In my State of the Territory Address in January, 2011, I said to the Virgin Islands community – and to our newly elected Senators – that our Territory was at a “tipping point.”
I said then that the financial and budgetary challenges we faced left us but two choices: to make very tough decisions to manage the crisis ourselves or to allow our future to be swept away by the external forces let loose by the Great Recession in ways that would be increasingly beyond our control and which would set us back for generations.
I vowed then, and have worked tirelessly since then, to be sure that we kept control of our future. To do so I have argued that we must change how we view our challenges and how together we meet them.
My Administration proposed many methods and means to close the current year’s budget shortfall and to prepare for the even vaster budget crisis that looms before us in the next fiscal year. These proposals were developed not with the goal of leaving everything “as is”— that would not work. Rather our proposals were developed with the overarching goal of shared sacrifice.
Our aim was to do what needed to be done in a way that was spread fairly across the community with minimal employee dismissals, cuts in programs or services, unpaid holidays and tax increases. These proposals were not met with the required action, nor were they replaced with other meaningful alternatives.
No, the Senate repeatedly rebuffed these suggestions leaving us where we find ourselves today. And that is back at the “tipping point”– but with less time and fewer options. But I will not permit the inaction of others to determine our future.
Our Virgin Islands’ economy is essentially a closed economy. Our financial survival is interdependent. This reality is surely understood by us all. And yet far too many who make up our interdependent whole have acted as if their own actions could be held apart, as if they did not need to be part of the solution of our common crisis.
I ask the following: If you are given the choice between postponing getting a raise for a couple of years or losing your job entirely, which would you choose? If you are a union leader, would you rather have hundreds of your members dismissed or have your members agree to give up their pay on a few holidays when they are not working anyway? And as a business owner, why oppose a two-year increase in your gross receipts tax if the result is you lose your business in substantial part because your customers have lost their jobs? To me, the answers to these questions are clear.
The 29th Legislature’s unwillingness to act to address fully our budget crisis has put us in an increasingly difficult situation. I have said repeatedly that the Legislature does not have to agree with all of my proposals. However, if the Senators do not agree with what has been proposed to them, they cannot just say “No.” They have a responsibility to develop their own ideas and proposals to resolve the projected shortfalls.
The Government’s most recent cash flow projections, which I have shared with the Senate President, include actual revenue collections and expenditures through the second quarter of this fiscal year, and the budget cuts imposed by the Legislature to the Executive Branch departments and agencies along with the Superior and Supreme Courts. However, even with these projected revenues, we are still facing a General Fund FY 2011 budget shortfall of $17.4 million and a FY 2012 budget shortfall of approximately $90.1 million. With this shortfall the government cannot continue to operate as it has operated to date.
Expectations and attitudes must change. Behavior and rhetoric must change. That is the duty of leadership. Government leaders must deal with reality. What choices we have, the real cost of those choices, what money we have -- is central to that reality.
We cannot print money. We cannot just appropriate it and believe the obligation is funded. This government gets money, gets funds, only two ways. We either collect it in the taxes we collect from ourselves or we borrow it from the monies that would otherwise be there to pay for what we need, and what our children and grandchildren need, in the future. Those are our choices.
Without collecting more, we must spend less. Spending less in the Virgin Islands Government, where a substantial percentage of our expenses are the expenses of paying our employees and providing them the benefits they have been afforded, means one and only one thing: a reduction in the workforce – employee dismissals.
The dismissal of no fewer than 500 employees is now both inevitable and fast approaching. This action cannot be delayed if the savings to be realized are to be used to meet a portion of this current year’s budget deficit. The dismissals will be effective no later than June 30th. These dismissals will have a ripple effect.
They will have a crippling effect on many families and local businesses. Donations to charities and civic associations will be impacted. All will feel this blow. I know this and so do you. And still, I know that a collaborative effort can do much to help us resolve the immediate fiscal crisis, to address future financial issues and future dismissals.
Further delay will not do. I recently sent a letter to Senate President Ronald E. Russell restating my call that we gather together to develop a plan that will more fully resolve our budget crisis. We cannot wait until after a review of the April collections; we need not gather more information, we must reject all meaningless delay tactics. More information will not change our reality.
My administration has worked very hard to avoid reaching this point. We have used stimulus funds, we have borrowed, we have initiated capital projects to pump money into the economy, we have provided small business assistance, continued to cut executive branch appropriations and, finally, we have proposed austerity measures designed to equitably spread the sacrifice of changes that will cost us all.
I believe our community expected and continues to expect this level of leadership. Surely the community deserves leadership. We have made hard decisions and we have harder ones yet to make. Not one of these future decisions will be popular, but they are unavoidable.
We will have hard times ahead. Let us not abandon our future by failing work together, by failing to make the decisions today that cannot be postponed to tomorrow. We can avoid the worst outcomes if we work together. Let us do just that.