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Port Authority Board Looks at Ways to Cut Expenses

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March 26, 2008 — While the V.I. Port Authority's revenues are on the rise, the agency's finances are still in the red, prompting a need to cut down on operating expenses, board members said during a meeting Wednesday.
Currently VIPA is operating on a net loss of $132,678, according to Cassan Pancham, VIPA board chairman. Though there have been some profit gains in the marine division and Crown Bay Commercial Center, operating expenses to date are $18.3 million — up from the $14.7 million expended during the same period in fiscal year 2007.
On the aviation side, the port is currently experiencing a net loss of about $3 million, Pancham added. He said the VIPA management has already started to "formulate" ideas on how to promote growth within the agency while simultaneously "tapping" down on expenses.
Meanwhile, the VIPA board looked into some of its own cost-saving measures, such as splitting the cost of medical insurance with the agency's employees. VIPA presently shoulders 100 percent of the employees' insurance costs, and had recently approved a new structure for FY 2008, with employees paying 35 percent of the premium and the agency paying 65 percent.
"Right now, the port is not in the black — it's in the red — and this is another expense we have to consider," said board member Albert Bryan Jr.
The plan has not yet been implemented, however, and questions have been generated about whether splitting the cost of insurance would conflict with employees' union agreements. When the new policy was suggested, the changes were "never" discussed with VIPA staff, said Ken Hobson, the port's interim executive director.
VIPA has also said that employees still making below the $20,000 salary minimum required by V.I. law would be adversely affected by the new policy, Hobson said.
Board members decided to reconsider the policy after getting more information about how much employees would have to pay once the changes are put in place.
Getting to the bottom of the authority's financial practices was also a concern for board member Gordon Finch, who directed Hobson to produce an official audit on VIPA's fiscal year 2006 operations within 30 days. The board approved Finch's request.
Finch said he had been asking for the document for the past three months. When asked why the audit had not been completed, Hobson explained that auditors from Ernst and Young had been unable to gather all the necessary information from the authority's finance director, Judith James.
James has also said that she has been unable to "get the auditors on the phone," Hobson added.
Meanwhile, board members also discussed how to spend $1.7 million worth of federal Airport Improvement Program funds leftover from FY 2007. While no official decision was made Wednesday, the board agreed to consider using the money to buy new firetrucks for the territory's airports. Federal funds awarded for FY 2008 could also go toward the purchase of supplemental fire equipment and other capital projects, such as resurfacing the runway at St. Thomas' Cyril E. King Airport, board members said.
Firetrucks currently used at the airports are at least 10 years old, and must be replaced to keep the facilities in line with federal requirements, Finch explained.
Rounding out the meeting, board members also decided to fill out the last two retail spaces at Crown Bay Commercial Center, approving lease agreements with NXP Corporation — doing business as Jewels — and Jo Ann Warner.
The board also approved a motions allowing U.S. Customs and Border Protection to move its office from one side of the Crown Bay cargo terminal to the other, and renewing the agency's lease agreement for space at St. Croix's Henry Rohlsen Airport.
Board members present Wednesday were Bryan, Finch, Attorney General Vincent Frazer, Tourism Commissioner Beverly Nicholson-Doty, Robert O'Connor, Pancham, Hector Peguero, Public Works Commissioner Darryl Smalls and Yvonne Thraen.
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