Same old tune from governor's financial team, senators at fiscal update hearing
Published: February 19, 2014
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ST. THOMAS - The governor's financial team appeared before the Senate Finance Committee on Tuesday to give an update on the territory's fiscal health.
What they said was no surprise: The territory currently is facing a $70.5 million budget shortfall for Fiscal Year 2014.
The response from senators also was unsurprising: Many believe that the problem could be fixed by simply collecting the outstanding money owed to the government in delinquent, under-reported and unreported taxes.
Gov. John deJongh Jr. and the territory's legislators have been going around on the issue since the start of the budget process last year, when deJongh sent down an unbalanced budget and told the senators to find a way to support the budget level he was proposing.
The senators balked and said it was illegal for deJongh to send an unbalanced budget.
However, the Senate to date has not passed legislation that would generate the kind of revenue needed to shore up the 2014 budget.
Senators continue to blame the administration for not cutting costs, and the administration continues to blame the Senate for failing to pass legislation to cut costs - such as reducing the number of paid government holidays - or generate funds.
The result of the fiscal stagnation is the territory's high unemployment rate and the continued deterioration of the local economy.
During Tuesday's Senate committee hearing Office of Management and Budget Director Debra Gottlieb was blunt.
"If the government is unable to meet its financial obligations, it is likely layoffs could occur within the government sector, which will lead to a reduction in both governmental and consumer spending within the overall economy," Gottlieb said.
Borrowing more is not an option, she said.
Further reductions in government staffing levels will continue to weaken the retirement system and impact the economy and critical government services.
Several senators insisted that the budget gap could be closed by collecting revenues.
Sen. Donald Cole said the government needs to fully staff the divisions that make money for the government and focus on collections.
Collecting the money "out on the street" is the place to start in closing the budget gap, he said.
Sen. Judi Buckley suggested creating a notification system for regularly assessed fees and reporting requirements at the Lt. Governor's Office and other divisions of the government. She said many business owners are out of the territory and may have the money to pay but may not realize when the next payment is due.
A reminder notice could go a long way in ensuring all payments to the government are made timely, according to Buckley.
"It can be a difficult system to navigate," she said.
Sen. Nereida Rivera-O'Reilly took the government to task for sending every member of the governor's Cabinet over to St. Croix for last weekend's Agriculture and Food Fair. She pointed out that it would be thousands of dollars for the flights, hotels and rental cars - all paid for by the taxpayers.
"In this guava crop, if you don't have it, you don't spend it," she said.
Rivera-O'Reilly asked Delbert Hewitt, the chief of operations at the Lt. Governor's Office, about the $84 million in delinquent property taxes.
Currently, the government's only recourse is to auction off the properties and recoup the debt.
In 2013, four auctions were conducted, two in each district. In total, 24 properties in the St. Thomas-St. John District and 26 properties in the St. Croix District were sold.
The delinquent tax debt on the properties was $289,273, but the total amount brought in by the sales was $1,240,800, according to Gottlieb.
Rivera-O'Reilly said she knew of several delinquent properties that are collecting rent from tenants. She wondered whether it would help to pass legislation allowing the government to garnish that rental income to pay back taxes.
Hewitt said anything that would help him collect delinquent taxes would be good.
Sen. Clarence Payne III asked whether the Bureau of Internal Revenue has considered hiring outside collection agencies to collect under-reported or non-filed Gross Receipts, hotel tax and corporate income taxes.
Internal Revenue Director Claudette Watson-Anderson said that option was considered, but it is not possible because protected tax information would have to be disclosed and that would be a violation.
- Contact reporter Aldeth Lewin at 714-9111 or email email@example.com.