DeJongh: V.I. is past the tipping point

ST. THOMAS - During last year's State of the Territory Address, Gov. John deJongh Jr. said the Virgin Islands was at a tipping point.

A year later, at Monday's address, he said the territory has tipped to one side.

"One year ago - almost to the day - I delivered my fifth State of the Territory address. I emphasized then that our territory was at a tipping point. That we were at a critical juncture, wherein the choices that lay before us - and the actions we chose to take - would directly impact our future," deJongh said.

While he mentioned a few positive things the territory has experienced during the last year, the bulk of his speech was focused on the challenges that lie ahead with the closure of HOVENSA and steadily declining revenues.

Approximately $100 million in annual revenues will be lost when HOVENSA shuts down. Additionally, a $67.5 million budget deficit for Fiscal Year 2012 already has led to the dismissal of 500 government employees, and hundreds more are likely to lose their jobs in the coming months.

"So, as we embrace this new reality, as we work to stabilize our economy and achieve diversification and growth going forward, we have been rocked by these recent announcements, we have been tipped to one side. The State of our Territory tonight can best be described as troubled," deJongh said.

DeJongh said that in the years since the recession hit in 2008, the territory has taken measures to mitigate the damage to the local economy - borrowing about $500 million to do so.

"We hoped that the nation's economic recovery, and our recovery, would have come more quickly, but it has not. And our ability to fully insulate our people from its effects has run its course," he said.

He said he was angry at the last-minute notice HOVENSA gave him about the decision to leave St. Croix, but much of his anger and disappointment Monday night was directed at the 29th Legislature.

"This Legislature is dominated by those who say only what they cannot support. Rarely do they come up with any practical suggestions - real solutions - that they will support - and that match the challenges we face," he said.

He said he did not understand the action the Senate took last week, when senators voted in favor of a bill to borrow $120 million but voted against the bill to make that borrowing possible by raising Gross Receipts Taxes.

"I can only ask again, what is your alternative?" the governor said.

DeJongh sharply criticized the suggestion by some senators that the government borrow the $120 million from the Government Employees Retirement System. He said it would threaten the integrity of the system to pledge 10 percent of its assets with no collateral. He commended the GERS board for standing up to senators and refusing to consider such an idea.

The governor called on the GERS board to stop waiting for the Senate to save the retirement system and act on its own to save the pensions of thousands of future retirees.

"You, as trustees, must exercise the full authority granted to you by law to increase your revenues and decrease your liabilities, to fulfill your fiduciary obligation to future retirees," he said.

While 500 positions already have been removed from the government's payrolls - saving about $20 million - more cuts will have to be made to close the $67.5 million budget gap and avoid payless paydays.

"On top of the 8 percent salary reduction and the dismissals which have already taken place, we must turn to the narrower range of options available to us, including: more dismissals, shorter work weeks, additional school closures and classroom consolidations, shorter hours at senior centers, public health clinics and recreational facilities," deJongh said. "I have to consider all of these options until we are out of this crisis and our revenues and expenditures are again in balance."

As he asks his cabinet to take deep cuts from their budgets, it is frustrating that the Legislature has not had to make the same sacrifices, deJongh said.

"The Legislature must realize that the people are not fooled - you have not yet even taken the 8 percent cut in costs even though you took the cut in pay. But the cut in pay was supposed to be a reduction of your overall cost to the taxpayers," he said. "It is time for you to make these cuts. The people of this territory demand that we all share and share fairly in the burdens that have been thrust upon us."

The governor said government still is focused on growing existing businesses and luring new businesses to the territory. The private sector and the V.I. government should continue to foster partnerships, he said.

One public/private partnership waiting in the wings is the new Paul E. Joseph stadium on St. Croix. The new facility will have swimming, volleyball, tennis and baseball, he said.

"With $25 million in new private funding, this project will mark a new opportunity to build a recognized niche in sports tourism, with the commitment of the sponsoring sports organizations for dozens of events at the new facilities. It will be a step on the path of recovery," deJongh said.

Union contracts for teachers, administrators and principals will be renegotiated this year. To prepare the territory's youth for the tough, globally competitive economy, both the school day and the school year must be longer, he said.

DeJongh said he wants the Economic Development Commission and the Research and Technology Park play a greater role in the territory's recovery.

"We must refocus our efforts on job development that will be sustainable and that will pay a living wage for those working at companies that receive benefits, if we are to build a strong economic foundation for our workers, their families and their communities," he said.

To reach that goal, deJongh has directed the Economic Development Commission to revamp its programs to ensure benefits are not given to companies who do not hire locals.

"No business has a right to do business here without paying taxes. We have the right to grant that privilege to those who bring us what we need for our economic advancement along with their gain, not the other way around," he said.

Growing the economy by luring new business is possible only if crime is reduced and infrastructure - namely the water and power utilities - is improved.

Going into the new year, the territory's law enforcement will be restructured to creatively manage reduced resources - moving officers from behind the desk to put more of them in the field, deJongh said. Officers on extended paid leave will be asked to come back to work or leave government service for good, he said.

For the territory's energy crisis, deJongh's only plan is to have the V.I. Water and Power Authority draft a revised and realistic "action plan," including infrastructure and management changes and improvements.

"I, for one, want this action plan to fully spell out the pros and cons, the costs and benefits, of whether or not it makes sense at this point to retrofit some or all of the existing generators, whether it makes better sense to skip to new, more modern, more efficient generators, and also to inform us all if we should be moving to natural gas as the fuel for our generators on any or all of our islands," he said.

In order to move past the "troubled" state of the territory, deJongh said everyone will have to band together and keep faith that things will get better.

"My fellow Virgin Islanders now - more than ever - the message I have to each and every one of you is, let us not lose faith, let us not lose faith in ourselves, let us not lose faith in our future, let us move forward. Let us move forward together," he said.

- Contact reporter Aldeth Lewin at 714-9111 or email alewin@dailynews.vi.

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