V.I. faces $26.3 million shortfall in FY2013
Published: February 20, 2013
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ST. THOMAS - In the 30th Legislature's first committee hearing Tuesday - and the first work the Senate has done since November outside of its organizing ceremony in January - the governor's financial team told the Senate Finance Committee the territory is facing a $26.3 million budget shortfall for Fiscal Year 2013.
Management and Budget Director Debra Gottlieb said the projected shortfall can be addressed through budget cuts and austerity measures; however, the government plans to take out a short-term line of credit just in case.
The line of credit would be available if the government needed extra money to cover regular expenditures in a given month, such as payroll and vendor payments. Gottlieb said that revenue collection fluctuates month to month throughout the year, and that some months may have a cash shortfall and the government could fall back on the line of credit to get by.
V.I. Finance Commissioner Angel Dawson Jr. said that in the last fiscal year, the lowest collections were $30 million in November and the highest collections were $70 million in April. The government's payroll is approximately $15 million per pay period, according to Dawson.
Gottlieb told senators that $714.3 million has been appropriated for FY 2013, but the revised revenue projection is $703 million - which includes $35 million in borrowing approved last year.
Despite the $11.3 million shortfall, Gov. John deJongh Jr. will submit a $15 million supplemental budget, Gottlieb said.
The additional $15 million will cover $12 million in unfunded government employees' health insurance costs and $3 million to pay vendors owed for services provided to the Bureau of Corrections.
"It is our anticipation that the combination of regular collections, our aggressive focus on delinquent collections, near term economic activity and our various saving measures, that we will meet our Fiscal Year 2013 requirements," Gottlieb told senators.
The saving measures include a more stringent hiring freeze, a 5 percent allotment reduction for all General Fund appropriations, reducing energy consumption, reducing telecommunication expenses, improving the draw-down of federal funds, travel restrictions and reducing rental expenses.
Gottlieb said the cost-saving initiatives already have reduced government expenses by about 10 percent compared with the same period last year.
"However, I must caution that if revenues continue to decline, additional savings and revenue-generating measures will need to be developed collaboratively and implemented immediately," she added.
Two years of property taxes will be billed and collected in FY 2013, Gottlieb said. The 2011 bills should be issued by the end of the month, and the 2012 bills will be issued in July, she said.
Legislation will be submitted to the Senate to issue the 2012 bills at the 1998 tax levels, according to Gottlieb.
It will allow the government to collect property taxes for 2012 in FY 2013, bringing the government almost up to date and bringing in much needed revenue for the current fiscal year.
This year, the territory's properties are to be re-assessed; the revaluation of all property is required every five years.
Gottlieb said the governor will resubmit a number of measures shot down by the 29th Legislature. As part of the governor's FY 2013 budget proposal, he included enabling legislation intended to help balance the budget.
Those measures included:
- Eliminating the government's obligation to pay half of the malpractice insurance premiums for private practice physicians who also do work for the government.
- Eliminating the night-shift payroll differential, which gives higher pay rates to those who work at night.
- Making the current, ongoing career incentive bonus a one-time bonus instead.
- Forcing semi-autonomous and autonomous agencies to pick up the cost of health insurance for their retirees.
- Increasing the government employee's portion of health insurance premiums from a 65 percent employer contribution and 35 employee contribution to a 60/40 split.
- Holding government salaries paid out of the General Fund at the 2011 level for the purposes of collective bargaining negotiations, step increases or salary adjustments.
Sen. Janette Millin Young said she was not happy to hear that the governor's proposals are coming back.
"I am not thrilled with many of these proposals that are back again, after being soundly defeated," she said.
Sen. Terrence Nelson asked what other revenue-generating ideas the financial team had to fill the government's coffers.
"We've shared all of ours with you at this time, we look forward to working with you on any plans the Senate comes up with," Gottlieb said.
Gottlieb also asked senators to consider changing the government's departmental budgets from modified line-item budgets to lump sum budgets to allow greater flexibility.
- Contact reporter Aldeth Lewin at 714-9111 or email firstname.lastname@example.org.