September 24, 2003
Over the years the League of Women Voters of the Virgin Islands has studied and commented on the proposed budgets of more than a half-dozen governors. Rarely have the budgets been submitted on time, truly balanced, or fiscally responsible. Nor has the Legislature accepted its responsibilities. Both the executive budget proposals and the resulting legislative appropriation bills are political documents and should reflect not only the utmost level of fiscal discipline but also of political acumen. In the past twenty years the deficit, like an oil slick, has spread and grown and endangered and despoiled the services which the V.I. government is mandated to provide to the people of the Virgin Islands.
The proposed Fiscal Year 2004 Executive Budget is balanced with revenue proposals that are fiscally irresponsible and difficult, if not, impossible to implement; and that may be open to legal challenges where contractual provisions have been ignored. Sadly, from what has been made public for the upcoming fiscal year, the League sees no realistic plan from either the Executive or the Legislature to address the current fiscal shortfall or for the long-term corrective actions necessary to eliminate the deficit.
Recently the Legislature passed bills appropriating over $7 million from funds already committed by the executive in its 2004 Budget Proposal. Was this an act of defiance by the Legislature, or utter disregard and disrespect for taxpayers? Isn't the Legislature, by appropriating these same funds for other purposes attempting to use the same money twice, or is it just preempting the plans of the executive? How do these actions serve the best interest of the people?
Overappropriations already give the director of the Office of Management and Budget (OMB) powers not granted by law. When the dollar figures of appropriations exceed available revenues, the director of OMB must choose which appropriations, or parts thereof, will be funded. The executive now asks for legislation to empower the director to transfer monies accrued by vacancy savings without legal authority granted by appropriations. This is fiscal anarchy. Such authority will dilute the power of the Legislature as well. That authority must not be granted
There are additional concerns. The fiscal year 2004 Budget Preview refers to a 36-hour workweek and a reduced payroll cost of $26,213,000 — with no explanation concerning which employees are affected or how the figure was computed. The proposed enabling legislation grants a far broader, nonspecific authority to the governor — "to reduce the work hours and the official work week for that fiscal or any other part thereof." Why, the League questions, were the labor leaders not invited to participate in the development of plans regarding this and other enabling legislation that affects their membership? Before directly impacting its unionized employees, shouldn't the executive lead by example and roll back the very unpopular, and in some cases excessive, raises granted a year ago to employees holding exempt positions?
Costs of providing services to the territory have escalated beyond available government revenues. The FY 2004 Budget Preview suggests that the recent federal tax cuts will reduce the Government of the Virgin Islands revenues in FY 2004 by some $57 million. If services from the hospital, schools, police, firemen, etc., are to continue, the people served must bear a more equal share of the cost. The proposed 10 percent income tax surcharge (an additional 10 percent of an individual's 2003 income tax liability), according to the Director of OMB, will replace about $24 million of this loss. The League recommends a fifty-fifty cost share for health insurance premiums and contributions to the Government Employees' Retirement System as a must for all three branches of the government.
The League has long advocated that unfunded federal mandates should not be paid if, as they certainly do, such payments impact severely on the revenues needed for services provided by this government. One glaring example is the Earned Income Tax Credit. These payments are not tax refunds but are outright grants from the government with no revenue stream from which to meet these costs. For long-term results, the executive and the V.I. Delegate to Congress must begin at once to pursue, if necessary through the Inter-Agency Group on Insular Areas, funds to offset the financial effects of the tax reductions.
In the Feb. 6, 1998 Daily News, the League of Women Voters of the Virgin Islands offered short- and long-term solutions to "mitigate the Territory's fiscal crisis." We said, and we say again, that the cooperation of the unions is crucial, and there must be a moratorium on labor negotiations relative to economic issues, if the fiscal crisis is to be realistically addressed. We said then that we were dismayed "at the unrealistic revenue estimates proposed." We say it again. We said then that there was a need to "institute an aggressive program to collect $90 million of the delinquent accounts receivable." Now, with accounts receivable in excess of $125 million, we say it again. And, if we did not say it before, we are saying now, that the continuance of long-term Economic Development Commission benefits is in need of review to ensure that all share an equitable tax burden. We said it then, and say it again, louder and more stridently than ever, "that the V.I. Legislature must immediately reduce its operating costs" to a more realistic level. We strongly support the FY 1992 level.
During his recent appearance in Washington, D.C., the governor used the phrase "fiscal restraint and fiscal control." The League of Women Voters was pleased to hear the governor's comment and eagerly awaits such fiscal restraint and fiscal control in practice. We believe that the electorate will no longer support a cavalier approach to the territory's financial management. Taxpayers deserve more, much more, from their elected officials and they must demand it.

Rosalie Simmonds Ballentine
President, League of Women Voters of the Virgin Islands

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