A crucial part of the Turnbull administration's economic recovery plan got a boost Thursday night when the U.S. Senate authorized general borrowing authority for the V.I. government.
In another development that may help the territory's finances, the Senate Finance Committee approved a bill tat would lift the cap on how much rum taxes are returned to the territory.
Delegate to Congress Donna Christian Christensen said Friday unanimous passage of HR 2841 by the U.S. Senate brings the Virgin Islands one step closer to obtaining the same "general borrowing authority as authorized by the V.I. Legislature."
HR 2841 will be sent to President Clinton for his signature.
"Now that the our local Legislature has also passed a borrowing bill for the territory, we can proceed with the business at hand of working through our strategy to eliminate the fiscal deficit before us," the Delegate said.
On Tuesday, the V.I. Legislature okayed Gov. Charles Turnbull's request for a $130 million bond issue. The bill passed only after an amendment was added authorizing the Public Finance Authority to issue up to $300 million instead of the requested $130 million in bonds to fund a working capital loan.
Proponents of the amendment believe the larger borrowing will allow for measures to stimulate the economy, including paying past-due income tax refunds, paying vendors the government owes and funding a retirement incentive plan.
The legislators shot down the original two-tier bill in a late-night session Oct. 1. In that vote, the bill failed on a 7-7 vote.
The Turnbull administration has maintained that without the authority to borrow money, it would be unable to meet payroll starting in November. On Tuesday, Paulette Rabsatt, deputy assistant to the governor on fiscal policy, said the government was facing a $39 million shortfall by Nov. 18.
The bill authorizes the government to issue bonds to borrow working capital. However, it was contingent on the passage of HR 2841.
The revised bill submitted by Turnbull for consideration at Tuesday's special session of the Legislature calls for a one-step bond structure as opposed to the more costly and complicated two-step process of the earlier bill.
Meanwhile, another revenue source for the territory may be secured through the end of 2000, Christensen said.
"I am also happy to announce that we have made another step forward in the process to lift the cap on rum taxes returned to the territory . . . with the vote in the Senate Finance committee to lift the cap for 18 months beginning retroactively in July of this year."
The measure, which would mean an additional $20 million to $22 million annually to the territory, must still be passed by the full Senate before going to a House-Senate conference committee.
"Even though it was not included in the House version, we are cautiously optimistic because of the committee's action and the strong White House support," Christensen said. "If passed, it would still only be a partial victory, and so we are still continuing to work to have the cap lifted permanently."
