HOVENSA top of agenda at session
Published: August 19, 2013
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The 30th Legislature is set to tackle funding issues - including the question of whether it will provide special funding for a lawsuit with HOVENSA - when it goes into special session on Tuesday.
Gov. John deJongh Jr. called the session, and has three items for lawmakers to consider:
- A bill that would appropriate $5 million in the Fiscal Year 2014 budget to the V.I. Justice Department to fund the government's response to the HOVENSA closure, including legal, financial, consultant and industry expert advice and representation, and any litigation costs.
- A bill that would finance a $13,635,104 settlement with the IRS, stemming from a 2012 IRS audit of a $219.49 million bond issuance by the V.I. Public Finance Authority in 2006.
- A bill that would authorize the issuance of PFA Revenue Refunding Bonds to provide "cash-flow relief" for the FY 2014 budget.
After senators on Aug. 7 voted down a proposed new agreement with HOVENSA, the impasse between the company and the government over interpretation of the existing agreement heated up.
"I do believe that HOVENSA is going to play hard ball with the government of the Virgin Islands," Sen. Terrence Nelson said during an interview last week, at a point after HOVENSA had indicated its intention to shut down its fuel rack where gasoline is sold wholesale to the island's retailers - but before the governor called the Senate into special session.
Nelson, who was one of the most vocal opponents of the deal, said at that time that he thought the process called for trying to go back to the negotiating table.
During the same time frame - after HOVENSA indicated its intention to shut down the fuel rack, but before deJongh called the special session to ask for the funding - Sen. Kenneth Gittens seemed to be supportive of the idea of litigation.
"We will just need to do what we have to do through the justice system with these guys," Gittens said.
A number of senators were out of the territory last week to attend the National Conference of State Legislatures Legislative Summit in Atlanta.
DeJongh indicated in his letter calling the session that a breach of contract lawsuit with HOVENSA would likely cost far more than the requested $5 million. He wrote that officials believe that litigating such a case could cost taxpayers $15 million, and last seven years.
The other two items on Tuesday's agenda have to do with PFA bond issues.
In one piece of legislation, the governor is requesting a $13.4 million appropriation to settle outstanding issues from an audit the Internal Revenue Service did of a 2006 PFA bond issuance.
The governor wants the appropriation for the current fiscal year, so the settlement can be paid by Aug. 27. After that, the $13.4 million due to the IRS starts to accrue interest. The proposed legislation for the appropriation allows for borrowing or bonding to finance the payment.
The other legislation on the agenda involves authorizing the PFA to issue up to $90 million in bonds to refund and restructure 2004 and 2009 series bonds for a more favorable interest rate.
Officials project that they would get approximately $26 million from the refunding and restructuring - money that would be used to close a projected budget deficit for Fiscal Year 2014.
The session is scheduled to start at 10 a.m. Tuesday at Ottley Legislative Hall on St. Thomas.