DeJongh sends FY 2015 budget to Senate

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ST. THOMAS - Gov. John deJongh Jr. sent a Fiscal Year 2015 budget proposal to the V.I. Legislature Monday that is about $50 million less that the budget passed by the Senate last year.

The total FY 2015 budget proposal is $1.1 billion. Of that, $709.5 million comes from the General Fund. The remainder of the budget comes from federal funds, special funds and other sources.

The $709.5 million General Fund budget is balanced based on projected revenues, some proposed legislative measures and $57 million in new revenue that the Senate will have to come up with.

The governor's financial team will be before the Senate today to detail the budget request at the Finance Committee's first budget hearing.

The $709.5 million budget is $34.3 million less than last year's $743.8 million budget proposal and $51.7 million less than the $761.2 million FY 2014 budget passed by the Senate.

Office of Management and Budget director Debra Gottlieb said it is $21.5 million less than the $731 million she currently is expecting to allot, or actually spend, in FY 2014.

"Our community continues to face the economic and financial challenges resulting from the impacts of the Great Recession and the closure of the oil refinery, once our largest single employer and taxpayer. We are continuing the process of adjusting to this 'new normal,' even as we are strengthening our foundation for the present and future," deJongh said in his letter to Malone.

The $709.5 million General Fund budget reflects an approximate 4 percent cut to all departments and agencies compared to the current appropriation levels for FY 2014.

Like the current year's budget, the FY 2015 budget also is based on not filling General Fund-supported positions, eliminating programs and services that can no longer be justified, streamlining processes and shifting costs to federal and other special funds, according to deJongh.

FY 2015 budget breakdown

The total $1.1 billion budget for FY 2015 includes $709.5 million from the General Fund, $71.7 million from other appropriated funds, $162.2 million in federal funds, $134,5 million in non-governmental funds, and $63.2 million in other non-appropriated funds.

The $709.5 million General Fund budget includes $54.4 million for the legislative and judicial branches of government. The governor cannot propose specific budgets or spending plans for other branches of government.

The remaining amount will fund the executive branch departments and agencies, the miscellaneous budget and other operating expenses.

Funding from the General Fund also is used to fund the University of the Virgin Islands at $29.6 million, Schneider Hospital at $22.5 million, Luis Hospital at $20.1 million, the Virgin Islands Waste Management Authority at $22.3 million and the Elections Supervisor and Boards of Elections at $1.4 million.

Projected revenue

The FY 2015 budget is based on projected revenue, the amount of money the government believes it will collect over the course of the coming year.

DeJongh said the government expects to collect 1.6 percent more net total taxes than the current year but essentially expects all other revenues to remain flat.

"The biggest impact is the $53.8 million reduction in the transfers to the General Fund. The revenue actions required for this budget reflect the continuing fiscal challenges that we face in our core categories and with respect to our rum partnerships," he said.

Gottlieb said several revenues streams the government has been dependent on will dry up in 2015. For example, starting in FY 2015, the territory will be caught up with the back years of property taxes and will only have to bill for one year's property taxes.

Rum production has decreased, resulting in the Internal Revenue Matching Fund contribution to the General Fund dropping by $54.5 million - from $75 million in FY 2014 to a projected $20.4 million in FY 2015.

A partial settlement of $39.9 million for the South Shore Natural Resource Damages litigation - the red mud issue on the south shore of St. Croix - will be a slight boost to expected revenues, Gottlieb said.

Enabling legislation

The governor sent down a number of proposed legislative measures along with the budget, many of which could be used to ensure the FY 2015 budget proposal is sustainable.

The governor's proposals include:

- The governor has again submitted three pieces of legislation rejected by the Senate for the last two years.

The first is to make the career incentive program a one-time bonus for law enforcement personnel who seek higher education.

The second would shift the full cost of medical malpractice insurance premiums to physicians who have a private practice and who also do work for the government.

The third measure would eliminate the night-shift pay differential, which is the system creating a higher pay scale for employees who work between the hours of 6 p.m. and 6 a.m.

- Changing the health insurance premium ration so that employees would pay 40 percent of the cost and the government would pay 60 percent. The current ratio is 35/65.

- Adding a number of electronics to be exempt from excise taxes or customs duties.

- Authorizing a $40 million line of credit for working capital purposes for FY 2015 and FY 2016.

- Increasing the rate schedule for excise taxes on certain products and to revive the antilitter and beautification fund.

- He also submitted a bill making it clear that the government employees who had an 8 percent salary cut in 2011, 2012 and half of 2013 are not owed retroactive money for the cuts.

- Contact reporter Aldeth Lewin at 714-9111 or email

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