Senators hold austerity measures bill in committee to fine-tune legislation
Published: October 16, 2013
Font size: [A] [A] [A]
ST. CROIX - The Senate Finance Committee peppered testifiers with questions Tuesday about a bill that proposes government austerity measures - although members ultimately voted to keep the bill in committee for fine-tuning.
The bill - sponsored by Senators Terrence Nelson and Nereida Rivera-O'Reilly - comprises 10 diverse sections. Nelson said he, Rivera-O'Reilly and former Sen. Neville James began looking at these measures in 2011, when the Legislature enacted a variety of different austerity measures in an attempt to close looming budget gaps.
"I think this is an organic way of marrying ecosystems in government in order for us to attain many objectives," Rivera-O'Reilly said.
Some government officials testifying Tuesday offered suggestions for improving the bill, while some written testimony read into the record was critical of the bill.
Rivera-O'Reilly defended the bill.
"These are thoughtful solutions - maybe not perfect - but solutions nonetheless," she said.
The bill would:
- Authorize the director of the V.I. Internal Revenue Bureau to implement an early payment discount of 1 percentage point for businesses that pay estimated Gross Receipts taxes in advance.
- Authorize the Government Employees Retirement System and the V.I. government to negotiate the sale and purchase of the 2012 real property tax portfolio.
- Require every government department and agency to suspend all non-essential locally funded contracts for professional services until Sept. 30, 2014.
- Create a Workforce Reduction Planning Board to provide advice and recommendations to the governor on implementing a workforce reduction in the executive branch, with the purpose of reducing the non-service unclassified workforce of the government to a maximum limit of 1,000 employees.
The board - comprising the Finance Commissioner, Director of the Office of Management and Budget, the Director of Personnel and two senators appointed by the Senate president - would recommend the maximum number of unclassified positions allowed on each department and agency payroll to achieve a quarterly unclassified workforce reduction of no less than 150 positions for five consecutive quarters.
- Authorize all branches of government to implement voluntary part-time employment status for up to two years for non-essential employees as a cost-saving measure. Employees participating in the program would have their benefits preserved.
- Authorize all branches of government to establish PayPal accounts to expedite the payment of fees and taxes due through existing website pages.
- Reprogram $250,000 from the residual funds of the proceeds remaining from the 2003 Gross Receipts bonds for the V.I. Police Department to purchase portable automated credit card payment machines to process the payment of traffic tickets in real time. Payments made at the time of ticket issuance would be discounted by 20 percent.
- Authorize Property and Procurement to negotiate leases with mobile phone tower operators to place towers on government-owned properties, with the proceeds going to the General Fund for government operations.
- Require that all companies holding a V.I. Economic Development Commission certificate be assessed an additional 1 percentage point on the current Gross Receipts tax rate, in exchange for an automatic three-year extension of their certificate. The bill would also allow for an additional 1 percentage point increase on the current Excise Tax rate in exchange for an automatic three-year extension on the certificate.
Those provisions would expire in two years.
Testimony on the measure came from Finance Commissioner Angel Dawson Jr. and Internal Revenue Bureau Director Claudette Watson-Anderson, while other testimony of officials who were not present - including Office of Management and Budget Director Debra Gottlieb and Personnel Director Kenneth Hermon Jr. - were read into the record.
Watson-Anderson said the estimated amount from the early discount for Gross Receipts taxes would be $1 million, but that such a program would be difficult to implement because of the Internal Revenue Bureau's reduced budget. Likewise, she said, the proposed change to the EDC beneficiary tax rates would also require funding.
Dawson said he accepts the spirit in which the bill was intended, to be helpful with the government's fiscal problems. He said he had no problem being a member of the proposed Workforce Reduction board.
Dawson recommended getting input from the government's bond counsel about whether reprogramming funds for police to purchase credit card processing machines is a qualified usage of proceeds from tax-exempt bonds and recommended reprogramming the funds from specific line items.
Gottlieb's testimony, read into the record, said she found most of the provisions of the bill problematic.
She said that she believes the early discount on Gross Receipts taxes would undermine the collection of Gross Receipts taxes and could jeopardize the government's Gross Receipts bond rating by reducing the coverage ratio on outstanding bond issues secured by the Gross Receipts Tax.
She also said that the suspension of all non-essential professional contracts is "improvident and there may be legal ramifications if it is implemented inclusive of the assessment of penalties that may apply."
Gottlieb further contended that the Workforce Reduction Board portion of the legislation encroaches on the executive prerogative by legislating how many unclassified employees the executive branch could employ.
The Office of Management and Budget, she said, does not support the bill and finds many of the measures "problematic, vague on specific details, and it does not appear that much consideration was given to the managerial and financial aspects of implementing the proposed austerity measures."
Testifiers pointed out that the unclassified employees of the executive branch already number below the maximum limit of 1,000 that is outlined in the bill.
Ultimately, Nelson moved to hold the bill in committee to make amendments at a future committee meeting, with Senators Myron Jackson, Nelson, Rivera-O'Reilly and Committee Chairman Clifford Graham voting yes. Committee members Judi Buckley, Donald Cole and Clarence Payne III were absent.