The Virgin Islands government could find itself in yet-another financial pickle as early as February despite the recent authorization granted the Turnbull administration to negotiate for a $300 million general obligation bond issuance.
That assessment came from Senate Post Auditor Campbell Malone on Wednesday night when he and Sen. Lorraine L. Berry detailed the methodology by which the Fiscal Year 2000 budget was formulated and approved last week by the 23rd Legislature.
Berry, who chairs the Senate Finance Committee, appeared with the post auditor on public televisions "Face to Face" program.
Malones assessment emerged from a "hypothetical seasonalization" of the government budget outlook.
"The first quarter (Oct. 1 to Dec. 31) shows slightly higher-than-average cash flow activity, due in part to the $300 million bond issue," he said. But the gravity of the governments fiscal health is revealed in the remaining three quarters where a combined $81.5 million shortfall is anticipated, according to Malone.
"By February 2000, we anticipate not having sufficient cash flow to meet basic operating costs, a shortfall of some $26.8 million," the post auditor said.
Malone projects the third quarter coming in short by $49.9 million and the fourth quarter of FY 2000 by $15 million.
But Berry noted that several issues could either enhance or further muddy the financial forecast.
"This overall projection is based on several items, capital projects, changes to the mirror tax code, the governors five-year fiscal recovery plan and the federal governments willingness to forgive previous community disaster loans," Berry said.
Under current law the territory mirrors the federal tax code, including payment of earned income credits for which the V.I. has no funding source. There has been discussion about removing that unfunded obligation.
Also impacting the territory's financial picture will be the rum-excise legislation now bogged down in congressional politics.
The V.I. currently receives a return of $10.50 per gallon. The legislation would change that to $13.50 per gallon.
"Twenty-two million dollars is projected in the end of the fourth quarter," Berry noted but later acknowledged that the lifting of the cap on rum revenues is not yet a done deal in Washington.
The Virgin Islands rum-revenue legislation is tied to a similar measure that affects Puerto Rico. And the Vieques controversy with the U.S. Navy over the use of the island's bombing range has worked its way into the pending rum-revenue legislation.
In other comments on Wednesday night's program, Berry said the community remains in "denial" about the true state of the governments finances. It is wrong to believe that the $300 million bond issue will cure the fiscal problems, she said.