commission.
While details of the proposed transaction continue to be evaluated and negotiated by the inter-departmental task force I have appointed for this purpose, including our financial and legal advisors, sufficient progress has been made to allow me to say that I am increasingly confident that a fair deal for both the Government and Southern Energy can be struck – one that more than meets the conditions I have established and one that provides important new opportunities for the people of the Virgin Islands.
* * * * *
My fellow Virgin Islanders, as we face the challenges and opportunities of the 21st century and the third millennium, let us pause to thank our Creator for providing these beautiful and blessed Islands to be our home. They have been, are, and will continue to be a place to which people from all over the globe choose to visit and inhabit.
May the diversity of all kinds they bring serve to be a blessing and not a burden. Let us all choose to live in unity, one with the other.
Serving as your Governor and humble servant has been both a joy and a challenge, and I welcome both. The Governorship of the Virgin Islands is not a place for timid souls who bend to every stormy wind that blows. Hard and sometimes unpopular decisions must be made. The imperative for the Governor is to make the right decision. This Administration is not for the moment; it is for the ages.
We are gathered in this hallowed chamber as the leaders of three co-equal, coordinate branches of our Government. Let us set the example for all the people of the Virgin Islands who have caused us to be elevated to these positions of responsibility and service.
Let each do the job it was chosen to do without infringing on the prerogatives and duties of the other branches, as we are sometimes prone to do. In sum, one branch must make the laws, the other administer them, and the third to interpret. When this is not done, government malfunctions. This must be avoided.
This new century presents an unprecedented opportunity for us to build a grander Virgin Islands – one that educates and enlightens the young, and prepares them for the global economy and the information age.
The 21st Century will challenge us to be our better selves, protecting our precious environment, treating our fellow citi
zens with civility and respect, and providing nurture, shelter and proper health care for all the residents of these, our beloved Islands – particularly the elderly, the sick and those with special needs.
We must, therefore, not fail to seize the opportunity presented by this unique moment in human history, to work with respect, in unity, and in service for the good of our entire community. It is for us to continue the work that we have begun and to renew our commitment to achieve the grander vision.
May God bless America. May God bless the Virgin Islands of the United States of America. And, may God bless all people of good will. Thank you and Good Night.


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