GERS will use property taxes to pay pensions
Published: August 27, 2013
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Government House announced a proposed agreement between the V.I. government and the Government Employees Retirement System to use property tax collections for 2005 and earlier to meet employer contributions so that recent government retirees can receive their pension benefits.
"We have been in discussions with the trustees on this issue for some time and we want to take away any anxiety that our employees have as to their retirement payments and yet meet the need of the retirement system for amounts they claim to be due. We continue to reconcile amounts owed, but I believe the funding stream that we have identified and the agreement I have sent provides the assurance that the retirement system needs," Gov. John deJongh Jr. said in a prepared statement Government House released Monday.
Although a settlement with the government was on the agenda for executive session during a meeting of the GERS board Thursday, after the session, board members said they would review the proposal they had received and possibly discuss it during a meeting Monday. However, there was no GERS meeting announced for Monday.
The GERS board next meets with its investment managers Thursday and Friday.
According to Government House, the proposed agreement would be signed by deJongh and Vincent Liger, GERS chairman of the board, and would stipulate that the balance left in the Special Real Property Tax Receipts Fund after the government has repaid a loan it received from GERS in November 2011 will complete the government's outstanding contributions. Those contributions would be for pensions of government employees who retire or have retired in the period between Oct. 1, 2010, through Dec. 31, 2013, and who the system has determined need payment of missing employer contributions to receive their annuity.
The balance left over after paying off the Property Tax Loan Note would be used to pay employer contributions for public workers who retired but have yet to receive benefits and pay refunds to employees who made the employer contribution payments themselves.
According to Government House, the Tax Assessor's Office has indicated that about $25.6 million is left outstanding in property taxes for 2005 and prior years and that the Lt. Governor's Office has deemed about $20.7 million of that amount "collectible."
However, Monday's statement did not indicate how close the government is to actually collecting all of that money.
About $5.6 million already has been deposited into the Special Real Property Tax Receipts Fund, and if the government collects all outstanding amounts, the total available for payment of the loan and the missing employer contributions would be about $26 million, according to the Government House statement.
Of that $26 million, about $11 million would remain after about $15 million is used to pay the loan back, according to the release.
The proposed settlement calls for payments drawn from that fund to go to GERS to settle the unpaid employer contributions for the recent retirees, upon presentation of proper invoices.