One thing was clear following the Senate Finance Committee’s hearing on the Turnbull administration’s proposed Fiscal Year 2001 budget: The recommendation to increase gross receipts taxes isn’t going to fly.
Senators’ opposition to the hike will play havoc with the administration’s financial plan because the increase, from 4 percent to 5 percent, was slated to generate $20 million to $24 million to help fund salary increases for teachers. Along with the tax increase, teachers’ salaries are to be covered by employees paying half of their retirement and health plans and the government’s collection of fees, according to committee Chairwoman Lorraine Berry.
Thursday’s hearing was divided into two sessions: one in the morning, at which members of the private sector commented, and another session in the afternoon devoted to members of the St. Croix American Federation of Teachers.
Carmelo Rivera, president of the St. Croix Chamber of Commerce, said the organization is "adamantly against" the proposed gross receipts tax increase because it will "precipitate the closure of more small businesses."
"The St. Croix Chamber of Commerce says no to the budget proposal. It’s no good for the private sector," he said. "This proposed budget is business as usual. It has no new thinking."
Sens. Anne Golden, Alicia "Chucky" Hansen, Gregory Bennerson and Roosevelt David all voiced their opposition to the tax increase.
"Increasing gross receipts taxes will not increase revenues," Hansen said. "It’s a dumb idea."
Several senators said the administration submitted the budget and its questionable revenue sources to let the Senate make the hard choices. In light of the proposed tax increase, they scoffed at Gov. Charles W. Turnbull’s position that the private sector must be nurtured.
"The government has said what must be done and then it sends down a budget diametrically opposed," Berry said.
Wendell Snider, president of the St. Croix Hotel and Tourism Association, said the government could increase revenues by creating a private-public tourism authority which would spend money on advertising the territory. He said that since 1996 approximately $36 million has been collected by the government in hotel occupancy taxes, which are supposed to be used for marketing the territory, but only $7 million has been spent on advertising.
Snider said he is not directing his complaint against Tourism Commissioner Rafael Jackson. "It’s the system that no longer works," he said.
Later in the afternoon, AFT members blasted the administration’s proposal that members pay half of their health and retirement contributions. Tyrone Molyneaux, president of the St. Croix AFT, said the plan would cut the net income of union members.
Members of the AFT are being paid at 1993 levels and are owed about $120 million in retroactive wages.
In recent contract negotiations, the administration offered nearly $9 million in salary increases to union members, which they rejected. Now the government must find more money if it is to avoid a threatened teacher strike next month.
"To get the salary increase, (the budget) includes the 50-50 cost-sharing, the gross receipts tax and fees," Berry said. "The money set aside for teachers is set aside in taxes and fees. The budget as submitted is not workable."
Finance Committee hearings continue Friday in the Senate chambers on St. Thomas.


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