It’s hoped that fiscal year 2011 will mark a "turning point" for the territory’s economy, but until things really start to rebound, delivering a balanced budget means another year of across-the-board cuts for government agencies, Gov. John deJongh Jr. wrote Monday.
"Critical to our budget-balancing effort is the insistence that the pain be shared across the government, and thus there are reductions in the current appropriation levels of all departments and agencies, including the other branches of government," deJongh said in a letter sent to Senate President Louis P. Hill along with the budget. To view a .PDF document of the budget, see the following links: FY 2011 (Part 1), FY 2011 (Part 2).
The government’s overall spending plan for FY 2011 is $1.2 billion — including $176.3 million in federal funds, $93.9 million in nongovernmental funds, $69.4 million in other appropriated funds, $46.5 in other non-appropriated funds and $6.6 million from federal American Recovery and Reinvestment Act funds.
The overall total is usually inclusive of projected tax refunds, pegged at $85.2 million for FY 2011, along with debt service payments (nearly $50 million) and transfers from the General Fund to other public government fund accounts ($6.7 million). According to the most recent totals, the FY 2010 overall spending plan added up to about $1.3 billion, which also factored in $862.3 in General Fund appropriations.
This time around, the FY 2011 General Fund budget — used to cover most central government operations — is based on net revenue projections of $781.9 million and is about $72.5 million less than the budget submitted for FY 2010. Cutting the agencies’ budgets was a key maneuver, but also pared back this year is the Miscellaneous Section of the budget — which is down to $79.8 million — and transfers in from other government fund accounts, which have dropped approximately $12.3 million.
About $135.1 million in borrowed funds expected to come from a newly negotiated line of credit is factored into the General Fund total, along with $99 million, or two years’ worth, of real property tax bills — the first of which is expected to be issued later in the summer.
Projected revenues also include: $361.7 million in individual income taxes, $52.6 million in corporate income taxes, $22.9 million in trade and excise taxes, and $141.3 million in gross receipts taxes. While the government’s "core revenues" are still lower than usual, most of the tax categories have picked up from FY 2010, deJongh has said.
Local law requires the governor to submit a balanced budget to the Legislature, and while the FY 2011 budget was "extremely challenging to put together," factoring in any more stringent measures — from layoffs to tax increases — was thought to be counterproductive, given the islands’ dynamic, according to a letter from Office of Management and Budget head Debra Gottlieb included in this year’s submission.
Instead, there are additional drops in all general budget categories, including personnel services costs, which customarily rise each year as salary increases are factored in. But for FY 2011, that total also makes the turn downward to $356.6 million, while fringe benefits are set at $142.3 million.
About $1.3 million has been set aside for capital outlays, while $13.4 million has been put toward supplies. The "other services and charges category," which includes everything from professional services contracts to travel expenses, is $125.3 million, while $18.1 million is set aside for utilities.
The "all expenses" category includes: $59.2 million to be split between the Legislature and Judicial branches, $33.4 million for the University of the Virgin Islands, $4.4 million for WTJX Channel 12 and $27.6 million for the V.I. Waste Management Authority.
In his letter to Hill, deJongh said Friday that even though the budget has been pared back, it will still continue to support investments and improvements made in "critical areas," such as education and public safety.
"We have made every effort in this budget to sustain our core investments in human services and education and to not allow a downturn in public spending to exacerbate the severe impacts that we have seen from the economic recession and downturn in private spending and employment," the governor wrote.