After rejecting the governor’s economic-recovery proposals in December, the V.I. Senate on Tuesday passed its own bill to allow the government to borrow up to $120 million, lift the sunset date of the most recent gross-receipts tax hike, and make other changes supporters hope will prevent employee firings and fix fiscal year 2012’s projected $67.5 million deficit.
However, opponents argue that the Employment Relation and Economic Recovery Act of 2012 will be ineffective because it does not come with an increase to the gross receipts tax.
In his proposals, Gov. John deJongh Jr. sought to increase the gross receipts tax rate from 4.5 percent to 5 percent. On Tuesday, after the Senate approved its Economic Recovery Act by a 10-5 vote, its members narrowly defeated a proposed amendment to V.I. Code that would have done what deJongh wanted and raised the gross receipts tax rate to 5 percent.
Without the promise of that extra gross receipts tax revenue for collateral, the administration will not be able to get the $120 million in financing it needs, according to those who supported the tax increase.
“Basically we are saying, ‘Yes we authorize you to borrow, we want you to go and borrow,’ but we are telling you, ‘You’re not going to get the instrument you need to do it,’” said Sen. Majority Leader Celestino White Sr., who voted in favor of both the Economic Recovery Act and gross receipts tax increase.
In a prepared statement, deJongh framed the Employment Relation and Economic Recovery Act’s passage as a failure.
“To authorize a borrowing without providing the means of repayment is the same as offering to lend one’s car and then removing the tires,” deJongh said.
“Every senator at the session today understood what they were doing,” deJongh continued. “Each senator understood fully that to vote against the increase in the Gross Receipts Tax in the absence of any other revenue generating alternative was a vote to dismiss government workers.”
Sen. Shawn-Michael Malone supported the Economic Recovery Act, but did not vote for the gross receipts tax increase. After Tuesday’s meeting, Malone said he was not sure the gross receipts tax increase was necessary for securing the $120 million loan.
“That’s what we heard from the governor,” Malone said. “We never heard from a banker.”
Malone said the Economic Recovery Act’s other revenue-generating provisions should be able to produce the necessary collateral.
Sen. Janette Millin Young, who voted against both pieces of legislation, said the gross receipts tax increase would result in an estimated $17 million in revenue, which is not enough to convince her to raise business owners’ bills.
“Is that the number that’s actually going to convince the bank to lend or not to lend?” Young said. “Those are the type of questions I have.”
In addition to authorizing the government to borrow $120 million for paying its past-due V.I. Water and Power Authority bills, issuing citizens’ overdue tax-refund checks, and continuing to provide payroll for government employees, the Economic Recovery Act would:
— Make the 4.5 percent gross receipt tax rate permanent by removing its June 30, 2013 end date from V.I. Code;
— Direct the V.I. Internal Revenue Bureau to implement an early payment discount program for businesses required to pay gross receipts taxes. Under the program, businesses will receive a 10 percent reduction of one year’s estimated annual gross receipt taxes, as well as a 10 percent reduction to any delinquent amounts they might owe. The program would start April 1, and end Sept. 30, 2012;
— Reduce the required balance of the Insurance Guaranty Fund from $50 million to $10 million, so that those revenues can be rerouted into the general fund;
— Direct the governor to submit quarterly reports on the government’s financial status, as well as submit a 24-month-long budget to the Senate on or before May 30, 2014;
— Order the tax assessor to issue 2009, 2010, and 2011 property-tax bills that are based on the 1998 property-assessment rates;
— Amend V.I. Code, so that government workers who request to participate in the Voluntary Leave Without Pay Program will be granted immediate leave, and that they will not have to get approval from the head of their agency or department;
— Revise V.I. Code related to aspiring University of the Virgin Islands Research and Technology Park tenants and companies. Under the changes, the Technology Park’s board must forward all favorable tenant and Protected Cell Corporation applications to the governor for consideration. If the governor does not respond with a decision to approve or reject the plans within 60 calendar days, the Technology Park board can proceed with issuing the appropriate certificates.
