DeJongh calls special Senate session to deal with fiscal crisis
Published: July 15, 2014
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ST. THOMAS - Gov. John deJongh Jr. called the Senate into a special session, to take place Wednesday, to address legislation to fix the Senate's plan to address the territory's fiscal crisis.
In June, the governor sent proposed legislation to the Senate to borrow $169 million. The borrowing would have covered the $30 million budget shortfall for the current fiscal year and fund a number of critical needs, including paying both hospitals' outstanding utility bills and giving the hospitals a cash infusion of about $15 million each.
At a session later that month, the Senate rejected the governor's plan, tabling the legislation indefinitely.
Instead, the Senate introduced and passed its own plan - a bill authorizing the government to re-issue a short-term working capital loan in the amount of $50 million.
However, the loan must be paid back in 270 days.
Senate President Shawn-Michael Malone said the senators will be in caucus today to discuss the governor's proposal.
"The senators are not in favor of borrowing," Malone said. "But we have a meeting tomorrow, and caucus members will analyze the bill."
In a letter to Malone, deJongh said the local bank that currently holds the line of credit is not interested in providing a loan that has to be repaid in such a short time frame because it is unlikely the government will be able to do so.
DeJongh said the government needs some flexibility in financing the loan authorized by the Senate last month.
"Local financial institutions are unlikely to provide short-term financing to the government without suitable provision for the eventual repayment of such financing upon maturity," deJongh said in a prepared statement Government House issued Monday.
The amendment authorizes the government to either the issue bonds or notes in anticipation of issuing longer-term bonds, or issue a loan that is converted to a long-term maturity after the 270 days.
The governor said he approved the Senate's authorizations for the hospitals, payments to the V.I. Water and Power Authority and the Sea View Nursing Home; however, that approval is based on the government's ability to obtain the necessary funding.
"Both hospitals have expressed the urgent need for this funding, particularly the Gov. Juan F. Luis Hospital, which has indicated its inability to meet the next payroll and purchase badly needed medications, and Schneider Regional Medical Center's pressing need to address some tax obligations," deJongh said in the prepared statement. "WAPA has also expressed its concern for the potential impact that the outstanding receivables from the hospitals have on their cash flow as well as their bond rating. Additionally, the commissioner of the Department of Human Services has indicated the potential for the disruption of long-term nursing care services without some assistance for Sea View, the only certified nursing home in the territory."
Debra Gottlieb, director of the Office of Management and Budget, said the measure is a "clean up" legislation. She said the Senate shot down the administration's proposal, and now the administration is trying to work with the Senate's proposal.
"The funding mechanism they've come up with, the banks aren't going to accept it," she said. "The local bank doesn't have the appetite for that type of short-term financing."
However, now is a good time to go to the bond market, according to Gottlieb. The government just got its investment grade bond ratings confirmed, and the market is offering very low interest rates, she said.
The other items included in the governor's proposal mirror what he sent down last month, including amending the authorization for the design-build contract for Paul E. Joseph Stadium on St. Croix to include the construction of a little league field and a permanent Festival village site.
DeJongh said negotiations with a contractor are in progress.
- Contact Aldeth Lewin at 714-9111 or email email@example.com.