Governor's team presents balanced FY 2013 budget
Published: September 7, 2012
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ST. THOMAS - Based on new projections of increased property tax collections and higher rum revenue, Gov. John deJongh Jr.'s financial team is anticipating a balanced Fiscal Year 2013 budget, they told the Senate Finance Committee on Thursday.
The balanced budget also is dependent on a number of amendments to the miscellaneous section and some changes to the territory' laws that were submitted with FY 2013 budget proposal.
Office of Management and Budget Director Debra Gottlieb revised the revenue projections for 2013 up from $695.9 million to $701 million.
Gottlieb said real property tax revenue projections went from $98 million at the start of the budget hearing process to $100.7 million. The property tax revenue is based on collecting payments on 2010, 2011 and 2012 tax bills in FY 2013.
Gottlieb said the Office of the Tax Assessor will be conducting a reassessment of the territory's real property in the coming fiscal year, which will allow the 2012 bills to be issued at the new rates set in Act 7342. Property taxes for 2010 and 2011 will be billed at the 1998 rates.
Rum revenue projections also rose - from $47.1 million to $70.1 million.
The government gets $10.50 back for every proof gallon of rum produced in the territory and sold in the United States. Since 1999, the returned excise tax, or coverover, has been raised to $13.25 per proof gallon, but that increase expires every two years and must be renewed by Congress.
The last coverover extension expired in January and the renewal - which would be retroactive to January - still needs to be passed by Congress and signed by the president.
Gottlieb said that the rum revenue projections were increased based on several factors.
Following a recent audit of the coverover program, the U.S. Treasury recently paid the Virgin Islands an $11 million adjustment, Gottlieb said.
Original rum production estimates for the coming year also were revised upward, which means more rum to sell and more revenue for the territory.
The FY 2013 budget had been balanced using $60 million in borrowing from the $120 million working capital bond sold Thursday. Gottlieb said the increased rum coverover and property tax revenues will allow the government to use only $35 million in borrowing for FY 2013. The remaining $25 million will be used to balance the FY 2014 budget.
To realign the governor's FY 2013 budget proposal with the revised revenue projections, Gottlieb submitted a number of amendments to the miscellaneous section of the budget Thursday, including:
- Striking $45,000 for the drought relief fund.
- Raising the appropriation for the Bont Tick Program from $40,000 to $85,000.
- Deleting the $13,500 earmark for the St. John Humane Society and replacing it with $25,000 to the Animal Care Center of St. John.
- Striking $40,000 for the St. Croix Humane Society and replacing it with $80,000 for the St. Croix Animal Welfare Center.
- Increasing the appropriation for the St. Thomas Humane Society from $40,000 to $80,000.
- Increasing the appropriation for the Casino Control Commission from $706,881 to $806,881.
- Adding $1.5 million for the V.I. Labor Department for injured workers medical expenses and long-term care.
- Adding $3 million to fund critical vacancies in the government.
The budget bill to make the contribution from the Internal Matching Fund - rum revenue - to the General Fund also must be changed to reflect the additional revenue projections, Gottlieb said.
The FY 2013 budget is balanced based on a number of changes to the territory's laws.
One of the hot-button measures is deJongh's proposal to eliminate night differential pay and the annual career incentive bonus.
V.I. Personnel Director Kenneth Hermon Jr. told senators Thursday that as of Aug. 31, the government has paid $1.9 million in night differential pay and $1.1 million in career incentive bonuses.
He said the night differential - higher hourly wages for certain employees who work late night shifts - is something created in the V.I. Code, so the code must be amended to get rid of it.
Senators asked him how it would affect union contracts.
Hermon said because it is a provision under law, and only adopted by the collective bargaining agreements because it is law, it should not affect the contracts.
The governor wants to eliminate the annual career incentive bonus in favor of a one-time bonus. Hermon said the way it is set up now, a police officer could get an associate's degree and get an annual bonus for the rest of his or her career, which does not give a continued incentive to pursue higher education.
A set of rules and regulations that would include tuition reimbursements and one time bonuses would be implemented for the revised career incentive program, Hermon said.
Another piece of enabling legislation the governor is proposing to balance the budget would force semi-autonomous and autonomous agencies to pick up the cost of health insurance for retirees. Hermon said when an employee retires from the V.I. Government Employees Retirement System, the V.I. Port Authority and other agencies, the central government begins to pay the employer contribution for that employee's health benefits.
Sen. Neville James asked Gottlieb whether the government is planning any layoffs in FY 2013.
"We are anticipating keeping the budget balanced," she said.
She said the deJongh administration does not want to terminate anyone, and as long as the budget remains balanced it will not have to.
Sen. Terrence Nelson asked whether the government is anticipating a deficit in FY 2013.
"No, based on the projections we're sharing here today, we are pretty much balanced," Gottlieb said.
She said the 2012 fiscal year has a projected $55 million budget shortfall, but the government employee dismissals made throughout the year saved the government $33 million of that. The rest was - or will be - made up by not releasing the full allotments for various agencies and groups that had been appropriated money in 2012.
- Contact reporter Aldeth Lewin at 714-9111 or email email@example.com.