Voting For the Employment Relation and Economic Recovery Act of 2012:
Sen. Malone, Sen. White, Sen. Carlton Dowe, Sen. Alicia Hansen, Sen. Louis Hill, Sen. Usie Richards, Sen. President Ronald Russell, Sen. Sammuel Sanes, Sen. Patrick Sprauve and Sen. Alvin Williams Jr.
Voting Against the Employment Relation and Economic Recovery Act of 2012:
Sen. Craig Barshinger, Sen. Neville James, Sen. Terrence Nelson, Sen. Nereida Rivera-O’Reilly, and Sen. Young.
Voting For increasing gross receipts tax:
Sen. Dowe, Sen. Hansen, Sen. Richards, Sen. President Russell, Sen. Sanes, Sen. Sprauve, and Sen. White
Voting Against increasing gross receipts tax:
Sen. Barshinger, Sen. Hill, Sen. James, Sen. Malone, Sen. Nelson, Sen. Rivera O’Reilly, Sen. Williams and Sen. Young
This makes me so mad!
The ONLY real economic recovery and relief that will come is when our senators come to understand stealing from Peter to pay Paul ends up resulting in ever increasing debt which is what has been mounting for the last DECADE with their inept and corrupt leadership.
I am tired of them “wasting and misusing” my ever increasing tax dollars since they consider the taxpaying public an endless supply of revenue.
We just got thru paying 3 property tax bills last year and they want us to pay another 3 this year?
AT THE OLDER, HIGHER RATE!?!
Where is this money going to magically appear from?
Is this a ploy to auction off people’s properties so that we have nothing left?
These senators need to reduce their own salaries and that of the Governor, Lt. Governor and all Administrators back to the pre 2003 Bill 6905 levels in which they raised all their salaries.
They expect us to get by on much less and get NOTHING in return for our taxes while they get OVERPAID for their incompetence, all the while having us pay for their fuel, vehicles, travel expenses, cell phones and all those other perks they also gave themselves including healthcare and great retirement packages and all of their horrendously BAD DECISIONS.
So it is business as usual. Stupidity, wastefulness corruption and greed continues to reign and the citizens of the Virgin Islands get bled dry!
You are right on Alana. Our Senators are completely out of touch with reality. Why are the people that got their pay cut 8% and the people that got dismissed from their jobs not revolting in the streets? After seeing the photos in the newspaper today and reading the stories about the Senators that ‘after weeks of meetings” still can’t come up with fiscal recovery ideas, I am appalled. But the Senators drove their TAXPAYER PAID SUV’S to Walker’s By The Sea for a catered heavy luncheon PAID FOR BY TAXPAYERS to have further discussions when they should be meeting in the Legislature where TAXPAYERS are already paying for wapa lighting and a/c and their huge staff!!! Maybe at least one of them could have figured out that fiscal recovery could start with every one of the Senators. PARK UP THE CARS. BUY YOUR OWN LUNCH. TURN OFF THE A/C AND LIGHTS IN YOUR OFFICES WHEN NOT IN USE. CUT BACK!!!!!!!!!!
Are you kidding me???????? BOOT THEM ALL OUT. They are derelict in their duties.
The “act is worthless” and so are these Senators. Time to flush out the tiefing garbage, dem. VOTE THEM ALL OUT!
I think the Senators need to take a refresher course in banking practices at the University of the Virgin Islands….
I mean, you want to borrow $120 million dollars from the bank without collateral….
An increase in gross receipts taxes from 4.5% to 5% is not an huge increase…
But, it is needed as a means of repaying the loan back….
What are the Senators grand scheme of things?
Does the Senators have a back-up plan if the banks tells them NO!!!?
Can they actually grow a brain before they sink the Virgin Islands Government in a hole it can come out of….?
Is this what you call as being “CREATIVE” or are you Senators stuck on “STUPID”?
So, what you are telling the voters of Virgin Islands that we are divisive as a legislature and we are against any proposal that Governor John deJongh Jr. makes so eliminate as many government employees because you think that you are going back in the legislature for two more years?….
I think you are going to face an angry mob of unemployed voters at the upcoming election…
Their votes will have a lasting impact based on your actions….
The upcoming election will no longer amount to a popularity contest….
