Governor to address Legislature as V.I. budget spirals into red


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ST. THOMAS - Gov. John deJongh Jr. will address the Senate for the last time tonight, giving his eighth and final State of the Territory speech.

The last few years have been tough for the territory. High utility costs have forced many businesses to shut their doors, leaving more Virgin Islanders out of work and resulting in dwindling tax revenue to support government operations.

The territory is still waiting to see what will happen with the HOVENSA refinery on St. Croix, and systemic problems at the Bureau of Corrections and Luis Hospital have risen to a breaking point.

Despite a task force and recommendations made, nothing has been done to fix the territory's crumbling retirement system, leaving thousands of active and retired employees in fear for their future.

Crime is still a major concern for residents and visitors alike, and many people are wondering how bad it can get before something changes.

People will be waiting to see if deJongh will offer workable solutions during his last year in office, or if he will ride it out and let the next administration try to solve the territory's problems.

The budget

DeJongh's financial team announced Thursday that the projected budget shortfall for Fiscal Year 2014 is $70.5 million.

After almost all of the governor's revenue generating and cost cutting measures were rejected by the V.I. Legislature in recent years, deJongh has stopped trying to send legislation to the Senate and instead has simply laid the responsibility at the feet of the senators.

Some of his past proposals ignored or shot down by the Senate included:

- Implementing an income tax surcharge, which would generate an estimated $24 million.

- Implementing a combination of unpaid holidays and/or furlough days to save $16 million.

- Extending the expiration date of the 8 percent salary reduction to save $29.5 million.

- Implementing a vehicle mileage tax to generate about $10 million.

- Reducing the Gross Receipts Tax exemption to the previous level to save $3 million.

- Eliminating the exemption of excise taxes on certain products.

- Increasing real property and other existing taxes.

- Reducing fringe benefits offered to government employees.

- Making the career incentive program a one-time bonus for law enforcement personnel who seek higher education.

- Shifting the full cost of medical malpractice insurance to physicians who have a private practice and also do work for the government.

- Eliminating night-shift pay differential, which is the system creating a higher pay scale for employees who work at night

- Making autonomous agencies of the government responsible for the health insurance costs of their retired workers.

In his Fiscal Year 2014 budget submittal, he said the senators would have to come up with revenues to sustain the necessary expenditures. They were not happy with the governor's tactic and ultimately passed a budget based on rum revenues the territory has not yet received, and may not receive.

As he has done in the last two State of the Territory speeches, deJongh will likely take the Senate to task for failing to come up with revenue generating legislation.

HOVENSA

One of the biggest blows to the territory came in 2012 when the territory's largest private employer, the HOVENSA oil refinery, announced it was closing.

The governor spent much of last year trying to get a Fourth Amendment to the Agreement between HOVENSA and the government ratified by the V.I. Legislature.

After it was rejected in August, the governor and the refinery agreed to incorporate the Senate's concerns and it was passed in November.

The new agreement will allow for the refinery to be sold, in hopes that it may once again be operational and bring jobs back to the island.

DeJongh has met with the bankers hired to attract buyers, and may provide an update in his speech tonight.

Luis Hospital

The troubles at Luis Hospital have been mounting steadily for months.

The hospital has been without a permanent chief executive officer since last January. In recent months, the Central Government repeatedly has had to step in to provide the hospital with advances on its allotment so it could make its payroll. Paydays have been late, pay cuts have been instituted, and the hospital has gone through three rounds of dismissals in the last two years.

The hospital is in danger of losing is certification, and needs a serious cash infusion to continue operating.

To make matters worse, the board has not been able to meet for lack of a quorum. The governor must nominate two more board members to give the board a quorum.

Residents of St. Croix will be paying very close attention to the governor tonight to see what he plans to do to help their only hospital.

GERS Reform

The Government Employee's Retirement System is on the verge of collapse.

The system's unfunded liability - the difference between what is being paid into the system in contributions and the obligation to pay out all retirement benefits - stands at about $1.8 billion

During the last two decades, the unfunded liability has grown because of insufficient contributions, a ratio of fewer active employees to retired employees, and unfunded mandates like early retirement packages.

The GERS actuary predicts that the system will fail in less than a decade.

After an audit of the system was released, the governor formed a task force to come up with a list of reforms to help save the system. The task force released its findings in May, yet no action has been taken by the Legislature to approve any of the measures.

The governor will likely pressure senators to act on the reforms.

Retirees and those who are ready to retire will be paying very close attention to see if the governor makes mention of a settlement agreement to pay owed contributions to the GERS. The missing contributions are preventing employees from retiring, as the GERS will not process an annuity for an employee unless all outstanding contributions have been paid.

The GERS and the central government have not been able to agree to an amount owed, which has left many employees in the lurch.

Other topics

The territory is facing many challenges, from a weak economy to a struggling school system.

People tuning in to the governor's annual address will be looking for updates on the territory's tourism industry, broadband network, economic development plans, ways to address the exorbitant utility costs, high crime rates, deteriorating prisons, limited government services and education.

The governor will address the V.I. Legislature in formal session at 7 tonight at Ottley Legislative Hall on St. Thomas.

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

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