Senate Reduces EDA Tax Beneficiary Hiring Requirements, Passes Slew of Bills

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The V.I. Legislature passed a bill Tuesday reducing the number of employees certain types of finance companies must have to receive tax breaks under the V.I. Economic Development Authority’s Industrial Development Program from 10 employees to five.

Sen. Shawn-Michael Malone, the bill’s sponsor, said the measure was similar to, but more narrowly crafted than, two measures previously approved but vetoed by the governor (See related links below). The current version only exempts "financial companies that are not labor intensive," rather than all recipients of tax breaks. The bill’s language specifies that it applies to the program’s Category IIA businesses only.

Puerto Rico only requires four such employees, giving that territory an advantage in wooing companies, Malone said.

"We have a statement from (EDA Executive Director Percival) Clouden to the effect that we will lose more of these to Puerto Rico" without this, Malone said. While each company would have fewer employees, he said there should be more companies with their owners paying income tax on what tends to be very high incomes.

"We lose five jobs, but what we gain is income tax revenue," Malone said.

The bill was approved unanimously with Malone, Sens. Nereida "Nellie" Rivera-O’Reilly, Terrence "Positive" Nelson, Carlton "Ital" Dowe, Alicia "Chucky" Hansen, Neville James, Louis Patrick Hill, Usie Richards, Sammuel Sanes, Patrick Sprauve, Celestino White and Janette Millin Young voting yea. Sens. Craig Barshinger, Ronald Russell and Alvin Williams were absent.

Another measure approved Tuesday would allow a private citizen to file suit against a person or company that submits false claims for payment to the V.I. government. The bill, sponsored by Hill, would allow the private citizen to seek damages on behalf of the government and to take a share of any court judgment if certain conditions are met. It also establishes certain protections for whistleblowers. The bill summary says it is modeled after the Washington, D.C., False Claims Act and the federal False Claims Act.

The Legislature also voted to increase the University of the Virgin Island’s budget by almost $6 million. The measure, sponsored by Dowe, says $5.2 million in specific increases were recommended by Gov. John deJongh Jr. Those appropriations include $4 million for UVI’s debt service, $400,000 for valedictorian and salutatorian scholarships; $300,000 to provide matching grants for the Small Business Development Center, and several smaller sums.

The bill also includes $400,000 to restore UVI salaries reduced by 8 percent in 2011 when the government was facing a fiscal crisis. An amendment from Young also appropriated $356,000 for UVI’s Upward Bound Program.

O’Reilly initially objected to the Upward Bound funding, saying, "We have no guarantee this money even exists," and that Upward Bound had returned some grant funding unspent.

"We find funds for incarceration, so I think we need to find this funding," Young replied.

O’Reilly withdrew her objection and the amendment was added by unanimous consent. The bill was approved unanimously, with Barshinger, Hansen, Russell and Williams absent.

The Legislature also passed legislation:
– from O’Reilly mandating the territory develop a detailed plan to address Alzheimer’s disease in the territory;
– from Sanes, Richards and Russell giving the V.I. Board of Medical Examiners express authority to license and regulate telemedicine in the territory. The legislation says the Board of Medical Examiners will issue a group license authorizing one or more groups of out-of-territory physicians who are licensed in their home state to provide telemedicine services in the U.S. Virgin Islands. The board will set up the rules for licensing and have authority to establish regulations governing its practice;
– authorizing Public Works to use $730,000 already in its budget to pay Precise Builders for thermoplastic road striping in the St. Thomas and St. John district that has already been completed;
– re-appropriating $55,000 in unspent 2011 Community Development Block Grant funds, giving $45,000 to the St. Croix Women’s Coalition to help toward repairing fire damage to its crisis center, $5,000 to Choice Basketball and $5,000 to the Frederiksted Boys and Girls Club;
– and approving the upcoming year’s CDBG funded projects. (For details of those projects, see CDBG Grants Allocated Across the Territory in related links below.)

The Legislature also passed a resolution asking the federal government to assign proceeds from a "$700 million fine" it asserted the Environmental Protection Agency imposed on the refinery to the V.I. Water and Power Authority to reduce utility bills.

The measure, proposed by Russell, refers to an agreement reached between the U.S. Department of Justice, EPA and Hovensa in January 2011 over charges the refinery increased emissions without getting proper permits or installing required pollution control equipment. In that agreement, Hovensa agreed to pay a $5.3 million fine, put aside $4.9 million for environmental projects in the territory and spend more than $700 million on pollution control equipment and plant upgrades. (See Hovensa to Pay $5.3M in Fines; Spend $710M For Upgrades in related links below) Hovensa has since mothballed the refinery rather than undergoing the upgrades.

Before passing the resolution, senators added an amendment from Russell declaring that the V.I. government representative who signed off on the agreement on behalf of the territory did not have authority to do so, and assigning 20 percent of the nonexistent proceeds to Gov. Juan F. Luis Hospital.

Several senators sharply criticized the bill, some of whom then voted for it.

"I am not into denying reality," said O’Reilly. "It is not what the consent decree speaks of and therefore I will not support it," she said.

Nelson similarly criticized the bill.

"I can’t support this as much as I would like to. It is embarrassing to be doing something like this. … It was not a fine against Hovensa. It was infrastructure. For us as a body to send this to EPA does not speak very highly of us," Nelson said.

"Have we ever gotten a response when we move resolutions here in this body?" asked James. "I mean, come on, do you really think the EPA is going to take $700 million they directed Hovensa to spend on infrastructure and give it to the territory? The answer is no," James said.

The senate has passed resolutions asking for well over a billion dollars and has never received a response, James said. "I mean, if this is the solution, why not ask for $3.2 billion and solve our GERS shortfall and all of our problems right now?" he asked.

Voting for the bill as amended were O’Reilly, Nelson, Dowe, Hansen, Hill, Richards, Sanes, Sprauve, White and Young. Voting nay were James and Malone. Barshinger, Russell and Williams were absent.

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