The issues alone will “SINK YOUR OWN BOAT”, Senators…
Does the Senators plan to use the $6.9 million dollars stolen as collateral?
I,say, impeach the Senators now before they sink Saint Thomas, Saint John, and Saint Croix while they are still in office…
You are right. They are inept. They also need to be concentrating on finding new businesses to replace HOVENSA. Without new employers to pay taxes and employ all of the unemployed we will be sunk. They are trying to rob Peter to pay Paul. No one in their right mind will buy property and pay taxes on this land with these folks in charge. We are doomed.
For the sake of public relations, the Governor, Lieutenant Governor and Senators should start by cutting THEIR salaries 8%.
Then cut the size of the Senate to five. Two Senators for each St. Croix and St. Thomas, and one Senator for St. John and Water Island. Eliminate all the realtives and campaign workers who get staff salaries, and all the extraagant perks.
nickels_dimes
I would like the elections to be tomorrow to see the same Robin Hoods back in the government. There is nobody to blame but us, we put them there year in & year out. All we have in the legislature is a bunch of clowns. They go in there to make money for themselves. Where else a clown like Celestino White is going to make $100,000 a year, Sanes, a teacher would never make that kind of money. Chuky with all the degress she bought in the web will never make so much money unless she has the chance to hire another funny company to clean sewage lines. None of these senator are capable of making $100,000 anywhere else not even Russell with his law degree is capable of making this kind of money. Some of the rest their brain are burn or cooked which make it worst. it’s up to us November is just around the corner, Like the biggest clown says “senator for hire” we need to hire 15 new senators.
Understood completely N&D.
We need to put some sense into the TAXI drivers that actually make up the majority of votes. I believe there is a law against having such a voting block.
So, in other words, if we could vote tomorrow, the Taxi assoc. would ‘hire’ the same old losers or another one to take their place and do anything the Taxi Assoc. asks for. Bring in the FEDS. Once and for all. Get rid of those safaris that have taken over the Islands, with their intrusive, ugly, reprehensible attitudes and vehicles, but mostly, let the real public have their vote back. Also, we DO NOT NEED 15 clowns at once running this place into the ground.
Here’s a radical idea: How about eliminating the gross receipt tax altogether in favor of a sales tax system like they do in other jurisdictions? That way, businesses (especially perishable goods businesses) won’t be burdened with having to pay taxes on products they haven’t even placed on their shelves yet. The gov’t may actually come out ahead in this scenario. Instead of collecting 4.5% in gross receipt taxes, they could possibly collect 6% or more in sales taxes. Something to think about…
So, as the government employees are laid off, then the Virgin Islands Government, should have a skeleton crew in each office. Eliminate offices deemed as an unnecessary waste of funds to economize taxpaper dollars. How many government employees are needed in each office you retain?;only your employees who can multi-task and are quite efficient and reliable should stay. There is no longer a need for extravagant perks. Auction off the government vehicles for much needed revenue. Start driving your own vehicles to and from work. Eliminate the credit cards for travel and per diem cost because you are already being paid your massive salaries. Take the iniative and show some spunk and tenacity. So, you are giving proper notification to your citizens whom you claim to represent to the soon-to-be government unemployed that you are cutting back as well. I, mean, you want to be taken seriously. In this unfortunate economic time, the Virgin Islands Government has no choice but to proceed and dictate its own process of elimination and by all means make it count for the sake of your precious islands before it is too late………..
However, in order to economize taxpayer dollars even further, the Virgin Islands truly needs only three senators….One to represent each island….
15 senators is way too many…..
There will be a better accountability of funds by having only three senators….
Lastly, I am confident that you want to leave an indelible impression on the hearts and minds of the voters, your families and friends, and the entire community……..
At other jursdictions, for example, the hotel industry is charging 8% hotel occupancy rate and 5,6,7 or eight percent sales tax per room sold depending on the state. The hotel industry is doing quite well that they are increasing the room rate stateside…..
That is a lot of revenue flowing in like a torrential rainstorm that never quicks…
The State of Delaware has no sales tax and is surviving quite well without it….
So, why is Delaware surviving and the Virgin Islands is in dire straits?