Feb. 13, 2009 — The Virgin Islands are poised to receive somewhere in the neighborhood of $200 million in unanticipated revenue from President Barack Obama's stimulus package, with windfalls for the territory's roads, schools, Medicaid patients and providers, and tax credits for its citizens. The exact numbers are still in flux.
"Despite the announcements of an agreement, as we are talking, negotiations have not really been finished," Delegate Donna Christensen said in a conference call with media Thursday afternoon.
With that caveat, Christensen was able to share some broad outlines of the likely package.
The compromise bill reduces Obama's signature tax cut of $500 per person and $1,000 per couple to $400 per person and $800 per couple; still a significant piece of change into wage earners' pockets come April 15.
"I still think that may go back to the $500 and $1,000 proposed by the House," Christensen said.
Because the territory's tax system is tied directly to the federal system, any reduction in federal tax rates means a reduction in V.I. tax rates and less money for the V.I. government, so by itself, this tax break would take tens of millions of dollars out of the territory's till.
"As of midday today, the territory will receive back from the federal government the amount of the reduction in taxes caused by the bill," Christensen said.
This provision will preserve $50 to $60 million in revenues, according to Government House.
(See: "Territory's Cut of Federal Economic Stimulus Package Undetermined.")
There are two options regarding Medicaid. One option has the potential to increase the territory's total allotment by as much as 30 percent, Christensen said.
"We are now getting about $16 million and that could be as much as $4 million more," she said. Another option reduces the local matching requirement but would increase the allotment only 15 percent.
"Without crunching the numbers I don't think our match is significant enough to outweigh that," she said. "But the final decision of which option goes to the governor."
The total package includes something between the $39 billion proposed by the House and $79 billion proposed by the Senate for a state fiscal stabilization fund mostly aimed at education. The U.S. territories' share is currently set at $270 million and the Virgin Islands will probably get between $67 and $108 million, Christensen said.
At present, there may be as much as $19.4 million in new, unanticipated funding for roads and transportation projects, she said. There is more money coming for food stamps, Head Start, low-income energy assistance and other programs too, but Christensen wouldn't attach tentative numbers to these.
"We've been using the ballpark figure of $200 million for the Virgin Islands," she said. "But it is very hard to say with any certainty until numbers are definitely assigned and until the bill is completed. … I can't stress enough how even though there have been reports an agreement has been reached and the bill is going to the floor, there are still changes to be made."
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