Senators, speakers gather to explore ways to solve territory's fiscal crisis
Published: June 19, 2012
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ST. THOMAS - A small handful of senators and members of the public gathered at the Legislature on Monday to hear from expert panelists during an economic summit.
The idea for the summit was spearheaded by Sen. Janette Millin Young as a way to exchange ideas for improving the territory's fiscal position. The day was split into two topics: the morning session focused on budgetary issues and the afternoon session focused on revenue generating ideas.
After each group of panelists made their presentations, senators and members of the public got to question them and offer their own suggestions.
The Legislature's Post Auditor Jose George, who once served as director of the V.I. Office of Management and Budget, gave a presentation about the way the territory's annual budget is put together.
Since Fiscal Year 2007, the government has passed a budget in which the spending exceeds the revenues and the territory's operating expenses have been supported by borrowing, he said.
George said the definitions of revenues and verifiable receipts need to be refined in the V.I. Code to include external and internal borrowing, and many of the existing laws on the books must be enforced. He also recommended a true hiring freeze in which no vacancies - no matter what the position - would be filled. Long-term, the government needs to look at reducing expenses perhaps by eliminating the practise of duplicating all government services in each district, George said.
University of the Virgin Islands economics professor Simon Jones-Hendrickson said that before better fiscal policies can be put in place, the territory's debt must be better defined.
"In most of the economies with which I have been involved or which I have studied over the years, the debt profile of the country is public knowledge. In the V.I., the public debt is a state secret," he said.
It is imperative that the ratio of debt to gross territorial product be accurately calculated, he said.
To improve the local economy, the Virgin Islands needs to decide what type of economy it wants to be, Jones-Hendrickson said. He suggested that financial incentives be given to agriculture and cultural industries to boost that sector of the local economy.
In the afternoon session, the discussion of revenue generation led to the realization that a lot of money is being left on the table because the government is not enforcing its own laws.
Erik Ackerson spoke about the marine industry and offered many suggestions for how revenues can be generated by simply enforcing existing laws, such as mandating that all commercial vessels have a V.I. business license.
He suggested senators implement a comprehensive mooring and anchoring plan for the territory and an appropriate fee structure to go along with it.
Ackerson said the government could create an incentive program to lure new businesses, such as boat bars and restaurants to the territory. He also suggested that the V.I. Tourism Department create a position to focus exclusively on developing the territory's marine industry by promoting boat shows, international regattas and other activities worldwide.
A marine trade association could be developed in the territory to advocate for the industry in the Virgin Islands, Ackerson said.
Realtor Kirk Boeger made a presentation about how many villa and other vacation rentals are not paying hotel occupancy taxes. He also spoke about the prevalence of illegal and unlicensed property managers in the territory. Without enforcement of the tax evaders, the government will continue to lose millions of dollars each year, he said.
"We all talk about generating new revenue, but until we patch some of these holes where our revenue stream seems to leak off into, it's for naught," Sen. Terrence Nelson said.
Nelson brought up his own revenue-generating idea - legalizing marijuana in the territory.
The panelists supported his idea and said more states are moving in that direction, and the territory should be ahead of the trend, not behind it.
Attorney Tom Bolt said the territory would be more welcoming to business if many laws were updated. He said the territory's foreclosure, labor, franchise tax and corporate laws are out of date and restrictive. He also recommended updating the list of exemptions for customs duties and excise taxes to include food and medicine.
- Contact reporter Aldeth Lewin at 714-9111 or email firstname.lastname@example.org.